ECONOMIC DESIGN OF CONTROL CHARTS USING THE TAGUCHI LOSS FUNCTION

We embellish Duncan's cost model with Taguchi's loss function to incor porate losses that result from both inherent variability due to assign able causes. Whereas Duncan applies a penalty cost for operating out o f control, he does not show how this cost can be obtained or quantifie d. We illustrate, analyze, and evaluate this model utilizing hypotheti cal cost figures and process parameters. We also suggest adjustments t o control chart design parameters when there are process improvements over time.