Operations Management Past Paper PDF (2024-2025 Midterms - National U-Clark)

JUNIOR LEAGUE OF MARKETERS​ NATIONAL UNIVERSITY-CLARK ​ ​ ​ OPERATIONS​ MANAGEMENT Pasado Playlist – Exam Reviewer For BSBA Nat...

JUNIOR LEAGUE OF MARKETERS​ NATIONAL UNIVERSITY-CLARK ​ ​ ​ OPERATIONS​ MANAGEMENT Pasado Playlist – Exam Reviewer For BSBA Nationalians A.Y. 2024-2025, Midterms – Second Term, Second Year 1  JUNIOR LEAGUE OF MARKETERS​ NATIONAL UNIVERSITY-CLARK ​ ACKNOWLEDGEMENT This exam reviewer, focused on the Business Administration Core Courses, is part of the Junior League of Marketers' A.Y. 2024-2025 project, "Pasado Playlist," created to support the BSBA Marketing Management Nationalians in their academic journey. We extend our deepest gratitude to our esteemed advisers, Prof. Dennis Chlenton B. De Jesus and Dr. Aira May T. Balancio-Canlas, for their invaluable guidance. We also acknowledge the support of Dr. Jhanssen T. Tan, Program Chair of the Business Administration Department. MACEREN, JESSA MAE S.​ PRESIDENT ​ ​ ​ TULLAO, JAIRAH P.​ ELLAMIL, ANDREA MARIELLE A. VP FOR INTERNAL AFFAIRS VP FOR EXTERNAL AFFAIRS ​ LIWANAG, DERICK DEE S.​ SINFUEGO, LYRIZ JHOY S.​ VP FOR FINANCE SECRETARY MACASINAG, CHARMAINE ​ MANGUERRA, NEIL ADRIAN A​ AUDITOR HEAD OF MEMBERSHIP 2 JUNIOR LEAGUE OF MARKETERS​ NATIONAL UNIVERSITY-CLARK CASTRO, JOSE GABRIEL M.​ PADUA, CARL HARDISON B.​ HEAD OF EVENTS HEAD OF PROMOTIONS ​ ​ SERRANO, CATLYN GWEN H.​ PINEDA, TRISHA MAE N.​ HEAD OF CREATIVES HEAD OF CORPORATE AND BAUTISTA, CHRISTIAN V.​ NUNAG, PRINCESS MIKYLLA P.​ EXECUTIVE COMMITTEE EXECUTIVE COMMITTEE NUNAG, JHON WESHLEE D.​ SWIN, ELYZIA JOY​ EXECUTIVE COMMITTEE EXECUTIVE COMMITTEE BERMAS, ANGELICA V.​ NAGUIT, BIANCA ALYZA M.​ MEMBERSHIP COMMITTEE MEMBERSHIP COMMITTEE MANINANG, JOHN RENZ B.​ QUIAMBAO, JADES​ MEMBERSHIP COMMITTEE MEMBERSHIP COMMITTEE SARIEDDINE, VANESSA RAMZI A.​ BANAYAT, LAURENCE JAY C.​ MEMBERSHIP COMMITTEE EVENTS COMMITTEE 3 JUNIOR LEAGUE OF MARKETERS​ NATIONAL UNIVERSITY-CLARK MAGLALANG, ANGEL B.​ MANTO, JAN HARVEY B.​ EVENTS COMMITTEE EVENTS COMMITTEE MAMARIL, GEREIGN LIME​ QUIZON, QUINNE RAVEN F.​ EVENTS COMMITTEE EVENTS COMMITTEE SANTOS, STEFANNY AKI B.​ TARDEO, ALEXIS RAIN A.​ EVENTS COMMITTEE EVENTS COMMITTEE TAGUMPAY, RODMAR T.​ PENA, ABIGAIL CAMILLE A. ​ EVENTS COMMITTEE PROMOTIONS COMMITTEE RAZON, MARC LESTER D.​ DEL ROSARIO, ALVIN M.​ PROMOTIONS COMMITTEE CREATIVES COMMITTEE BITUIN, DEAN P.​ OCAMPO, MEO MAR T.​ CREATIVES COMMITTEE CREATIVES COMMITTEE ​ SANTOS, MIGUEL JEREMY D.​ UNIVERSITY STUDENT COUNCIL - BSBA REPRESENTATIVE 4  JUNIOR LEAGUE OF MARKETERS​ NATIONAL UNIVERSITY-CLARK Topic 1 Operations Management Mission - While its mission statement describes the company's reason for being and how it will achieve Subtopic 1 its goals. Subtopic 2 Content​ 1. COMMUNICATE THE ORG'S PURPOSE ​ ​ They help stakeholders understand the org's purpose Font: Times New Roman​ and why they should support it. Font Size: 10​ Spacing; 1.15 2. GUIDE STRATEGY DEVELOPMENT​ They help inform the development of strategies and OPERATIONS MANAGEMENT the goals and objectives used to measure success. ​ 3. ALIGN RESOURCES​ Creating and delivering goods and services to They help ensure that resources are aligned to customers depends on an effective system of linked achieve a successful future. ​ facilities and processes and the ability to manage them effectively locally or even around the world. 4. CREATE A SENSE OF IDENTITY​ Operations Management is the art and science of They help employees feel a sense of belonging and ensuring that goods and services are created and identity, which can motivate them to work harder. ​ delivered successfully to customers. ​ 5. INCREASE EFFICIENCY/PRODUCTIVITY ​ OPERATIONS MANAGEMENT INCLUDES: They help ensure that everyone is working towards Design of goods and services a single purpose, which can increase efficiency and Processes of creating goods and services ​ productivity. ​ Day-to-day management of these processes Continuous improvement of these goods, services, UNDERSTANDING GOODS AND SERVICES and processes 1. GOODS ARE TANGIBLE, WHEREAS Operations Management is the only function by SERVICES ARE INTANGIBLE which managers can directly affect the value Goods are consumed, but services are experienced. provided to all stakeholders. Goods-producing industries rely on equipment, machines, hard technology to perform work. Goods ROLES OF THE OPERATIONS MANAGER can be moved, stored, repaired, and generally require The concepts and methods of Operations physical skills and expertise during production. Management can be used in any job, regardless of the Customers can often try them before buying. functional area of business or industry, to better Services, on the other hand, require more use of create value for internal customers (within the information systems and other soft technology, organization) and for external customers (outside the require strong behavioral skills, and are often difficult organization). to describe, or demonstrate. VISION & MISSION 2. CUSTOMERS PARTICIPATE IN MANY SERVICE PROCESSES, ACTIVITIES, AND Vision - A company's vision statement describes TRANSACTIONS what the company wants to become in the future. Many services require that the customer be present either physically, on the telephone, or online for service to commence. In addition, the customer and 5  JUNIOR LEAGUE OF MARKETERS​ NATIONAL UNIVERSITY-CLARK service provider often co-produce a service, meaning While manufacturing plants for goods can be they would work together to create and located on the other side of the globe, as long as simultaneously consume the service. goods are delivered to the customers in a timely A service encounter is an interaction between the fashion. customer and the service provider. 3. THE DEMAND FOR SERVICES IS MORE 7. PATENTS DO NOT PROTECT SERVICES DIFFICULT TO PREDICT THAN THE A patent on a physical good or software code can DEMAND FOR GOODS provide protection from competitors. The intangible Customer arrival rates and demand patterns for such nature of a service makes it more difficult to keep a service delivery systems as banks, airlines, competitor from copying a business concept, facility supermarkets, call centers, and courts are very layout, or service encounter design. difficult to forecast. This places many pressures on Overall, these differences between goods and service firm managers to adequately plan staffing services have important implications for all areas of levels and capacity. an organization, and especially to operations. 4. SERVICES CANNOT BE STORED AS VALUE PHYSICAL INVENTORY In goods-producing firms, inventory can be used to Value is the perception of the benefits associated decouple customer demand from the production with a good, service, or bundle of goods and services process or between stages of the production process in relation to what buyers are willing to pay for them. and ensure constant availability despite fluctuations in demand. Value = Perceived Benefits Service firms do not have physical inventory to / Price (Cost to the customer) absorb such fluctuations in demand. For service delivery systems, availability depends on the If the value ratio is high, the good or service is system’s capacity. perceived favorably by customers. 5. SERVICE MANAGEMENT SKILLS ARE PARAMOUNT TO A SUCCESSFUL SERVICE INCREASING VALUE ENCOUNTER Employees who interact with customers require TO INCREASE VALUE, AN ORG MUST: service management skills such as knowledge and Increase perceived benefits while holding price technical expertise, as well as cross-selling other constant; products and services, and good human interaction Increase perceived benefits while reducing price; skills. Decrease price while holding perceived benefits Service Management integrates marketing, human constant. resources, and operations functions to plan, create, and deliver goods and services, and their associated In addition, proportional increases or decreases in service encounters. perceived benefits as well as price result in no net change in value. 6. SERVICE FACILITIES TYPICALLY NEED TO BE IN CLOSE PROXIMITY TO THE CUSTOMER BENEFIT PACKAGES CUSTOMER When customers must physically interact with a Bundling goods, services, and digital content in a service facility, they must be in a location convenient certain way to provide value to customers not only to the customers. Examples are the post offices, enhances what customers receive, but can also hotels, and banks. 6  JUNIOR LEAGUE OF MARKETERS​ NATIONAL UNIVERSITY-CLARK differentiate the product from competitors. Such a VALUE CHAIN ≠ SUPPLY CHAIN bundle is called a customer benefit package. A customer benefit package is a clearly defined set of The supply chain deals with building the product tangible and intangible features that the customer and getting it to the consumer, while the value chain recognizes, pays for, uses, or experiences. looks for ways to enhance the product's value as it A customer benefit package consists of a primary moves along that supply chain. good or service coupled with peripheral goods and/or services and sometimes variants. ​ MICHAEL E. PORTER ​ ​ Primary goods or services - the core offering that Michael E. Porter, of Harvard Business School, attracts customers and responds to their needs. ​ introduced the concept of a value chain. He wrote: Peripheral goods or services - are those that are “Competitive advantage cannot be understood by not essential to the primary good or service, but looking at a firm as a whole. It stems from the many enhance it. discrete activities a firm performs in designing, producing, marketing, delivering, and supporting its product. ” It’s important to maximize value at each specific point in a firm’s processes. PROCESSES Each good or service in the customer benefit package requires a process to create and deliver it to customers. A Process is a sequence of activities that is intended to create a certain result, such as a physical good, a service, or information. 1. CORE PROCESSES Focused on producing or delivering an organization’s primary goods or services that create value for customers, such as filling and shipping a VALUE CHAIN customer’s order or assembling a piece of equipment. A value chain is a series of consecutive steps that go 2. SUPPORT PROCESSES into the creation of a finished product, from its initial Such as purchasing materials and supplies used in design to its arrival at a customer’s door. The chain manufacturing, managing inventory, installation, identifies each step in the process at which value is health benefits, technology acquisition, on-site added, including the sourcing, manufacturing, and services, and research and development. marketing stages of its production. 3. GENERAL MANAGEMENT PROCESSES Including accounting and information systems, human resource management, and marketing management. 7  JUNIOR LEAGUE OF MARKETERS​ NATIONAL UNIVERSITY-CLARK Creating a competitive advantage requires a OPERATIONS MANAGEMENT:A HISTORY fundamental understanding of two things: OF CHANGE AND CHALLENGE understanding customer needs and expectations and leveraging operational capabilities to support desired competitive priorities. SEVEN MAJOR ERAS OF OPERATIONS 2. STRATEGIES UNDERSTANDING MANAGEMENT: CUSTOMER WANTS AND NEEDS A company usually cannot satisfy all customers 1960s - Focus on Cost and Efficiency with the same goods and services. Often, customers 1970s - Focus on Quality have to be segmented into several natural groups, 1980s - Focus on Customization and Design each with their unique wants and needs. These 1990s - Focus on Time segments might be based on buying behavior, 2000s - Focus on Service and Value geography, demographics, sales, volume, 2010s - Focus on Sustainability profitability, or expected levels of service. By 2020s - Focus on Data and Analytics understanding the differences among such segments, a company can design the most appropriate customer benefit packages, competitive strategies, and Cost Minimization -> Sustainability processes to create goods and services to meet the Mass Production -> Mass Customization unique needs of each segment. Manufacturing-Based Tech -> Info-Based Tech Order Qualifiers - Minimum performance level Focus on Goods -> Focus on Value and Service required to stay in business. Local Markets -> Global Markets Order Winners - Goods and service features and performance characteristics that differentiate one OPERATIONS STRATEGY customer benefit package from another and win the customer’s business. KODAK AND XEROX - Over the past two decades, the transformation to a digital society has 3. EVALUATING GOODS AND SERVICES ​ caused many companies to redefine their strategy. Research suggests that customers use three types of Some have had to completely reinvent themselves. attributes in evaluating the quality of goods and services: search, experience, and credence. ​ Search Attributes - are those that a customer can THE OBJECTIVES OF OPERATIONS determine before purchasing the good or service. (e.g. STRATEGIES color, price, freshness, style, fit, feel, smell) ​ Changing a corporate strategy has many Experience Attributes - are those that can be implications for operations and the entire value chain. discerned only after purchase or during consumption Facilities may have to be reconfigured or new ones /use. (e.g. friendliness, taste, wearability, safety, fun) ​ built; new technology may have to be acquired; new Credence Attributes - are those that a customer processes and jobs must be designed. must believe in but cannot personally evaluate even after purchase and consumption. (e.g. The expertise 1. GAINING COMPETITIVE ADVANTAGE of a surgeon or a mechanic, education, food Denotes a firm’s ability to achieve market and supplements) financial superiority over its competitors. In the long run, a sustainable competitive advantage provides above-average performance and is essential to the survival of the business. 8  JUNIOR LEAGUE OF MARKETERS​ NATIONAL UNIVERSITY-CLARK supplier that is the best at cost, quality, and time of delivery but uses child labor practices or pollutes community drinking water is not going to do business with the modern companies of today. 6. SUPPLY CHAINS Value chains now span across many continents. KEY CHALLENGES IN OPERATIONS Companies today face many challenges in designing MANAGEMENT TODAY and optimizing their supply chains. These include determining where to best source raw materials, 1. CUSTOMERS components, and finished foods. Sourcing abroad Consumers demand an increasing variety of requires efficient transportation and scheduling, and high-quality goods with new and improved features also incurs risks related to intellectual property and that are delivered faster than ever, along with supply chain disruptions from natural disasters and outstanding service and support. Being first to market other factors. Coordinating this entire process to means more now than ever and Operations minimize costs is a continuing challenge. Management plays a vital role. 2. TECHNOLOGY Technology continues to improve at a rapid pace. Applications in design and manufacturing, as well as Topic 2 the use of information technology in services, have Goods and Service Design provided the ability to develop innovative products and more effectively manage and control extremely complex operations. 3. WORKFORCE Designing Goods and Services Today’s workforce requires new skills, continual learning, more diversity, and better management. Perhaps the most important strategic decision that These tasks often fell on the shoulders of operations any firm makes involves the design and development managers. Organizations will need to become more of new goods and services, and the value chain flexible with how and where their workforces operate structure and processes that deliver them. Decisions in global value chains. about what goods and services to offer and how to position them in the marketplace often determine the 4. GLOBALIZATION ultimate growth,profitability, and success of the firm. Globalization no longer means just an opportunity Every design project is a series of tradeoffs between for organizations to enter new markets. We now live technology and functionality, between ambition and in an era of the “borderless marketplace. ” Today, affordability,between the people creating the object firms contend with a growing number of competitors and the needs of the people using it. and sources of lower- cost labor. In addition, managing operations with vastly different cultures An Integrated Framework for Goods and Service can be problematic. Design 1. Strategic Vision and Mission 5. SUSTAINABILITY Strategies and priorities should be consistent with Performance in global operations and supply chains and support the firm’s vision and mission. used to mean a focus on cost, quality, and time. Today, sustainability is a major performance area. 2. Strategic and Market Analysis, and Global sourcing managers must qualify suppliers on Understanding Competitive Priorities at least these four performance areas. A global Research and Development 9  JUNIOR LEAGUE OF MARKETERS​ NATIONAL UNIVERSITY-CLARK Manufacturing Technology 3. Customer Benefit Package Design and Configuration Although high-tech automated processes receive a lot of media attention, much of the tech used in SMEs 4. Detailed Goods, Service, and Process Design around the world is still quite basic. However, from This is where the designs of goods and services start an OM standpoint, all organizations face common to have differentiations. issues regarding technology. 4.1 Manufactured Good Design And Development 4.2 Service Delivery System Design 01. The right technology must be selected for the 4.3 Process Selection and Design goods and services that are produced. 4.4 Service Encounter Design 02. Process resources must be set up and configured in a logical fashion to support production efficiency. 5. Market Introduction For Deployment 03. Labor must be trained to operate equipment. In this step, the final bundle of goods and services is 04. Process performance must be continually advertised, marketed, and offered to customers. For improved. manufactured goods,this includes the final product 05. Work must be scheduled to meet shipping being shipped to warehouse or wholesale and retail commitments and/or customer promise dates. stores;for services, it might include building sites or 06. Quality must be ensured. hiring and training employees. Computer-Integrated Manufacturing Systems 6. Marketplace Evaluation ​ (CIMS) The marketplace is a graveyard of missed opportunities: poorly designed goods and services Much of the technology used in manufacturing and failed execution resulting from ineffective today is automated and linked with information operations. The final step in designing and delivering technology. CIMS represent the union of hardware, customer benefit packages is to constantly evaluate software, database management, and communications how well the goods and services are selling,and to automate and control production activities, from customers' reaction to them. planning and design to manufacturing and distribution. Understanding Technology in Operations The roots of CIMS began with Numerical Control, which are machine tools that enable the machinist's Technology has dramatically changed how work is skills to be duplicated by a programmable device that accomplished in every industry, from mining to controls the movements of a tool used to make manufacturing, to education, to healthcare. complex shapes. Technology is the enabler that makes today's service Industrial robots were the next major advancement and manufacturing systems operate productively and in manufacturing automation. It is a programmable meet customer needs better than ever. machine designed to handle materials or tools in the We may categorize technology into two basic performance of a variety of tasks. groups. Hard Technology refers to equipment and Integrated manufacturing systems began to emerge devices that perform a variety of tasks in the creation with computer-aided design, engineering, and and delivery of goods and services. Soft Technology manufacturing systems. CAD/CAE enables engineers refers to the application of the internet, computer to design, analyze, test, simulate, and "manufacture" software, and information systems to provide data, products before they physically exist, thus ensuring information, and analysis and to facilitate the creation that a product can be manufactured to specifications and delivery of goods and services. when it is released to the shop floor. CAM involves computer control of the manufacturing process, such as determining tool movements, and cutting speeds. 10  JUNIOR LEAGUE OF MARKETERS​ NATIONAL UNIVERSITY-CLARK Flexible Manufacturing Systems (FMS) consist of Technology Decisions and Implementation two or more computer-controlled machines or robots linked by automated handling devices such as A key factor that affects technology decisions is transfer machines, conveyors, and transport systems. scalability. Scalability is a measure of the Computers direct the overall sequence of operations contribution margin required to deliver a good or and route the work to the appropriate machine, select service as the business grows and volumes increase. and load the proper tools, and control the operations Contribution Margin is Revenue - Variable Cost. performed by the machine. High Scalability is the capability to serve additional Innovations in technology have changed customers at extremely low incremental costs. As a manufacturing in many industries. You have derivative of high scalability, if a firm establishes a undoubtedly heard of 3-D Printing or sometimes business where the incremental cost to serve more technically called Additive Manufacturing. This is customers is zero, the firm is said to be infinitely the process of producing a three-dimensional object scalable. from a digital model file. On the other hand, Low Scalability implies that 3-D Printing technology has numerous applications. serving additional customers requires high For example, industrial designers can quickly incremental variable costs. produce a physical model from a digital computer-aided design drawing, this is often called Customer-Focused Design Rapid Prototyping and is used extensively in the architecture, industrial design, automotive, aerospace, dentistry, and fashion industries. The technology is The design of a good or a service should reflect the expanding the customer benefit package, allowing customer's wants and needs. Customer requirements, producers and consumers alike to create custom as expressed in the customer's own words, are called products. the "voice of the customer." The design process must translate the voice of the customer into specific technical features that characterize a design and Service Technology provide the blueprint for manufacturing or service delivery. Technology is used in many services, including An effective approach for doing this is called downloading music, banking, automated car washes, Quality Function Deployment (QFD). It is an voice recognition, medical procedures, hotel and approach to guide the design, creation, and marketing airline kiosks, and entertainment. Other service of goods and services by integrating the voice of the technologies are used behind the scenes in hotels, customer into all decisions. QFD can be applied to a hospitals, and retails stores to facilitate service specific manufactured good or service through experiences. initiating a matrix called the House of Quality. Perhaps the most common service technology in use today involves the internet. E-service refers to using Yoji Akao the internet and technology to provide services that create and deliver time, place, information, entertainment, and exchange value to customers Quality Function Deployment (QFD) is a method and/or support the sale of goods. developed in Japan beginning in 1966 to help Technology, especially the Internet and transform the voice of the customer into engineering e-communications, has changed and will characteristics for a product. continuously change tthe operation, speed, and Yoji Akao, the original developer, described QFD as efficiency of the overall value chain and presents a "method to transform qualitative user demands into many new challenges to operations managers. quantitative parameters, to deploy the functions forming quality, and to deploy methods for achieving the design quality into subsystems and component 11  JUNIOR LEAGUE OF MARKETERS​ NATIONAL UNIVERSITY-CLARK parts, and ultimately to specific elements of the Goal-Post Model manufacturing process." The House of Quality, a part of QFD, is the basic The goal post model is a quality view that accepts design tool of quality function deployment. It performance within a specified range, regardless of identifies and classifies customer desires (WHATS), how close it is to the target value. This model is identifies the importance of those desires, identifies similar to the use of goalposts in football, where if engineering characteristics which may be relevant to the extra point goes between the goalposts, it is those desires (HOWS), correlates the two, allows for considered a success. verification of those correlations, and then assigns For most manufactured goods, design blueprints objectives and priorities for the system requirements. specify a target dimension known as the Nominal, along with a range of permissible variations known as House of Quality the Tolerance. For example, 0.500+ 0.020 cm. The nominal dimension is 0.500 cm, but may vary anywhere in the range of 0.480 to 0.520 cm. Tolerance design involves determining the acceptable tolerance. Narrow tolerances improve product functionality but tend to raise manufacturing costs because they usually require higher-precision technology. Wide tolerances, on the other hand, reduce costs but may have a negative impact on product performance. Designers must consider these tradeoffs and should use scientific approaches to optimizing tolerances rather than simply setting them judgmentally. Taguchi Loss Function In contrast, the Taguchi model focuses on minimizing deviation from a target value by associating any deviation with an economic loss. Genichi Taguchi, a Japanese engineer, maintained that the traditional practice of setting design specifications is inherently flawed. The goal-post model assumes that any value within the tolerance range is acceptable, but those outside are not. Using the previous example, realistically, what is the difference between 0.479 and 0.480? Statistically Designing Manufactured Goods insignificant, yet one is acceptable, and the other one is not. For a manufactured good such as an automobile, Taguchi argued that, in reality, neither 0.479 nor computer, or textbook, design involves determining 0.480 is close to the nominal technical specifications such as dimensions, specification. The smaller the variation from the tolerances, materials, and purchased components. nominal specification, the better the quality. In turn, This step also requires coordination with the products are more consistent and fail less frequently, operations managers to ensure that manufacturing thus less costly in the long run. processes can produce the design that is needed. Taguchi measured the quality as the variation from the target value of a design specification and then 12  JUNIOR LEAGUE OF MARKETERS​ NATIONAL UNIVERSITY-CLARK translated the variation into an economic loss meaning any widget weighing between 490 and 510 function that expresses the cost of variation in grams is considered acceptable. Widgets outside this monetary terms. specification limit are rejected, costing the company Taguchi proposed measuring the loss resulting from $50 per rejected widget. the deviation from the target by a quadratic function so that larger deviations cause increasingly larger L(x) = k(x - T)² losses. ​ L(x) = $50; (x-T) = 10; k = unknown constant ​ The Taguchi Loss Function is: 50 = k(10)² L(x) = k(x - T)² 50 = k(100) Where: k = 50/100 L(x) = the monetary value of the loss associated ​ k = 0.50 with the target. L(x) = 0.50(x - 500)² T = the Target x = the actual value of the dimension L(512) = 0.50(512 - 500)² k = constant that translates the deviation into ​ L(512) = 0.50(12)² cash L(512) = 0.50(144) L(512) = $72 Taguchi Loss Function Example #1 The equation is quadratic in nature, indicating that the financial loss increases exponentially as the Suppose a company manufactures widgets, and the deviation from the target value grows. This means target weight for these widgets is 500 grams. The that even small deviations from the target can result company has a tolerance range of ±10 grams, in significant financial losses. meaning any widget weighing between 490 and 510 grams is considered acceptable. Widgets outside this specification limit are rejected, costing the company $50 per rejected widget. ​ L(x) = k(x - T)² L(x) = $50; (x-T) = 10; k = unknown constant ​ 50 = k(10)² 50 = k(100) k = 50/100 k = 0.50 L(x) = 0.50(x - 500)² L(509) = 0.50(509 - 500)² L(509) = 0.50(9)² L(509) = 0.50(81) L(509) = $40.50 Taguchi Loss Function Example #2 Suppose a company manufactures widgets, and the target weight for these widgets is 500 grams. The company has a tolerance range of ±10 grams, 13 JUNIOR LEAGUE OF MARKETERS​ NATIONAL UNIVERSITY-CLARK 14