ABSTRACT
Genichi Taguchi formulated a method of relating cost to customer satisfaction (which also holds valid for product speciŽcations), shown in Figure 1.1 and o¨en referred to as the Taguchi loss function. is relates customer dissatisfaction to loss of income from the product under discussion. e further the product is from customers’ expectations, the more dissatisŽed customers become. One would like to think that the marketing and sales force have correctly interpreted customer needs, which the research and development communities have translated into a product, which has been manufactured within the best tolerances available to them. So manufacturing any product on aim exactly meets customer expectation, which results in maximum sales and therefore proŽts for the company. A deviation from the target toward the upper or lower speciŽcation may therefore result in loss of sales. Of course, the caveat here is that there may be no alternative product available and so a customer might buy a batch of products knowing that the batch contains variable products simply because there is no alternative.
