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CA5104
Operations Management and Total
Quality Management
(Quiz 2)
☆☆☆☆☆
Module 3: Product and Service Design
★ What product and service design do (2T)
★ Key Questions (2T)
★ Reasons for Product and Service Design or
Redesign (4T)
★ Idea Generation, Legal and Ethical
Consideration (4T)
★ Environmental Factors: Sustainability (4T)
★ The Three Rs (2T, 2A)
★ Design for Standardization, Mass
Customization, Robust Design, Degree of
Newness, QFD (6T)
★ Phases in Product Design and
Development (2T)
★ Design for Production (2T)
★ Service Design (4T)
★ Phases in the Service Design Process,
Well-designed Service Systems (3T)
☆ What does Product & Service Design Do?
(2T)
1. Translate customers wants and needs
into product and service requirements
2. Refine existing products and services
3. Develop new products and services
4. Formulate quality goals
5. Formulate cost targets
6. Construct and test prototypes
7. Documents specifications
8. Translate product and services
specifications into process specifications
9. Involve inter-functional collaboration
☆ Key Questions of Product and Service
Design (2T)
1. Is there a demand for it?
- Market Size
- Expected Demand Profile (short, long
term, slow or quick growth?)
2. Can we do it?
- Manufacturability, capability of an
organization to produce an item at an
acceptable profit
- Serviceability, capability of an
organization to provide a service at an
acceptable cost or profit
3. What Level of Quality is Appropriate?
- Customer Expectations
- Quality of competitors’ products or
services
- Fit with the current offering
4. Does it make sense from an economic
standpoint?
- Potential liability issues,
- Ethical considerations,
- Sustainability issues,
- Costs and profits
☆ Reason to Design or Redesign (4T)
- Product or service design has a strategic
implications for an organization’s success
as well as the impact on its future
activities
- The main forces for designing/redesign are
market opportunities and threats.
Changes contributions for threats and
opportunities:
1. Economic - low demand, excessive
warranty claims, need to reduce cost
2. Social and Demographic - population
shifts, aging baby boomers
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3. Political, Liability, or Legal - 3. Competitor-based - motivation to

government changes, safety issues, new improve products or services from
regulations competitors. An organization can glean
4. Competitive - new or improved products many ideas by studying a competitor’s
or services, new ads/promotion products or services and even how the
5. Cost or Availability - raw materials, competitors operate
components, labor, water and energy Reverse Engineering, dismantling and inspection
6. Technological - product components, of competitors products in order to search for ways
processes to improve their own
A focus on technological changes includes: 4. Research-based - input comes from
(a) New Technology that can be used directly organized efforts directed toward
in a product or service increasing scientific knowledge and
(b) Advances in processing technology product or process innovation.
require the redesign of products to make
them compatible with new technology Research - Based
(c) Blockchain technology, a new way of Research and Development (R&D)
exchanging information with a middleman - organized efforts to increase scientific
(d) Combination of the Internet of Things knowledge or product innovation
(IoT) with other leading technologies like Basic Research
AI and Blockchain - objective of advancing the state of
(e) Advances in Healthcare knowledge about a subject without any
(f ) Generative Adverserial Networks pits near-term expectation or commercial
neutral network against each other in order application
to train one of them to produce new Applied Research
things - objective of achieving commercial
applications
☆ Idea Generation, Legal and Ethical Developments
Considerations (4T) - converts the results of applied research
Idea Generation into useful commercial applications
- ideas for a new or redesigned products can
come from variety of sources including; Legal Considerations
1. Customers - surveys, focus groups, Product Liability
complaints, and unsolicited suggestions for - responsibility a manufacturer has for any
improvement injuries or damages caused by faulty
2. Supply-Chain - suppliers, distributors, product design
and employee obtained through Some of the concomitant/accompanying costs:
interviews, direct and indirect suggestions, 1. Litigation
and even complaints 2. Legal and Insurance costs
3. Settlement Cost

4. Costly product recalls
5. Reputation Effects
Uniform Commercial Code
- products carry an implication
merchantability and fitness.
product should be useable for its intended
purposes
Ethical Consideration
Designers are often under pressure to
- Speed up the design process
- Cut Costs
These pressures force trade-off decisions
- What if the product has bugs ?
- Release the product and risk damage to
your reputation
- Work out bugs and forego (to let go)
revenue
Guidelines that designers must adhere to:
- Design products should be consistent with
the goals of the organization
- Give the customer the value they expect
- Prioritize safety and health (of workers
especially)
☆ Environment Factors : Sustainability (4T)
Sustainability
- using resources in ways that do not harm
ecological systems that support human
existence
Key Aspect of Designing for Sustainability
1. Cradle-to-Grave Assessment (Life-Cycle
Assessment)
- The assessment of the environment impact
of a product or service throughout its
useful life
- Focuses on Global Warming, Smog
Formation, Oxygen Depletion, Solid waste
generation
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- LCA procedures is part of ISO 14000
environmental management procedures
- its goal is to choose a products and services
of that have the least environmental impacts
The while still taking into account economic
considerations
- takes into account impacts in every phase
of a product’s life cycle (raw - disposal, all
stages)
2. End-of-life Programs
- Deals with products, that have reached the
end of their useful lives
- Purpose is to reduce the dumping of
products, particularly electronic
equipment
- It is usually dumped in landfills,
third-world countries, incineration that
converts materials intro hazardous air and
water emissions and generate toxic ash
☆ 3. The Three R’s (2T, 2A)
- Three particular aspects of potential cost
saving and reducing environmental impact
- Reduce, Reuse, Recycle
1. Reduce the use of Materials
Value Analysis
- examination of the function or parts and
materials in an effort to reduce the cost
and/or improve the performance of a
product
2. Re-Use
Remanufacturing
- refurbishing used products by replacing
worn-out or defective components
- It can also be performed by the original
manufacturer or another company
Reasons to Remanufacture
- It can be sold for about 50% of the cost of a
new product
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- only requires mostly unskilled and incorporating some degree of

semiskilled workers customization in the final product service
- European lawmakers increasingly
requiring manufacturers to take back used Facilitating Techniques:
products Delayed Differentiation
Design for Disassembly (DFD) - process of producing, but not quite
- designing a product to that used products complete
can be easily taken apart - prioritize customer preferences
3. Recycle - It is a postponement tactic ( gawa ka ng
- recovering materials for future use furniture, pero wag mo muna lagyan ng
- It applies to manufactured parts and design, yung customer mamimili kung
materials used during production anong design )
Why Recycle? Modular Design
- Cost Savings - form of standardization in which
- Environmental concerns component parts are grouped into
- Environmental regulations modules that are easily replaced or
- In Europe, it must show that a specified interchanged
proportion of their products are recyclable Advantages:
Design for Recycling (DFR) - easier diagnosis and remedy of failures
- Product design that takes into account the - easier repair and replacement
ability to disassemble a used product to - simplification of manufacturing and
recover the recyclable parts. assembly
- training costs are relatively low
☆ Design for Standardization, Mass Disadvantage:
Customization, Reliability, Robust Design, - Limited number of product configurations
Degree of Newness, QFD (6T) - Limited ability to repair a faulty module;
the entire module must often be scrapped
Standardization
- Extent to which there is an absence of Reliability
variety in a product, service, or process - The ability of a product, part, or system
- Products are made in large quantities of to perform its intended function under a
identical items prescribed set of conditions
- Every customer or item processed receives - Reliabilities are always specified with
essentially the same service respect to certain conditions
Failure
Mass Customization - Situation in which product, part, or system
- A strategy of producing basically does not perform as intended
standardized goods or services, but Normal Operating Conditions
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- set of conditions under which an items Quality Function Deployment (QFD)

reliability is specified - integrates the “voice of the customer”
into both product and service
Robust Design development
- design that results in products or services - purpose is to ensure that customer
that can function over a broad range of requirements are factored into every aspect
conditions of the process
- More robust a product or service, the less - Listening and Understanding customer
likely it will fail due to a change in the is the central of QFD
environment in which it is used or in
which it is performed ☆ Phases in Production Design and
- It aims to produce a design that are Development (2T)
insensitive to different sources of 1. Feasibility Analysis
variation 2. Product Specifications
- Originates in Taguchi’s Quality 3. Process Specifications
Engineering Framework 4. Prototype Development
- Dr. Genichi Taguchi 5. Design Review
6. Market Test
7. Product Introduction
8. Follow-up Evaluation

☆ Designing for Production (2T)

Concurrent Engineering
- bringing engineering design and
manufacturing personnel together early in
designing phase
- Involves manufacturing, marketing, and
Degree of Newness purchasing personnel in loosely integrated
- Product or service design changes cross-functional teams
1. Modification of an existing product or - Views of suppliers and customers may also
service be sought
2. Expansion of an existing product line or - Its purpose is to achieve product design
service offering that reflect customer wants as well as
3. Clone of a competitor's product or service manufacturing capabilities
4. New product or service Computer-Aided Design (CAD)
- the degree of changes affects the newness - product design using computer graphics
of the product or service to the market and - CAD that includes finite element
to organization analysis (FEA) can significantly reduce
- Risk and benefits ? time to market
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- Enables developers to perform simulation - (operations and marketing)

that aid in the design, analysis, and 4. Translate performance specifications into
commercialization of new products design specifications
5. Translate design specifications into delivery
☆ Service Design (4T) specifications.
Service
- refers to an act, something that is done to ☆☆☆☆☆
for a customer Module 4: Strategic Capacity Planning for
- It is provided by a service delivery Products and Services
system, which includes facilities, ★ Definition of Capacity and Key Questions
processes, and skills needed to provide the (2T)
service ★ Capacity Decisions are Strategic (2T)
- It begins with a choice of service strategy, ★ Defining and Measuring Capacity (2T)
which determines the nature and focus of ★ Determinants of Effective Capacity (3T)
the service, and the target market ★ Strategy Formulation (2T)
- many are a part of a product bundle or ★ Forecasting and Calculating Processing
the combination of goods and services Requirements (2T)
provided to a customer
Key issues in Service Design ☆ Definition of Capacity and Key Questions
1. Degree of variation in service (2T)
requirements Capacity Planning
2. Degree of customer contact and Capacity
involvement - the upper limit or ceiling on the load
- These two issues have an influence on the that an operating unit can handle.
degree to which the service can be The load might be in terms of
standardized or must be customized. - Number of physical units produced
- The lower the degree of customer contact - Number of services performed
and service requirements variability, the The operating unit might be a
more standardized a certain service is - plant,
- department,
☆ Phases in the Service Design Process, - machine,
Well-designed Service Systems (3T) - store, or
1. Conceptualize - worker.
- Idea Generation, Assessment of customer Capacity needs include
wants/needs (marketing), Assessment of - Equipment
demand potential (marketing) - Space
2. Identify service package components needed - Employee skills
- (operations and marketing) Goal of Strategic Capacity Planning
3. Determine performance specifications

- The goal is to achieve a match between the
long-term supply capabilities of an
organization and the predicted level of
long-term demand.
Results of gaps in capacity:
Over capacity → operating costs that are too high
Under capacity → strained resources and possible
loss of customers
The main reasons why organizations involve in
capacity planning are:
(a) changes in demand,
(b) changes in technology,
(c) changes in the environment, and
(d) perceived threats or opportunities.
Capacity Planning Questions
Key questions:
- What kind of capacity is needed?
- How much is needed to match demand?
- When is it needed?
Related questions:
- How much will it cost?
- What are the potential benefits and risks?
- Are there sustainability issues?
- Should capacity be changed all at once, or
through several smaller changes
- Can the supply chain handle the
necessary changes?
☆ Capacity Decisions Are Strategic (2T)
Importance of capacity planning
1. Impact the ability of the organization to
meet future demands
2. Affect operating costs
3. Are a major determinant of the initial cost
4. Often involve a long-term commitment of
resources
5. Can affect competitiveness
6. Affect the ease of management
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7. Have become more important and
complex due to globalization
8. Need to be planned for in advance due to
their consumption of financial and other
resources
☆ Defining and Measuring Capacity (2T)
- Measure capacity in units that do not
require updating
- Why is measuring capacity in dollars
problematic?
Two useful definitions of capacity
Design capacity
- The maximum output rate or service
capacity an operation, process, or facility is
designed for
- The design capacity is the maximum rate
of output achieved under ideal
conditions.
Effective capacity
- Design capacity minus allowances such as
personal time and maintenance
- Effective capacity is always less than
design capacity owing to the realities of
changing product mix, the need for
periodic maintenance of equipment, lunch
breaks, coffee breaks, problems in
scheduling and balancing operations, and
similar circumstances.
- Actual output cannot exceed effective
capacity and is often less because of
machine breakdowns, absenteeism,
shortages of materials, quality problems as
well as other factors that are outside the
managers’ control.
☆ Main Determinants of Effective Capacity
(3T)
1. Design

- including layout, size, location,
and provision for expansion of
facilities
2. Product and service factors
- like the uniformity of output and
product or service mix
3. Process factors
- including quantity capability,
output quality, and productivity.
4. Human factors
- such as tasks, variety of activities,
employee training, skill,
experience, and motivation.
5. Policy factors
- such as management policy
regarding overtime, second or
third shifts
6. Operational factors
- such as scheduling, materials
management, quality assurance,
maintenance policies, and
equipment breakdowns
7. Supply chain factors
- such as the impact on suppliers,
warehousing, transportation, and
distribution
8. External factors
- like product standards, safety
regulations, unions, and pollution
control standards
☆ Strategy Formulation (2T)
Strategies are typically based on assumptions
and predictions about:
(a) Long-term demand patterns
(b) Technological change
(c) Competitor behavior
These capacity strategies typically involve
- The growth rate and variability of demand
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- The costs of building and operating
facilities of various sizes
- The rate and direction of technological
innovation
- The likely behavior of competitors
- Availability of capital and other inputs
☆ Forecasting and Calculating Processing
Requirements (2T)
Forecasting Capacity Requirements
- Long-term considerations relate to the
overall level of capacity requirements.
- Require forecasting demand over a time
horizon and converting those needs into
capacity requirements.
- Short-term considerations relate to
probable variations in capacity
requirements.
- Less concerned with cycles and trends than
with seasonal variations and other
variations from the average.
- An organization can identify seasonal
patterns using standard forecasting
techniques.
- Seasonal variations, previously thought
of as annual, are also reflected in monthly,
weekly, and even daily capacity
requirements.
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facilities, and relocation of existing

- Irregular variations are difficult or operations. At this point, a decision must
impossible to predict. be made on whether to make or buy a
They are caused by: good or provide or buy a service.
(a) major equipment breakdowns,
(b) freak storms that disrupt normal routines,
(c) foreign political turmoil that causes oil
shortages,
(d) the discovery of health hazards, etc.

Calculating Processing Requirements

- Calculating processing requirements
requires reasonably:
(a) accurate demand forecasts,
(b) standard processing times, and
(c) available work time
Formula:

A reasonable approach to determining capacity

requirements is to
1. obtain a forecast of future demand,
2. translate demand into both the quantity
and the timing of capacity requirements,
3. and then decide what capacity changes
(increase, decrease, or no changes) are
needed.
- Long-term capacity alternatives include
the expansion or contraction of an existing
facility, opening or closing branch