Week 2 ProductDesign

Operations
Management
Chapter 5
Design of Goods
and Services
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 7e
Operations Management, 9e
2008 Prentice Hall, Inc.
51
Learning Objectives
When you complete this chapter you should
be able to :
1.
2.
3.
4.
5.
6.
7.
8.
Define product life cycle

Describe a product development system
Build a house of quality
Describe how time-based competition is
implemented
Describe how products and services are defined
Prepare the documents needed for production
Describe customer participation in the design
and production of services
Apply decision trees to product issues
52
Product Decision
Great products are the keys to success
Top organizations typically focus on core
products
Customers buy satisfaction, not just a physical
good or particular service
An effective product strategy links decisions with
investment, market share, and product life cycle
Objective to develop and implement a product
strategy that meets demands of the marketplace
with a competitive advantage
53
Product Strategy Options

Differentiation
Shouldice Hospital
Low cost
Taco Bell
Rapid response
Toyota
54
Product Life Cycles

Four phases:
Introduction
Growth
Maturity
Decline
May be any length from a few hours to
decades Newspaper; months-PC,
Fashion; years-video tapes; decadesVolkswagen Beetle
The operations function must be able to
introduce new products successfully
55
Product Life Cycles
Sales, cost, and cash flow
Successful product strategies require determining the best strategy for

each product based on its position in its life cycle
Cost of development and production
Sales revenue
Net revenue (profit)
Cash
flow
Negative
cash flow
Introduction
Loss
Growth
Maturity
Decline
Figure 5.1
56
Product Development
System
Ideas
Figure 5.3
Ability
Customer Requirements
Functional Specifications
Scope of
product
development
team
Product Specifications Scope for

design and
Design Review
engineering
teams
Test Market
Introduction
Evaluation
57
Quality Function
Deployment
Identify customer wants
Identify how the good/service will satisfy
customer wants
Relate customer wants to product hows
Identify relationships between the firms hows
Develop importance ratings
Evaluate competing products
58
QFD House of Quality
What the
customer
wants
How to satisfy
customer wants
Relationship
matrix
Competitive
assessment
Customer
importance
ratings
Interrelationships
Weighted
rating
59
QFD House of Quality
5 10
House of Quality Example

Your team has been charged with
designing a new camera for Great
Cameras, Inc.
The first action is
to construct a
House of Quality
5 11
Interrelationships

What the
customer
wants
What the
Customer
Wants
Relationship
Matrix
Analysis of
Competitors
How to Satisfy
Customer Wants
Technical
Attributes and
Evaluation
Customer
importance
rating
(5 = highest)
Lightweight
3
Easy to use
4
Reliable
5
Easy to hold steady
2
Color correction
1
Identifies detailed list of product attributes desired
by customer
Focus groups or
1-on-1 interviews
5 12
Interrelationships
Relationship
Matrix
Technical
Attributes and
Evaluation
Ergonomic design
Paint pallet
Auto exposure
How to Satisfy
Customer Wants
Auto focus
Aluminum components
Low electricity requirements
What the
Customer
Wants
Analysis of
Competitors
How to Satisfy
Customer Wants
Defines product in terms of

how the product would
meet desired attributes
Translates customer
preferences into specific
product characteristics
5 13
Interrelationships

What the
Customer
Wants
High relationship
Medium relationship
Low relationship
Lightweight
Easy to use
Reliable
Easy to hold steady
Color corrections
Relationship
Matrix
Analysis of
Competitors
How to Satisfy
Customer Wants
Technical
Attributes and
Evaluation
3
4
5
2
1
Relationship matrix
5 14
Interrelationships

What the
Customer
Wants
Relationship
Matrix
Analysis of
Competitors
How to Satisfy
Customer Wants
Ergonomic design
Paint pallet
Auto exposure
Auto focus
Aluminum components
Relationships
between the
things we can do
Technical
Attributes and
Evaluation
5 15
Interrelationships

What the
Customer
Wants
Relationship
Matrix
Analysis of
Competitors
How to Satisfy
Customer Wants
Technical
Attributes and
Evaluation
Lightweight
3
Easy to use
4
Reliable
5
Easy to hold steady
2
Color corrections
1
Our importance ratings
22
27 27
32
25
Weighted
rating
5 16
Interrelationships
How to Satisfy
Customer Wants
Relationship
Matrix
Company A
Technical
Attributes and
Evaluation
How well do
competing products
meet customer wants
Lightweight
3
Easy to use
4
Reliable
5
Easy to hold steady
2
Color corrections
1
Our importance ratings
Company B
What the
Customer
Wants
Analysis of
Competitors
G
G
F
G
P
22
P
P
G
P
P
5
5 17
Company B
Company A
Ergonomic design
Paint pallet
Auto exposure
Auto focus
Completed
House of
Quality
Aluminum components
Lightweight
G P
Easy to use
G P
Reliable
F G
Easy to hold steady 2
G P
Color correction
Our importance ratings 22 9 27 27 32 25
5 18
Issues for Product

Development
Robust design
Modular design
Computer-aided design (CAD)
Computer-aided manufacturing (CAM)
Virtual reality technology
Value analysis
Environmentally friendly design
5 19
Robust Design
Product is designed so that small
variations in production or
assembly do not adversely affect
the product
Typically results in lower cost and
higher quality
5 20
Modular Design
Products designed in easily
segmented components
Adds flexibility to both production
and marketing
Improved ability to satisfy customer
requirements
5 21
Computer Aided Design

(CAD)
Using computers to
design products and
prepare engineering
documentation
Shorter development
cycles, improved
accuracy, lower cost
Information and
designs can be
deployed worldwide
5 22
Extensions of CAD
Design for Manufacturing and Assembly
(DFMA)
Solve manufacturing problems during the
design stage
3-D Object Modeling

Small prototype
development
CAD through the

internet
International data
exchange through STEP
5 23
Computer-Aided
Manufacturing (CAM)
Utilizing specialized computers
and program to control
manufacturing equipment
Often driven by the CAD system
(CAD/CAM)
Benefits:
1.
2.
3.
4.
5.
Product quality
Shorter design time
Production cost reductions
Database availability
New range of capabilities
5 24
Virtual Reality Technology

Computer technology used to
develop an interactive, 3-D model of
a product from the basic CAD data
Allows people to see the finished
design before a physical model is
built
Very effective in large-scale designs
such as plant layout
5 25
Value Analysis
Focuses on design improvement
during production
Seeks improvements leading either
to a better product or a product
which can be produced more
economically
5 26
Ethics and Environmentally

Friendly Designs
It is possible to enhance productivity,
drive down costs, and preserve
resources
Effective at any stage of the product life cycle
Design
Production
Destruction
5 27
The Ethical Approach

View product design from a
systems perspective
Inputs, processes, outputs
Costs to the firm/costs to
society
Consider the entire life cycle of

the product
5 28
Goals for Ethical and

Environmentally Friendly
Designs
1. Develop safe and more environmentally
sound products
2. Minimize waste of raw materials and energy
3. Reduce environmental liabilities
4. Increase cost-effectiveness of complying
with environmental regulations
5. Be recognized as a good corporate citizen
5 29
Guidelines for Environmentally

Friendly Designs
1. Make products recyclable
2. Use recycled materials
3. Use less harmful ingredients
4. Use lighter components
5. Use less energy
6. Use less material
5 30
Acquiring Technology
By Purchasing a Firm
Speeds development
Issues concern the fit between the acquired
organization and product and the host
Through Joint Ventures

Both organizations learn
Risks are shared
Through Alliances
Cooperative agreements between
independent organizations
5 31
Product Documents
Engineering drawing
Shows dimensions, tolerances, and
materials
Shows codes for Group Technology
Bill of Material
Lists components, quantities and
where used
Shows product structure
5 32
Engineering Drawings
Figure 5.8
5 33
Bills of Material
Figure 5.9 (a)

5 34
Bills of Material
Hard Rock
Cafes Hickory
BBQ Bacon
Cheeseburger
DESCRIPTION
QTY
Bun
Hamburger patty
Cheddar cheese
Bacon
BBQ onions
Hickory BBQ sauce
Burger set
Lettuce
Tomato
Red onion
Pickle
French fries
Seasoned salt
11-inch plate
HRC flag
1
8 oz.
2 slices
2 strips
1/2 cup
1 oz.
1 leaf
1 slice
4 rings
1 slice
5 oz.
1 tsp.
1
1
Figure 5.9 (b)

5 35
Group Technology
Parts grouped into families with
similar characteristics
Coding system describes
processing and physical
characteristics
Part families can be produced
in dedicated manufacturing cells
5 36
Group Technology Scheme

(a) Ungrouped Parts
(b) Grouped Cylindrical Parts (families of parts)

Grooved
Slotted
Threaded
Drilled
Machined
Figure 5.10
5 37
Documents for Production

Assembly drawing
Assembly chart
Route sheet
Work order
Engineering change notices (ECNs)
5 38
Assembly Drawing
Shows exploded
view of product
Details relative
locations to
show how to
assemble the
product
Figure 5.11 (a)

5 39
Assembly Chart
1
Tuna Fish
SA1
Mayonnaise
Bread
Tuna
Assy
A1
Sandwich
FG
A2
Identifies the point of production where

components flow into subassemblies
and ultimately into the final product
Figure 5.11 (b)
5 40
Route Sheet
Lists the operations and times required
to produce a component
Process
Machine
Operations
Auto Insert 2
2
3
Manual
Insert 1
Wave Solder
Test 4
Insert Component
Set 56
Insert Component
Set 12C
Solder all
components
to board
Circuit integrity
test 4GY
Setup
Time
Operation
Time/Unit
1.5
.4
.5
2.3
1.5
4.1
.25
.5
5 41
Work Order
Instructions to produce a given quantity
of a particular item, usually to a schedule
ng Ord
i
Wo
r
u
t
c
a
f
u
Man
er rk er
Dept Op
Date
:
d
e
v
o
Appr
JM
1984-1994 T/Maker Co.
5 42
Engineering Change Notice

(ECN)
A correction or modification to a
products definition or
documentation
Engineering drawings
Bill of material
Quite common with long product life
cycles, long manufacturing lead times, or
rapidly changing technologies
5 43
Service Design
Service typically includes direct
interaction with the customer
Increased opportunity for customization
Reduced productivity
Cost and quality are still determined at

the design stage
Delay customization
Modularization
Reduce customer interaction, often
through automation
5 44
Service Design
(a) Customer participation in design
such as pre-arranged funeral services
or cosmetic surgery
Service typically includes direct

interaction with the customer
Increased opportunity for customization

Reduced productivity
(b) Customer participation in

delivery such as stress test for
cardiac exam or delivery of a
baby
Cost and quality are still determined at

the design stage
Delay customization
(c) Customer participation in design and
Modularization
delivery such as counseling, college

education, financial management of
personal affairs, or interior decorating
Reduce customer interaction, often

Figure 5.12
through automation
5 45
Application of Decision
Trees to Product Design
Particularly useful when there are a
series of decisions and outcomes
which lead to other decisions and
outcomes
5 46
Application of Decision
Trees to Product Design
Procedures
Include all possible alternatives and
states of nature - including doing
nothing
Enter payoffs at end of branch
Determine the expected value of each
branch and prune the tree to find
the alternative with the best expected
value
5 47
Example of a decision tree in product design

Silicon, Inc., a semiconductor manufacturer, is investigating
the possibility of producing and marketing a microprocessor.
Undertaking this project will require either purchasing a
sophisticated CAD system or hiring and training several
additional engineers. The market for the product could be
either favorable or unfavorable. Silicon, Inc., of course, has
the option of not developing the new product at all.
With favorable acceptance by the market, sales would be
25,000 processors selling for $100 each. With unfavorable
acceptance, sales would be only 8,000 processors selling for
$100 each. The cost of CAD equipment is $500,000, but that
of hiring and training three new engineers is only $375,000.
however, manufacturing costs should drop from $50 each
when manufacturing without CAD, to $40 each when
manufacturing with CAD.
The probability of favorable acceptance of the new
microprocessor is .40; the profitabilityof unfavorable
acceptance is .60.
5 48
Decision Tree Example

(.4)
Purchase CAD
High sales
(.6) Low sales
Hire and train engineers

(.4)
High sales
(.6)
Low sales
Do nothing
Figure 5.14
5 49

(.4)
Purchase CAD
High sales
(.6) Low sales
$2,500,000
- 1,000,000
- 500,000
$1,000,000
$800,000
- 320,000
- 500,000
- $20,000
Revenue
Mfg cost ($40 x 25,000)
CAD cost
Net
Revenue
Mfg cost ($40 x 8,000)
CAD cost
Net loss
(.4)
High sales
EMV (purchase CAD system) = (.4)($1,000,000) + (.6)(- $20,000)

(.6)
Low sales
Do nothing
Figure 5.14
5 50

(.4)
Purchase CAD
$388,000
High sales
(.6) Low sales
$2,500,000
- 1,000,000
- 500,000
$1,000,000
$800,000
- 320,000
- 500,000
- $20,000
Revenue
Mfg cost ($40 x 25,000)
CAD cost
Net
Revenue
Mfg cost ($40 x 8,000)
CAD cost
Net loss
(.4)
High sales
EMV (purchase CAD system) = (.4)($1,000,000) + (.6)(- $20,000)

= $388,000
(.6)
Low sales
Do nothing
Figure 5.14
5 51

(.4)
Purchase CAD
$388,000
High sales
(.6) Low sales

$365,000
(.4)
High sales
(.6)
Low sales
Do nothing $0
$2,500,000
- 1,000,000
- 500,000
$1,000,000
$800,000
- 320,000
- 500,000
- $20,000
$2,500,000
- 1,250,000
- 375,000
$875,000
$800,000
- 400,000
- 375,000
$25,000
$0 Net
Revenue
Mfg cost ($40 x 25,000)
CAD cost
Net
Revenue
Mfg cost ($40 x 8,000)
CAD cost
Net loss
Revenue
Mfg cost ($50 x 25,000)
Hire and train cost
Net
Revenue
Mfg cost ($50 x 8,000)
Hire and train cost
Net
Figure 5.14
5 52

$2,500,000
Revenue
Because the top
the highest
(.4) branch has
- 1,000,000 Mfg cost ($40 x 25,000)
Purchase CAD
Expected Monetary
EMV
ofcost
High sales Value -(an
500,000
CAD
$388,000
Net
$388,000 vs. $365,000 vs $1,000,000
$0), it represent
$800,000should
Revenue
the best decision.
Management
(.6) Low sales
Mfg cost ($40 x 8,000)
purchase the CAD system.-- 320,000
500,000 CAD cost

$365,000
(.4)
High sales
(.6)
Low sales
Do nothing $0
- $20,000 Net loss

$2,500,000
- 1,250,000
- 375,000
$875,000
$800,000
- 400,000
- 375,000
$25,000
$0 Net
Revenue
Mfg cost ($50 x 25,000)
Hire and train cost
Net
Revenue
Mfg cost ($50 x 8,000)
Hire and train cost
Net
Figure 5.14
5 53
Quiz
Michaels Engineering, Inc. manufactures components
for the ever-changing notebook computer business. He
is considering moving from a small custom design
facility to an operation capable of much more rapid
design of components. This means that Michael must
consider upgrading his CAD equipment.
Option 1 is to purchase two(2) new desktop CAD
systems at $100,000 each.
Option 2 is to purchase an integrated system and the
related server at $500,000.
Michaels sales manager has estimated that if the
market for notebook computers continues to expand,
sales over the life of either system will be $1,000,000.
He places the odds of this happening at 40%.
He thinks the likelihood of the market having already
peaked to be 60% and future sales to be only $700,000.
What do you suggest Michael do and what is the EMV
of this decision?
5 54

Week 2 ProductDesign

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Week 2 ProductDesign

Încărcat de

Drepturi de autor:

Formate disponibile

Operations

Define product life cycle

2008 Prentice Hall, Inc.

Product Strategy Options

2008 Prentice Hall, Inc.

Product Life Cycles

Product Life Cycles

Sales, cost, and cash flow

Successful product strategies require determining the best strategy for

Product Specifications Scope for

2008 Prentice Hall, Inc.

2008 Prentice Hall, Inc.

QFD House of Quality

2008 Prentice Hall, Inc.

QFD House of Quality

2008 Prentice Hall, Inc.

House of Quality Example

2008 Prentice Hall, Inc.

House of Quality Example

2008 Prentice Hall, Inc.

House of Quality Example

2008 Prentice Hall, Inc.

Low electricity requirements

Defines product in terms of

House of Quality Example

House of Quality Example

2008 Prentice Hall, Inc.

Low electricity requirements

House of Quality Example

House of Quality Example

Low electricity requirements

House of Quality Example

Easy to hold steady 2

Our importance ratings 22 9 27 27 32 25

2008 Prentice Hall, Inc.

Issues for Product

2008 Prentice Hall, Inc.

2008 Prentice Hall, Inc.

Computer Aided Design

3-D Object Modeling

CAD through the

2008 Prentice Hall, Inc.

Virtual Reality Technology

2008 Prentice Hall, Inc.

2008 Prentice Hall, Inc.

Ethics and Environmentally

The Ethical Approach

Consider the entire life cycle of

Goals for Ethical and

Guidelines for Environmentally

Through Joint Ventures

Figure 5.9 (a)

Figure 5.9 (b)

2008 Prentice Hall, Inc.

Group Technology Scheme

(b) Grouped Cylindrical Parts (families of parts)

Documents for Production

2008 Prentice Hall, Inc.

Figure 5.11 (a)

Identifies the point of production where

2008 Prentice Hall, Inc.

1984-1994 T/Maker Co.

2008 Prentice Hall, Inc.