The Optimum Target Value for a Process Based on a Quadratic Loss Function

The purpose of this paper is to determine the most economic target value of a process. Consider a production process where products are produced continuously and whose specification limits are specified for screening inspection. There are many instances where the losses due to producing a product below the lower specification limit and above the upper specification limit are not equal. Moreover, a loss is always incurred between the specification limits no matter how small the deviation from the target for the process is when a quadratic quality loss function is used. Due to these losses, the total loss to the customer will greatly depend on the target value. In this paper, an optimum target value for the process whose quality characteristics is normally distributed with a known mean and variance is derived