Economic considerations on parameter design

A simultaneous consideration of process mean and variance in product design stages has been considered one of the most significant of Taguchi's contributions. Among his quality improvement methods, parameter design has drawn a great deal of particular attention from researchers. The ultimate objective of Taguchi's parameter design is to find control factor settings to achieve an on-target process mean with a minimum variance. There is no doubt regarding the virtue of the minimum variance. However, considering a variety of economic aspects related to product specifications well as a quality loss, the on-target process mean may not necessarily be economical. This paper investigates the parameter design problem from an economic point of view and proposes an alternative procedure to achieve the most economical process mean as well as the minimum variance by taking product specifications and an asymmetric quality loss into consideration. It is shown through an illustrative example that a significant cost saving can be accrued from the proposed procedure.