A Generalized Loss Function for Process Optimization

The use of loss functions for measuring the undesirability associated with failure to achieve target values for manufacturing product characteristics is widespread in industry. This study presents a generalization of one of the most commonly used loss functions and compares the two functions based on five theoretical criteria. A simulation involving multiple probability distributions for a single product characteristic is used to compare the performance of the loss functions. An example from the manufacture of helicopter transmission gears is used to empirically demonstrate the superiority of the generalized loss function over the conventional loss function.