Customer Expectation and Warranty Cost — Nominal-the-Best Case

A fixed target, be it at zero or infinity, is assumed in Taguchi's method for formulating the quality loss function (QLF). The QLF only accounts for immediate issues within manufacturing facilities whereas warranty cost occurs during customer use. Variable customer expectation has not been considered in the Taguchi methodology. This article presents a methodology to predict warranty probability, the probability of customer complaint, on the basis of two independent variables; product performance and consumer expectation. It is expected that the formulation presented will serve as a basic model for predicting warranty loss using warranty probability due to a single characteristic under certain assumptions. The nominal-the-best case is considered in this article and warranty cost is estimated for an automotive example to demonstrate the methodology.