The Application of Analytic Hierarchy Process to Determine Proportionality Constant of the Taguchi Quality Loss Function

Taguchi´s philosophy of quality improvement is quite unique and challenging. Traditionally, quality management focused on conformance to specifications within a given range. In Taguchi´s philosophy, the aim of quality management should be achieving a specific target value. Any deviation from the predetermined target value results in a loss (e.g., due to customer dissatisfaction). Taguchi measures this loss with a quadratic function called quality loss function (QLF). An important component of QLF is the proportionality constant ( ). An inaccurate or erroneous value for can result in misallocation of the organizational resources and can easily lead to chaos in quality management efforts. Thus, an accurate estimate for is of utmost importance. This paper proposes a new methodology for calculating the proportionality constant . To this end, the analytical hierarchy process is used to estimate the value of the proportionality constant in QLF. It is argued that the proposed methodology takes into account the relative importance of various quality characteristics and captures different levels of sensitivity along the loss function. Both symmetric and asymmetric loss functions are considered.