Integration of Taguchi's loss function approach in the economic design of x ¯‐chart

In this paper we incorporate Taguchi's loss function in the economic design of the control chart. This is done by redefining the in‐control and out‐of‐control costs using Taguchi's loss function. The new model brings Taguchi's off‐line concepts to the classical SPC approach and continues to have the advantages of the economic design model by taking into consideration the cost consequences of the design. Sensitivity analysis with respect to important model parameters is discussed.