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The Five/Ten Rule: A Constrained-Loss Economic Process Adjustment Procedure
Summary: We review the use of Taguchi's tolerance setting method for the quadratic loss function and apply it to obtain a constrained loss process adjustment rule that uses samples with 5 or 10 items (depending on the process capability). For capable processes, the rule limits the expected quadratic loss due to lack of centering to 1% of the production cost or less. This does not imply that we allow 1% more defective items. For capable processes, the number of defective items will not increase substantially relative to perfect centering. Instead, the rule will cause additional expected quadratic loss for acceptable items but not more than 1% of the production cost. As the process capability index increases beyond 1.5, the rule leads to progressively better centering. In the long run, customers pay for adjustments. The rule caps adjustment costs. Thus, it helps customers.
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- Topics: Continuous Improvement
- Keywords: Economics,Loss functions,Selection,Tolerances,Taguchi method
- Author: Trietsch, Dan
- Journal: Quality Engineering