5 - 1© 2011 pearson education, inc. publishing as prentice hall 5 5 design of goods and services...
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5 - 1© 2011 Pearson Education, Inc. publishing as Prentice Hall
55 Design of Goods and Services
Design of Goods and Services
PowerPoint presentation to accompany PowerPoint presentation to accompany Heizer and Render Heizer and Render Operations Management, 10e Operations Management, 10e Principles of Operations Management, 8ePrinciples of Operations Management, 8e
PowerPoint slides by Jeff Heyl
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The objective of the product decision The objective of the product decision is to develop and implement a is to develop and implement a
product strategy that meets the product strategy that meets the demands of the marketplace with a demands of the marketplace with a
competitive advantagecompetitive advantage
Product DecisionProduct Decision
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The good or service the organization provides society
Top organizations typically focus on core products
Customers buy satisfaction, not just a physical good or particular service
Fundamental to an organization's strategy with implications throughout the operations function
Product DecisionProduct Decision
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Product Strategy OptionsProduct Strategy Options
Differentiation Shouldice Hospital
Low cost Taco Bell
Rapid response Toyota
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Product Life CyclesProduct Life Cycles
May be any length from a few hours to decades
The operations function must be able to introduce new products successfully
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Product Life CyclesProduct Life Cycles
Negative cash flow
Introduction Growth Maturity Decline
Sal
es,
cost
, an
d c
ash
flo
w Cost of development and production
Cash flow
Net revenue (profit)
Sales revenue
Loss
Figure 5.1
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Product Life CycleProduct Life Cycle
Introductory PhaseIntroductory Phase
Fine tuning may warrant unusual expenses for
1. Research
2. Product development
3. Process modification and enhancement
4. Supplier development
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Product Life CycleProduct Life Cycle
Growth PhaseGrowth Phase
Product design begins to stabilize
Effective forecasting of capacity becomes necessary
Adding or enhancing capacity may be necessary
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Product Life CycleProduct Life Cycle
Maturity PhaseMaturity Phase
Competitors now established
High volume, innovative production may be needed
Improved cost control, reduction in options, paring down of product line
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Product Life CycleProduct Life Cycle
Decline PhaseDecline Phase
Unless product makes a special contribution to the organization, must plan to terminate offering
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Product Life Cycle CostsProduct Life Cycle Costs
Costs incurred
Costs committed
Ease of change
Concept Detailed Manufacturing Distribution,design design service,
prototype and disposal
Per
cen
t o
f to
tal c
ost
100 –
80 –
60 –
40 –
20 –
0 –
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Product-by-Value AnalysisProduct-by-Value Analysis
Lists products in descending order of their individual dollar contribution to the firm
Lists the total annual dollar contribution of the product
Helps management evaluate alternative strategies
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Product-by-Value AnalysisProduct-by-Value Analysis
Individual Contribution ($)
Total Annual Contribution ($)
Love Seat $102 $36,720
Arm Chair $87 $51,765
Foot Stool $12 $6,240
Recliner $136 $51,000
Sam’s Furniture Factory
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New Product OpportunitiesNew Product Opportunities
1. Understanding the customer
2. Economic change
3. Sociological and demographic change
4. Technological change
5. Political/legal change
6. Market practice, professional standards, suppliers, distributors
Brainstorming
is a useful tool
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Scope of product
development team
Product Development Product Development SystemSystem
Scope for design and engineering
teams
Evaluation
Introduction
Test Market
Functional Specifications
Design Review
Product Specifications
Customer Requirements
Ability
Ideas
Figure 5.3
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Quality Function Quality Function DeploymentDeployment
1. Identify customer wants
2. Identify how the good/service will satisfy customer wants
3. Relate customer wants to product hows
4. Identify relationships between the firm’s hows
5. Develop importance ratings
6. Evaluate competing products
7. Compare performance to desirable technical attributes
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Manufacturability andManufacturability and Value Engineering Value Engineering
Benefits:
1. Reduced complexity of products
2. Reduction of environmental impact
3. Additional standardization of products
4. Improved functional aspects of product
5. Improved job design and job safety
6. Improved maintainability (serviceability) of the product
7. Robust design
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Issues for Product Issues for Product DevelopmentDevelopment
Robust design
Modular design
Computer-aided design (CAD)
Computer-aided manufacturing (CAM)
Virtual reality technology
Value analysis
Environmentally friendly design
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Robust DesignRobust 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
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Modular DesignModular Design
Products designed in easily segmented components
Adds flexibility to both production and marketing
Improved ability to satisfy customer requirements
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Using computers to design products and prepare engineering documentation
Shorter development cycles, improved accuracy, lower cost
Information and designs can be deployed worldwide
Computer Aided Design Computer Aided Design (CAD)(CAD)
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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
Extensions of CADExtensions of CAD
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Computer-Aided Computer-Aided Manufacturing (CAM)Manufacturing (CAM)
Utilizing specialized computers and program to control manufacturing equipment
Often driven by the CAD system (CAD/CAM)
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1. Product quality
2. Shorter design time
3. Production cost reductions
4. Database availability
5. New range of capabilities
Benefits of CAD/CAMBenefits of CAD/CAM
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Virtual Reality TechnologyVirtual 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
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Value AnalysisValue Analysis
Focuses on design improvement during production
Seeks improvements leading either to a better product or a product which can be produced more economically with less environmental impact
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Ethics, Environmentally Ethics, Environmentally Friendly Designs, and Friendly Designs, and
SustainabilitySustainability It is possible to enhance productivity
and deliver goods and services in an environmentally and ethically responsible manner
In OM, sustainability means ecological stability
Conservation and renewal of resources through the entire product life cycle
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Ethics, Environmentally Ethics, Environmentally Friendly Designs, and Friendly Designs, and
SustainabilitySustainability Design
Polyester film and shoes
Production Prevention in production and
packaging
Destruction Recycling in automobiles
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The Ethical ApproachThe 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
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The Ethical ApproachThe Ethical Approach Goals
1. Developing safe end environmentally sound practices
2. Minimizing waste of resources
3. Reducing environmental liabilities
4. Increasing cost-effectiveness of complying with environmental regulations
5. Begin recognized as a good corporate citizen
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Guidelines for Environmentally Guidelines for Environmentally Friendly DesignsFriendly 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
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Time-Based CompetitionTime-Based Competition
Product life cycles are becoming shorter and the rate of technological change is increasing
Developing new products faster can result in a competitive advantage
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Acquiring TechnologyAcquiring 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
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Defining The ProductDefining The Product
First definition is in terms of functions
Rigorous specifications are developed during the design phase
Manufactured products will have an engineering drawing
Bill of material (BOM) lists the components of a product
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Engineering drawing Shows dimensions, tolerances, and
materials
Shows codes for Group Technology
Bill of Material Lists components, quantities and
where used
Shows product structure
Product DocumentsProduct Documents
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Engineering DrawingsEngineering Drawings
Figure 5.8
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Bills of MaterialBills of MaterialBOM for Panel Weldment
NUMBER DESCRIPTION QTY
A 60-71 PANEL WELDM’T 1
A 60-7 LOWER ROLLER ASSM. 1R 60-17 ROLLER 1R 60-428 PIN 1P 60-2 LOCKNUT 1
A 60-72 GUIDE ASSM. REAR 1R 60-57-1 SUPPORT ANGLE 1A 60-4 ROLLER ASSM. 102-50-1150 BOLT 1
A 60-73 GUIDE ASSM. FRONT 1A 60-74 SUPPORT WELDM’T 1R 60-99 WEAR PLATE 102-50-1150 BOLT 1 Figure 5.9 (a)
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Parts grouped into families with similar characteristics
Coding system describes processing and physical characteristics
Part families can be produced in dedicated manufacturing cells
Group TechnologyGroup Technology
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Group Technology SchemeGroup Technology Scheme
Figure 5.10
(a) Ungrouped Parts(b) Grouped Cylindrical Parts (families of parts)
Grooved Slotted Threaded Drilled Machined
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1. Improved design
2. Reduced raw material and purchases
3. Simplified production planning and control
4. Improved layout, routing, and machine loading
5. Reduced tooling setup time, work-in-process, and production time
Group Technology BenefitsGroup Technology Benefits
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Documents for ProductionDocuments for Production
Assembly drawing
Assembly chart
Route sheet
Work order
Engineering change notices (ECNs)
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Assembly DrawingAssembly Drawing
Shows exploded view of product
Details relative locations to show how to assemble the product
Figure 5.11 (a)
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Assembly ChartAssembly Chart1
2
3
4
5
6
7
8
9
10
11
R 209 Angle
R 207 Angle
Bolts w/nuts (2)
R 209 Angle
R 207 Angle
Bolt w/nut
R 404 Roller
Lock washer
Part number tag
Box w/packing material
Bolts w/nuts (2)
SA1
SA2
A1
A2
A3
A4
A5
Leftbracket
assembly
Rightbracket
assembly
Poka-yoke inspection
Figure 5.11 (b)
Identifies the point of production where components flow into subassemblies and ultimately into the final product
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Route SheetRoute Sheet
Lists the operations and times required to produce a component
Setup OperationProcess Machine Operations Time Time/Unit
1 Auto Insert 2 Insert Component 1.5 .4 Set 562 Manual Insert Component .5 2.3
Insert 1 Set 12C3 Wave Solder Solder all 1.5 4.1
components to board
4 Test 4 Circuit integrity .25 .5test 4GY
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Work OrderWork Order
Instructions to produce a given quantity of a particular item, usually to a schedule
Work Order
Item Quantity Start Date Due Date
Production DeliveryDept Location
157C 125 5/2/08 5/4/08
F32 Dept K11
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Engineering Change Notice Engineering Change Notice (ECN)(ECN)
A correction or modification to a product’s definition or documentation Engineering drawings
Bill of material
Quite common with long product life cycles, long manufacturing lead times, or
rapidly changing technologies
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Configuration ManagementConfiguration Management
The need to manage ECNs has led to the development of configuration management systems
A product’s planned and changing components are accurately identified and control and accountability for change are identified and maintained
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Product Life-Cycle Product Life-Cycle Management (PLM)Management (PLM)
Integrated software that brings together most, if not all, elements of product design and manufacture Product design
CAD/CAM, DFMA
Product routing
Materials
Assembly
Environmental
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Service DesignService 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
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Service DesignService Design
Figure 5.12
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Service DesignService Design
Figure 5.12
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Application of Decision Application of Decision Trees to Product DesignTrees to Product Design
Particularly useful when there are a series of decisions and outcomes which lead to other decisions and outcomes
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Application of Decision Application of Decision Trees to Product DesignTrees to Product Design
1. Include all possible alternatives and states of nature - including “doing nothing”
2. Enter payoffs at end of branch
3. Determine the expected value of each branch and “prune” the tree to find the alternative with the best expected value
ProceduresProcedures
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(.6)
Low sales
(.4)
High sales
(.6) Low sales
(.4)
High sales
Decision Tree ExampleDecision Tree Example
Purchase CAD
Hire and train engineers
Do nothing
Figure 5.14
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(.6) Low sales
(.4)
High sales
Decision Tree ExampleDecision Tree Example
Purchase CAD
(.6)
Low sales
(.4)
High sales
Hire and train engineers
Do nothing
Figure 5.14
$2,500,000 Revenue- 1,000,000 Mfg cost ($40 x 25,000)
- 500,000 CAD cost$1,000,000 Net
$800,000 Revenue- 320,000 Mfg cost ($40 x 8,000)- 500,000 CAD cost- $20,000 Net loss
EMV (purchase CAD system) = (.4)($1,000,000) + (.6)(- $20,000)
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(.6) Low sales
(.4)
High sales
Decision Tree ExampleDecision Tree Example
Purchase CAD
(.6)
Low sales
(.4)
High sales
Hire and train engineers
Do nothing
Figure 5.14
$2,500,000 Revenue- 1,000,000 Mfg cost ($40 x 25,000)
- 500,000 CAD cost$1,000,000 Net
$800,000 Revenue- 320,000 Mfg cost ($40 x 8,000)- 500,000 CAD cost- $20,000 Net loss
EMV (purchase CAD system) = (.4)($1,000,000) + (.6)(- $20,000)
= $388,000
$388,000
5 - 57© 2011 Pearson Education, Inc. publishing as Prentice Hall
(.6)
Low sales
(.4)
High sales
(.6) Low sales
(.4)
High sales
Decision Tree ExampleDecision Tree Example
Purchase CAD$388,000
Hire and train engineers$365,000
Do nothing $0
$0 Net
$800,000 Revenue- 400,000 Mfg cost ($50 x 8,000)- 375,000 Hire and train cost
$25,000 Net
$2,500,000 Revenue- 1,250,000 Mfg cost ($50 x 25,000)
- 375,000 Hire and train cost$875,000 Net
$2,500,000 Revenue- 1,000,000 Mfg cost ($40 x 25,000)
- 500,000 CAD cost$1,000,000 Net
$800,000 Revenue- 320,000 Mfg cost ($40 x 8,000)- 500,000 CAD cost- $20,000 Net loss
Figure 5.14
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Transition to ProductionTransition to Production
Know when to move to production Product development can be viewed as
evolutionary and never complete
Product must move from design to production in a timely manner
Most products have a trial production period to insure producibility Develop tooling, quality control, training
Ensures successful production
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Transition to ProductionTransition to Production
Responsibility must also transition as the product moves through its life cycle Line management takes over from design
Three common approaches to managing transition Project managers
Product development teams
Integrate product development and manufacturing organizations