A new right-skewed loss function in process risk assessment

Abstract

Due to globalisation, competitive companies realise that providing a more reliable, predictable, and robust product/process is a prerequisite for satisfying their customers and running a successful operation. Many quality improvement techniques focus on reducing process variation in line with the 'loss to society' concept. The widespread use of loss functions in industrial applications has increased their popularity with different loss-handling features. Developments relating to the inverted probability density functions (PDFs) have allowed the application of particular loss functions in a wide range. This paper presents the inverted Wald loss function as a new member of the inverted probability loss family. The important features of the proposed right-skewed loss function are discussed, and the risk functions associated with some process distributions of interest are obtained. Moreover, the proposed loss function and its performance are illustrated on the basis of a comparative study and an industrial example, including the monitoring of loss. [Received: 22 May 2018; Revised: 11 August 2018; Revised: 29 October 2018; Revised: 14 January 2019; Accepted: 23 January 2019]