Estimating supplier's hidden quality costs with Taguchi quality loss function and Topsis method

Abstract

This paper presents a new method of measuring hidden quality costs that are associated with a supplier. The hidden quality costs are the costs that could be identified, but hard to be quantified. Quantification of these costs is conducted based on several existing methods, such as Taguchi's quality loss function. This function has been proved to be successful over the last fifteen years for the improvement of product quality and process performance. It's a way to measure losses due to variability from a target value. To determine the target value for a product, most Taguchi experiments present it as a single quantitative quality characteristic. Whereas, the supplier's target value would be also qualitative. In this context the variability from a multiple qualitative quality characteristic is not common, due to its uncertainty and imprecision. Therefore, this paper presents an alternative approach for tackling such a problem using the Topsis method, and Taguchi's quality loss function. The paper also presents the validation of the proposed model through a case study.