Taguchi Loss Function

The Taguchi Loss Function is an equation that measures the “loss” experienced by customers as a function of how much a product varies from what the customer finds useful. His idea rocked the quality world because the common wisdom at the time held that if products met internal measures they were “good” and if they fell outside the limits they were “defects.” Taguchi looked at variation from the eyes of the customer and decided to grade on a curve.