Creating a Two Sided Customer Loss Function

Paper #:
  • 2015-01-1357

Published:
  • 2015-04-14
DOI:
  • 10.4271/2015-01-1357
Citation:
Crowley, J., "Creating a Two Sided Customer Loss Function," SAE Technical Paper 2015-01-1357, 2015, doi:10.4271/2015-01-1357.
Author(s):
Affiliated:
Pages:
7
Abstract:
In the area of Human Factors and Usability research a desired output of many studies is identification of what value a specific Design Parameter should be set at to minimize customer dissatisfaction.A Customer Loss Function is a simple way to graphically display the probability customers will be dissatisfied at different levels of a given design parameter, due to a given failure mode. Many design parameters however, have two distinct but related Failure Modes (customer disatisfiers), typically representing two ends of the parameter (i.e. too much/too little; too hot/too cold; too fast/too slow). Each of these Failure modes is represented by its own unique Customer Loss Function. This paper will introduce a technique to combine these two One-Sided Loss Functions into a comprehensive Two Sided Loss Function. The mathematics behind the creation of both one sided and two sided loss functions is based on Binary Logistic Regression [1,2,3] Analysis Techniques.The benefits of incorporating both failure modes into one two-sided customer loss function include: 1)Being able to graphically display the Combined Customer Loss Function curve and utilize this visual aid to identify the level which minimizes customer dissatisfaction.2)A secondary benefit is the ability to use the two-sided loss functions equation to develop an optimization tool for mathematically determining the minimum customer loss point. This is particularly useful if running a limit study (as opposed to a study with set levels).
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