An economic design of nx control chart using quadratic loss function

The quadratic loss function is used in Taguchi’s on-line cost model to estimate the quality cost. However, Taguchi’s on-line quality control approach is different from the widely used statistical process control techniques where control charts are the primary tools for quality control. Duncan’s economic design of nx control chart is the first attempt to design the control charts in terms of process cost. In this paper, the authors present a new economic design based on the loss function approach as advocated by Taguchi. They also obtain the optimal parameters of the control chart that minimize the total quality cost.