Lecture 3 Product and Process Design Issues

07/02/2022
Lecture 3
Product and Service
Design Issues
References:
Lee J Krajewwski, Manoj K Malhotra, Larry P Ritzman, Samir K Srivastava. Operations
Management: Process and Supply Chain (12/e). Pearson, 2019 – Chapter 2
Favorable cost
Access to international markets

Globalization
and Response to changes in demand
Competitiveness
Reliable sources of supply
trade agreements in 1990s
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Risks of Globalization
• Cultural differences
• Supply chain logistics
• Safety, security, and stability
• Quality problems
• Corporate image
• Loss of capabilities
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Cost Quality
Competitive
Priorities
Flexibility Speed
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Strategic Decisions in Operations
Products
Services Process
and
Technology
Human
Resources Quality
Capacity
Facilities Sourcing Operating

Systems
Lecture 3: Product and Process Design Issues 2-5
Make-to- • products and services are made

to customer specifications after
order an order has been received
Operations
Strategy: Make-to- • products and services are made
Products and stock in anticipation of demand
Services
Assemble- • products and services add
options according to customer
to-order specifications
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Project
• one-at-a-time production of a product to customer order
Production Batch production
Strategy: • systems process many different jobs at the same time in

groups (or batches)
Processes
and Mass production
technology • large volumes of a standard product for a mass market
Continuous production
• used for very high volume commodity products
Product-
Process
Matrix
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Continuous Production
A paper manufacturer produces a
continuous sheet paper from wood
pulp slurry, which is mixed, pressed,
dried, and wound onto reels.
Mass Production
Here in a clean room a worker performs
quality checks on a computer assembly line.
Batch Production
At Martin Guitars bindings on the guitar frame are
installed by hand and are wrapped with a cloth
webbing until glue is dried.
Project
Construction of the aircraft carrier USS Nimitz was a huge
project that took almost 10 years to complete.
Professional service
• highly customized and very labor intensive
Service Service shop

Strategy: • customized and labor intensive
Processes
and Mass service
Technology • less customized and less labor intensive
Service Factory
• least customized and least labor intensive
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Service-Process Matrix
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Service Factory
Electricity is a commodity available
continuously to customers.
Mass Service
A retail store provides a standard array of
products from which customers may choose.
Service Shop
Although a lecture may be prepared in advance, its
delivery is affected by students in each class.
Professional Service
A doctor provides personal service to each patient based
on extensive training in medicine.
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1. Global markets, global sourcing, and global

operations
2. Virtual companies
3. Greater choice, more individualism
4. Emphasis on service
Issues and 5. Speed and flexibility
Trends in 6. Supply chains
Operations 7. Collaborative commerce
8. Technological advances
9. Knowledge and ability to learn
10.Environmental and social responsibilities
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Standardized products
Standardization are immediately
available to customers
• Extent to which
Standardization there is an absence
of variety in a
product, service or
process
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Fewer parts to deal with in inventory & manufacturing
Design costs are generally lower
Reduced training costs and time
Advantages of More routine purchasing, handling, and inspection procedures
Standardization Orders fillable from inventory
Opportunities for long production runs and automation
Need for fewer parts justifies increased expenditures on

perfecting designs and improving quality control procedures.
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Designs may be frozen with too

many imperfections remaining.
Disadvantages of High cost of design changes

increases resistance to
Standardization improvements.
Decreased variety results in less

consumer appeal.
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Mass Customization
• Mass customization:
• A strategy of producing standardized goods or services, but
incorporating some degree degree of customization
• Delayed differentiation
• Modular design
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Delayed • Delayed differentiation is a postponement

Differentiation tactic
• Producing but not quite completing a
product or service until customer
preferences or specifications are known
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Lecture 3: Product and Process Design Issues
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Modular Design
Modular design is a form of standardization in which component parts are

subdivided into modules that are easily replaced or interchanged. It allows:
• easier diagnosis and remedy of failures

• easier repair and replacement
• simplification of manufacturing and assembly
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Reliability: The ability of a product, part, or

system to perform its intended function
under a prescribed set of conditions
Failure: Situation in which a product, part,

or system does not perform as intended
Reliability
Normal operating conditions: The set of

conditions under which an item’s reliability
is specified
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Improving Reliability
• Component design
• Production/assembly techniques
• Testing
• Redundancy/backup
• Preventive maintenance procedures
• User education
• System design
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Reliability
Failure: Situation in which a product, part,

Reliability
or system does not perform as intended
• The ability of a product, part, or system
to perform its intended function under a
prescribed set of conditions
• Reliability is expressed as a probability:
• The probability that the product or
system will function when activated
• The probability that the product or
system will function for a given length
of time
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• Finding the probability under the

Reliability– assumption that the system consists of a
When number of independent components
• Requires the use of probabilities for
Activated independent events
• Independent event
• Events whose occurrence or non-
occurrence do not influence one
another
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Lecture 3: Product and Process Design Issues
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Reliability– When Activated

• Rule 1
• If two or more events are independent and success is defined as the probability that all
of the events occur, then the probability of success is equal to the product of the
probabilities of the events
A machine has two buttons. In order for the machine to function, both buttons must work. One
button has a probability of working of .95, and the second button has a probability of working of
.88.
P ( Machine Works)  P ( Button 1 Works)  P ( Button 2 Works)
 .95  .88
 .836
Button 1 Button 2
.95 .88
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• Though individual system components may have high reliabilities, the
system’s reliability may be considerably lower because all
components that are in series must function
• One way to enhance reliability is to utilize redundancy
• Redundancy
• The use of backup components to increase reliability
.98 .90 .95

R = P(A works and B works and C works)
= .98 X .90 X .95 = .8379
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Reliability- When Activated (contd.)

• Rule 2
• If two events are independent and
success is defined as the probability
that at least one of the events will P (Power)  P (Power Co.)  (1 - P( Power Co.))  P (Generator)
occur, the probability of success is
equal to the probability of either one
plus 1.00 minus that probability  .97  (1 - .97)(.90)
multiplied by the other probability
• Example:  .997
• A restaurant located in area that has
frequent power outages has a
generator to run its refrigeration Generator
equipment in case of a power failure.
The local power company has a .90
reliability of .97, and the generator
has a reliability of .90. The
probability that the restaurant will
have power is
Power Co.
.97
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• Rule 3
• If two or more events are P (any Calc.)  1  [(1 - P(Calc.1)  (1  P (Calc. 2)  (1  P (Calc. 3)]
involved and success is
defined as the probability  1  [(1 - .85)(1 - .80)(1 - .75)]
that at least one of them
occurs, the probability of
success is 1 - P(all fail).  .9925
• Example: Calc. 3
• A student takes three .75
calculators (with
reliabilities of .85, .80, and
.75) to her exam. Only one
of them needs to function
for her to be able to finish Calc. 2
the exam. What is the .80
probability that she will
have a functioning
calculator to use when
taking her exam? Calc. 1
.85
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Availability
• Availability
• The fraction of time a piece of equipment is expected to be available for
operation
MTBF
Availability 
MTBF  MTR
where
MTBF  Mean time between failures
MTR  Mean time to repair
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Example– Availability
• John Q. Student uses a laptop at school. His laptop operates 30
weeks on average between failures. It takes 1.5 weeks, on average, to
put his laptop back into service. What is the laptop’s availability?
MTBF
Availability 
MTBF  MTR
30

3 0  1 .5
 .9524
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Differences Tangible – intangible
Between Services created and delivered at the same time
Product Services cannot be inventoried
and Services highly visible to customers
Service Services have low barrier to entry
Design Location important to service
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Desired service
experience
Service Concept Service Package
Targeted
customer Physical Sensual Psychological
items benefits benefits
Performance Specifications
Customer Customer
requirements expectations
Service Customer Design Specifications

Service
Provider
Design Activities Facility

Provider
skills
Cost and time
estimates
Process Delivery Specifications
Schedule Deliverables Location
Service
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Service Design Process
• The service concept defines the target customer and the desired customer experience. It also defines how
a service is different from others and how it will compete in the marketplace. Sometimes services are
successful because their service concept fills a previously unoccupied niche or differs from the generally
accepted mode of operation.
• A service package is created to meet customer needs. The package consists of a mixture of physical items,
sensual benefits, and psychological benefits.
• For a restaurant the physical items consist of the facility, food, drinks, tableware, napkins, and other
touchable commodities. The sensual benefits include the taste and aroma of the food and the sights
and sounds of the people. Psychological benefits are rest and relaxation, comfort, status, and a sense
of well-being.
• Effective service design recognizes and defines all the components of a service package. Finding the
appropriate mix of physical items and sensual and psychological benefits and designing them to be
consistent with each other and the service concept is also important.
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Service Design Process

• From the service package, service specifications are developed for performance, design,
and delivery
• Performance specifications outline expectations and requirements for general and
specific customers. Performance specifications are converted into design specifications
and, finally, delivery specifications (in lieu of manufacturing specifications).
• Design specifications must describe the service in sufficient detail for the desired service
experience to be replicated for different individuals at numerous locations. The
specifications typically consist of activities to be performed, skill requirements and
guidelines for service providers, and cost and time estimates. Facility size, location, and
layout, as well as equipment needs, are also included.
• Delivery specifications outline the steps required in the work process, including the work
schedule, deliverables, and the locations at which the work is to be performed.
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Service
• Something that is done to or for a customer
Service delivery system
Service • The facilities, processes, and skills needed to

provide a service
Design Product bundle

• The combination of goods and services
provided to a customer
Service package
• The physical resources needed to perform the
service
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Service is an act
Service Service delivery system
• Facilities
Design • Processes
• Skills
Many services are bundled with products
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• Service design involves

• The physical resources needed
Service • The goods that are purchased or consumed
Design by the customer
• Explicit services
• Implicit services
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Conceptualize
Identify service
Phases in package components
Service
Determine
performance
specifications
Design Translate performance

specifications into
design specifications
Translate design
specifications into
delivery specifications
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Service blueprinting
Service • A method used in service design to

describe and analyze a proposed
Blueprinting service
A useful tool for

conceptualizing a service
delivery system
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Establish Identify steps

boundaries involved
Identify
Major Steps
Prepare a
flowchart
potential in Service
failure points
Blueprinting
Establish a Analyze
time frame profitability
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Consistent with the organization mission
User friendly
Characteristics Robust
of Well Easy to sustain
Designed Cost effective
Service Value to customers
Systems Effective linkages between back operations
Single unifying theme
Ensure reliability and high quality
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Variable requirements
Challenges Difficult to describe
of Service High customer contact

Design
Service – customer encounter
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Design for environment

• designing a product from material that can
be recycled
Legal, Ethical, • design from recycled material
and • design for ease of repair
• minimize packaging
Environmental • minimize material and energy used during
Issues manufacture, consumption and disposal
Extended producer responsibility

• holds companies responsible for their
product even after its useful life
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Extended producer responsibility (EPR) is a concept that holds companies

responsible for their product even after its useful life. German law mandates
the collection, recycling, and safe disposal of computers and household
appliances, including stereos and video appliances, televisions, washing
machines, dishwashers, and refrigerators. Some manufacturers pay a tax for
recycling; others include the cost of disposal in a product's price.
Design for Eco-labeling gives the seal of approval to environmentally safe products and
encourages informed consumer purchase. , (such as Germany's Blue Angel
Environment designation or the United States’s Energy Star rating)
Carbon footprints measure the amount of carbon dioxide (CO2) and other
greenhouse gases that contribute to global warming and climate change. A
product’s carbon footprint is calculated by estimating the greenhouse gas
emissions from the energy used in manufacturing and transporting the
product along its supply chain, the energy used in stocking and selling the
product, the energy used by the consumer in using the product, and the
energy used to recycle and dispose of the product at the end of its useful life.
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Sustainability, the ability to meet present needs without

compromising those of future generations, is a lofty goal,
but companies worldwide are beginning to discover the
cost savings and consumer goodwill that green practices
provide.
Design for
Environment Design for environment (DFE) involves many aspects of
design, such as designing products from recycled material,
reducing hazardous chemicals, using materials or
components that can be recycled after use, designing a
product so that it is easier to repair than discard, and
minimizing unnecessary packaging. It extends across the
product lifecycle from raw material sourcing to
manufacture to consumer use and end-of-life recycling, re-
use, or disposal.
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• Sourcing: Design for environment begins with using located in close proximity to customers to
less material, using recycled material if possible, minimize transportation and its affect on
using organic material, and using non-toxic greenhouse gas emissions.
materials or chemicals. • The product should have minimal
• The materials should also be renewable, packaging and the boxes or bins used for
not endangered or scarce, and durable, so transportation should be re-usable.
that the product will last.
Green • Suppliers should be vetted to ensure that

their processes are environmentally sound,
and should be located nearby so that
• Consumption: Once the product is in the
consumer's hands, green design affects how
efficiently the product uses energy, how long the
product will last, and if the product can be repaired
Sourcing,
greenhouse gases are minimized in instead of discarded (i.e., the reliability and
transportation. maintainability concepts we discussed earlier in the
• The design should be rationalized so that chapter). At the end of the useful life of the
only the needed features (and thus product, it should be recyclable and easy to
Manufacture, material) are included and so that the

product is saleable and will not end up,
unused, in landfills.
disassemble for that purpose. Finally, the product
should not cause harm to the customer or the
environment (e.g., lead in toys or toxic fumes), and
should serve a useful purpose.
Consumption
• Manufacture: In the manufacturing process, green
design is concerned with the energy needed to
produce the product, whether that energy is
renewable, how much waste or harmful by-
products are generated from the process, and if
that waste can be recycled or by-product disposed
of safely.
• Production should be in the proper
amounts so that inventory is minimized,
and the manufacturing plant should be
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07/02/2022

Access to international markets

trade agreements in 1990s

07/01/2022 Lecture 3: Product and Process Design Issues 2

07/01/2022 Lecture 3: Product and Process Design Issues 4

Strategic Decisions in Operations

Facilities Sourcing Operating

Lecture 3: Product and Process Design Issues 2-5

Make-to- • products and services are made

07/01/2022 Lecture 3: Product and Process Design Issues 6

• one-at-a-time production of a product to customer order

Production Batch production

Strategy: • systems process many different jobs at the same time in

technology • large volumes of a standard product for a mass market

• used for very high volume commodity products

07/01/2022 Lecture 3: Product and Process Design Issues 7

07/01/2022 Lecture 3: Product and Process Design Issues

Lecture 3: Product and Process Design Issues 2-9

Service Service shop

07/01/2022 Lecture 3: Product and Process Design Issues 10

07/01/2022 Lecture 3: Product and Process Design Issues 11

Lecture 3: Product and Process Design Issues 2-12

1. Global markets, global sourcing, and global

07/01/2022 Lecture 3: Product and Process Design Issues 13

Lecture 3: Product and Process Design Issues 07/01/2022 14

Fewer parts to deal with in inventory & manufacturing

Design costs are generally lower

Reduced training costs and time

Advantages of More routine purchasing, handling, and inspection procedures

Standardization Orders fillable from inventory

Opportunities for long production runs and automation

Need for fewer parts justifies increased expenditures on

07/01/2022 Lecture 3: Product and Process Design Issues 15

Designs may be frozen with too

Disadvantages of High cost of design changes

Decreased variety results in less

07/01/2022 Lecture 3: Product and Process Design Issues 16

Lecture 3: Product and Process Design Issues 07/01/2022 17

Delayed • Delayed differentiation is a postponement

Modular design is a form of standardization in which component parts are

• easier diagnosis and remedy of failures

Lecture 3: Product and Process Design Issues 07/01/2022 19

Reliability: The ability of a product, part, or

Failure: Situation in which a product, part,

Normal operating conditions: The set of

Lecture 3: Product and Process Design Issues 07/01/2022 20

LECTURE 3: PRODUCT AND PROCESS DESIGN ISSUES 07/01/2022 21

Failure: Situation in which a product, part,

Lecture 3: Product and Process Design Issues 07/01/2022 22

• Finding the probability under the

Reliability– When Activated

Reliability– When Activated

.98 .90 .95

Reliability- When Activated (contd.)

07/01/2022 Lecture 3: Product and Process Design Issues 26

Reliability– When Activated

07/01/2022 Lecture 3: Product and Process Design Issues 27

07/01/2022 Lecture 3: Product and Process Design Issues 28

07/01/2022 Lecture 3: Product and Process Design Issues 29

Differences Tangible – intangible

Between Services created and delivered at the same time

Product Services cannot be inventoried

and Services highly visible to customers