Q: What is taguchi loss function?

The Concept
Taguchis loss function explains that quality does not suddenly plummet and private and social costs do not rise
suddenly when products are not in conformance to specifications. Instead, the losses to the manufacturer and the
society are a function of the deviance or variability from the target value or best quality level. The private and social
loss is zero at the target value, and the losses gradually increase as the product specifications deviate from the target
value.
The three characteristics that shape the definition of Taguchi loss function are:
1.

Nominal, where the best characteristic or target value is the median of the specified upper and
lower acceptable limits, and the losses owing to deviance from the target value rise proportionate to the extent
of deviance on either side of the mean. Here an example includes the frequency settings in radio and wireless
equipment. For instance, the equipment not confirming exactly with the set frequency is defective increases the
social costs for repair or replacement.
2.
Smaller-the-Better, where the ideal target value or best quality standard is zero, and the higher the
actual value, the higher the private and social costs. Examples of such instances include heat loss in heat
exchanger, or carbon dioxide emissions. For instance, the more heat lost by the heat exchanger, the less
efficiently it functions, and the higher the social costs.
3.
Larger-the-Better, where the ideal characteristic or best quality standard is infinity, and the higher
the actual value, the better, and the lower the actual value, the more the private and social costs. Examples of
such instances include maximizing product yield from a process, agricultural output, and the like. For instance,
the higher yields indicate better quality seeds, and lower yields increase the social costs.
Formula
The Taguchis loss function for one piece of product is:
Loss in Dollars = Constant*(quality characteristic target value)^2
The Average Taguchi loss per item for a sample set is
Loss in Dollars= Constant*(standard deviation^2+ (process mean target value) ^2)
1.

Constant is the coefficient of the Taguchi Loss, or the ratio of functional tolerance and customer
loss. Functional tolerance is the value at which 50 percent of the customers view the product as defective, and
customer loss is the average loss to the customer at this point.
2.
Quality characteristic indicates the actual value of the characteristic such as diameter,
concentration or the like used as the basis to determine quality.
3.
Target value is the specified ideal value for this quality characteristic.
Taguchi Loss Function uses include assessing economic loss from a deviation in quality without
having to develop the unique function for each quality characteristic.

Q: What are quality circles? How do they help in improving quality and increasing production?
It is a work group of employees who meet regularly to discuss their quality problems, investigate causes,
recommend solutions, and take corrective actions. Generally, QC is a small group of employees belonging to the
same similar work area.
This is so because the employees doing the similar type of work are well familiar to problems faced by them. The
size of the QC should not be too big so as to prevent some members from participating meaningfully in its meetings.
Generally, six to eight members are considered the ideal size of the QC.
QC is formed to achieve the following objectives:
1. Improvement in quality of product manufactured by the organisation.
2. Improvement in methods of production.
3. Development of employees participating in QC.
4. Promoting morale of employees.
5. Respect humanity and create a happy work place worthwhile to work.
The main features of QC can be listed as follows:
1. Voluntary Groups:
QC is a voluntary group of employees generally coming from the same work area. There is no pressure from
anywhere on employees to join QC.
2. Small Size:
The size of the QC is generally small consisting of six to eight members.
3. Regular Meeting:
QC meetings are held once a week for about an hour on regular basis. The members meet during working hours
usually at the end of the working day in consultation with the manager. The time of the meetings is usually fixed in
advance in consultation with the manager and members.
4. Independent Agenda:
Each QC has its own agenda with its own terms of reference. Accordingly, each QC discusses its own problems and
takes corrective actions.
5. Quality Focused:
As per the very nature and intent of QC, it focuses exclusively on quality issues. This is because the ultimate
purpose of QC is improvement in quality of product and working life.

Developing Quality Circles in Organisations:

Like any other organizational change, QC being a new concept may be opposed by the employees.
Therefore, QC should be developed and introduced with great concern and precaution as discussed below:
1. Publicising the Idea:
Introduction of QC is just like an organisational change programme Hence, like an organisational change
programme, the workers need to be convinced about the need for and significance of QC from the points of view of
the workers and the organisation. Moreover, participation in QC being voluntary, its publicity among the workers is
necessary. To begin with, management can also arrange for initial training to those workers who want to form a
quality circle.
2. Constitution of QC:
Workers doing the same or similar type of work are drawn voluntarily to form quality circle. The membership of a
QC is generally restricted to eight to ten. Once a QC is formed, they remain as permanent members of the circle
unless they leave that work area.
3. Initial Problem Solving:
The members of QC should discuss the problem at threadbare and, then, prepare a list of alternative solutions.
Thereafter, each alternative solution should be evaluated and the final solution should be arrived at on the basis of
consensus.
4. Presentation and Approval of Suggestions:
The final solution arrived at should be presented to the management either in oral or in written form. The
management may evaluate the solution by constituting a committee for this purpose. The committee may also meet
the members of the quality circle for clarifications, if required. Presentation of solutions to the management helps
improve the communication between management and workers and reflects managements interest to the members
of QC.
5. Implementation:
Once the suggestion or solution is approved by the management, the same is being put into practice in a particular
workplace. Quality circles may be organized gradually for other workplaces or departments also. In this way,
following above outlined process, the entire organisation can have quality circles.
Q: Write short note on quality cost and optimizing quality cost?
Q: Describe various quality costs. Briefly describe each of them.
Quality costs are the costs associated with preventing, detecting, and remediating product issues related to quality.
Quality costs do not involve simply upgrading the perceived value of a product to a higher standard. Instead, quality
involves creating and delivering a product that meets the expectations of a customer. Thus, if a customer spends very

little for an automobile, he will not expect leather seats and air conditioning - but he will expect the vehicle to run
properly. In this case, quality is considered to be a vehicle that functions, rather than a luxury experience.
Quality costs fall into four categories, which are:
Prevention costs. You incur a prevention cost in order to keep a quality problem from occurring. It is the

least expensive type of quality cost, and so is highly recommended. Prevention costs can include proper employee
training in assembling products and statistical process control (for spotting processes that are beginning to generate
defective goods), as well as a robust product design and supplier certification. A focus on prevention tends to reduce
preventable scrap costs, because the scrap never occurs.
Appraisal costs. As was the case with a prevention cost, you incur an appraisal cost in order to keep a

quality problem from occurring. You do so through a variety of types of inspection. The least expensive is having
production workers inspect both incoming and outgoing parts to and from their workstations, which catches
problems faster than other types of inspection. Other appraisal costs include the destruction of goods as part of the
testing process, the depreciation of test equipment, and supervision of the testing staff.
Internal failure costs. An internal failure cost is incurred when a defective product is produced. This

appears in the form of scrapped or reworked goods. The cost of reworking goods is part of this cost.
External failure costs. You also incur an external failure cost when a defective product was produced, but

now the cost is much more extensive, because it includes the cost of product recalls, warranty claims, field service,
and potentially even the legal costs associated with customer lawsuits. It also includes a relatively unquantifiable
cost, which is the cost of losing customers.
Q: Explain total quality management?
A core definition of total quality management (TQM) describes a management approach to longterm success
through customer satisfaction. In a TQM effort, all members of an organization participate in improving processes,
products, services, and the culture in which they work.

The Primary Elements of TQM

Total quality management can be summarized as a management system for a customer-focused organization that
involves all employees in continual improvement. It uses strategy, data, and effective communications to integrate the
quality discipline into the culture and activities of the organization.

Customer-focused. The customer ultimately determines the level of quality. No matter what an
organization does to foster quality improvementtraining employees, integrating quality into the design process,
upgrading computers or software, or buying new measuring toolsthe customer determines whether the efforts
were worthwhile.

Total employee involvement. All employees participate in working toward common goals. Total employee
commitment can only be obtained after fear has been driven from the workplace, when empowerment has

occurred, and management has provided the proper environment. High-performance work systems integrate
continuous improvement efforts with normal business operations. Self-managed work teams are one form of
empowerment.

Process-centered. A fundamental part of TQM is a focus on process thinking. A process is a series of

steps that take inputs from suppliers (internal or external) and transforms them into outputs that are delivered to
customers (again, either internal or external). The steps required to carry out the process are defined, and
performance measures are continuously monitored in order to detect unexpected variation.

Integrated system. Although an organization may consist of many different functional specialties often
organized into vertically structured departments, it is the horizontal processes interconnecting these functions that
are the focus of TQM.
o

Micro-processes add up to larger processes, and all processes aggregate into the business
processes required for defining and implementing strategy. Everyone must understand the vision, mission,
and guiding principles as well as the quality policies, objectives, and critical processes of the organization.
Business performance must be monitored and communicated continuously.

An integrated business system may be modeled after the Baldrige National Quality
Program criteria and/or incorporate the ISO 9000 standards. Every organization has a unique work culture,
and it is virtually impossible to achieve excellence in its products and services unless a good quality culture
has been fostered. Thus, an integrated system connects business improvement elements in an attempt to
continually improve and exceed the expectations of customers, employees, and other stakeholders.

Strategic and systematic approach. A critical part of the management of quality is the strategic and
systematic approach to achieving an organizations vision, mission, and goals. This process, called strategic
planning or strategic management, includes the formulation of a strategic plan that integrates quality as a core
component.

Continual improvement. A major thrust of TQM is continual process improvement. Continual

improvement drives an organization to be both analytical and creative in finding ways to become more
competitive and more effective at meeting stakeholder expectations.

Fact-based decision making. In order to know how well an organization is performing, data on
performance measures are necessary. TQM requires that an organization continually collect and analyze data in
order to improve decision making accuracy, achieve consensus, and allow prediction based on past history.

Communications. During times of organizational change, as well as part of day-to-day operation,

effective communications plays a large part in maintaining morale and in motivating employees at all levels.
Communications involve strategies, method, and timeliness.
These elements are considered so essential to TQM that many organizations define them, in some format, as a set of
core values and principles on which the organization is to operate.