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Production Selection by Ajay K Tomar

Production Selection:
A Strategic Decision:
Production selection is a strategic decision for any organization. Such decisions are long term decisions and the organization commits itself to the product/products selected for a long time to come. What products to produce—in what form and with what features—is very important because many other decisions—for example, the technology used, the capacity of the productive system, the location of the production facilities, the organization of the production function, the planning and control systems, etc are dependent on this. The competitiveness and profitability of a firm depend in part on the design and quality of the products and services that it produces, and on the cost of production. This design of a product or service may make it expensive to produce and a change in design may make it possible to produce the same in a less expensive way. Similarly, one design of a product or service may require large and expensive additions to capacity of some process whereas a change in design may make it possible to produce the same with existing capacity. Production selection is a strategic decision, thereby involves other functional areas like marketing, research and development and as well also the top management therein. The operations management function provides vital inputs regarding the production of the product or service in these decisions making.

The product selection process is a highly integrative process. Thus product function, cost, quality and reliability are some of the inputs to this decision. The producibility of a product/service measures the ease and the speed with which the output can be produced. The specialized equipment, specialized skills and specialized tooling’s, facilitate in switching production from one product to another etc and are thus important factors to assess producibility. It is also important to look at the complete range of products produces because a new product may either use the capacity of processes/sub-processes already established or may require the establishment of capacity of some processes/sub-processes. A family of similar products is much simpler to produce than a family of dissimilar products.

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Design specifications. 2|Page of 10 9760000219 .Production Selection by Ajay K Tomar Main Factors to be Considered in Product Selection: 1. 4. 2. Financial resources. Limitations of space. 7. 3. Availability of raw materials. Relation to other products/models. Product characteristics. 5. Sales reports and sales forecast. 9. 8. 6. Available processes. Type of labour force available.

2. scenario building. Screening means critical evaluation of product ideas to select those that are suitable and viable and reject others. Screening: Ideas are not immediately converted into new products. profitability criteria. technology forecasting etc. Market Research: This can take the form of consumer surveys. they are subjected to a screening process first. They should be consistent with the overall marketing objectives and organizational objectives of the 3|Page of 10 9760000219 . New Idea Generation: These ideas can be generated by using techniques like brainstorming. panel discussions. 3. and company image criteria.Production Selection by Ajay K Tomar Product Selection Process: Output possibilities are generated from many sources: Pure Research Applied Research Marketing Research New Idea Generation Screening Economical Analysis New Product Selection 1. The product ideas should satisfy consumer needs. opinion polls etc. Pure and Applied Research: This can be due to a breakthrough achieved by pure research or applied research in developing new knowledge. 4. sales volume criteria. dealer surveys.

So. the cash flows are discounted to take care of the time value of money and the net present value of all cash flows is obtained—or else the cash flows are used to find an internal rate of return. we undertake a detailed business analysis of the ideas. The economic value of the returns must exceed the economic value of the cost incurred to produce the output. However. since there is a time value of money these cash flows cannot be directly added or subtracted. if the new product or service idea is implemented. 4|Page of 10 9760000219 . Once the screening is over. the measurement of the returns and cost is relatively straight forward and economic analysis in a way becomes synonymous with profitability analysis. Economical Analysis: An economical viability of a new product or service idea ties up most of the concepts that we have talked so far in quantitative terms to the extent possible.Production Selection by Ajay K Tomar company. For commercial organization. rating method of different kinds. 5. Screening is done by check-list method. have to be estimated for the life of the project. The cash flows generated as well as consumed.

creating alternating concepts for the product. Needs Identification: Needs identification must be preceded by idea generation. and estimating logistics requirements for producing. distributing and maintaining the product in the market. it must be demonstrated that. production department or from the engineering section. Advanced Product Planning (Feasibility Study): Advance product planning includes preliminary market analysis. 5|Page of 10 9760000219 . 2.Production Selection by Ajay K Tomar Product Design or New Product Development: A product is anything that is capable of satisfying a felt need. New product development starts with an idea. A new product is the one which is truly innovative and is significantly different from other existing products. Ideas emanate from customers. establishing design criteria and their priorities. and that existing products do not satisfy the need. There are seven distinct stages which are required to develop a new product: Needs Identification Advanced Product Planning Advance Design Detailed Engineering Design Production Process Design and Development Product Evaluation and Improvement Product Use and Support New Product Development or Product Design 1. the new product fulfils some consumer needs. Once a product idea surfaces. staff of the marketing department. clarifying operational requirement. top management.

retail price and so on. the product can be produced at the intended cost and volumes. Promising design alternatives are evaluated according to critical parameters to determine whether design support such as analytical testing. Design for safety to ensure that. would articulate its length. Such joint-efforts would also help design and test new production processes early in the development process. simulations and physical prototypes allow for testing various design alternatives and validate that. and profitability. hence. The engineering process typically involves analysis. shape. joining together. Concept design is finalized by the production and operations personnel. 5) Design for producibility so that. which involves detailed investigation by basic and applied researchers into technical feasibility and also identifying the trade-offs in product design. 3. Since objectives can conflict with each other. materials. experimentation. physical modeling and prototype testing will be required. the product will perform with least physical hazards to the user and the environment. trade-offs are inevitable in the optimal design. 5. Typically. weight. 4. colour. conceptual design of the product shall emerge. Advance planning poses a point of friction between business and technical personnel when solid technical ideas are adjudged to have insufficient business merit and. the product can be economically maintained. and data collection to find designs that meet several design objectives: 1) 2) 3) 4) Design for function to ensure that the product will perform as intended. sizes and so on. The conceptual design for a pen. Advance Design: The next step in product development process is the advance design. fall by the wayside. Production Process Design and Development: 6|Page of 10 9760000219 . Computer analysis. overheads. the final design includes drawings and other documentation as well as a prototype or a trial model of the product. Preliminary market analysis including sales projections and economic analysis including estimates of operating costs of production. Detailed Engineering Design: This stage involves a series of engineering activities to develop a detailed definition of the product. Design for reliability to ensure that the product will perform consistently. experimentation. strength. including its subsystems and components. the final design meets the design objectives. may suggest abandoning a technologically attractive new idea. Design for maintainability so that.Production Selection by Ajay K Tomar At this stage. for example.

It should create a good expression on the customer and generate his confidence regarding durability. engineers and manufacturing specialists prepare plans for material acquisitions. if necessary. Product should be acceptable to customer and should satisfy his needs. information and human resources. warehousing. This is not enough. 7|Page of 10 9760000219 . 7. 3.Production Selection by Ajay K Tomar Armed with the detailed product design. Support systems might: 1) Educate users on specific application of the product. and. technical breakthroughs in materials and equipment and formal research are used to monitor. it needs constant evaluation and improvement. The nature and quality of the materials have significant affect on the design of the product. Product Evaluation and Improvement: After the product has been launched. transportation and distribution. This stage also involves planning for other supporting systems such as controls. Factors Determining the Design of a Product: 1. or 4) Upgrade the product with design improvements. The designer must see that an operator is provided with all possible comforts and product is functionality sound. analyze. The designer must see that an operator is provided with all possible comforts and facilities in handling the separations involved in product design. Product Use and Support: An important stage of product development considers support for consumers who use the product. production. 2. Field performance and failure data. 2) Provide warranty and repair services. redesign the product. quality and performance of the product. 4. 3) Distribute replacement parts. 6.

Therefore. 3.Production Selection by Ajay K Tomar Process Selection: Selection of the process is generally carried out at the design stage along with the material selection. and how much they cost? 2. Sometimes the following information’s may be important for process selection. Obtain all the information’s regarding the components to be manufactured such as quantity. while others may involve near installations. the production capacity should be increased by installing additional equipment. Usually a component they may be available in the plant. 8|Page of 10 9760000219 . it is necessary to decide: 1. Obtain all the possible alternative methods of production on the basic of process analysis. 3. it is assumed that the planning engineer is familiar with the various production processes. quality level specification. At this stage. Time available to meet the delivery date should also be known. 2. with their uses and implications. Obtain all the information’s regarding equipments and personnel’s available within the organization. If only one process is capable to produce the required quality. Selection of the process is primarily based on technological considerations. 1. Under what conditions. the most economic method is to be selected keeping in mind the existing plant capacity and facilities. What are the various functional qualities which can be developed with the existing facilities and what others are to be developed. but such situations exist rarely. then the decision is confined to that only. How do the processes compare cost wise at various production ranges (break even analysis)? This is necessary when processes have to be re-evaluated. The production people must be consulted at the early stage so that they provide reliable information regarding the capabilities of existing facilities.

3. 2. parts lists. Type of Equipment: Generally. Quality of the Product: Product quality determines the quality of component parts and materials which in turn determine the methods and equipments to be used.Production Selection by Ajay K Tomar Factor Influencing Process Design: The following factors should be considered while designing a manufacturing process: 1. more advanced methods of manufacture can be used when the volume of output is large. The number of identical units to be produced exercises important influence on manufacturing design. should be read by the process engineer to determine process design. bills of materials. Process engineers must be constantly alert to near improvements in machine tools and equipment that may be used in the manufacture of the production. Volume of Output: The quantity and rate of production affect the method of production. the process engineer should attempt to design manufacturing processes that are adoptable to and will balance the productive lead of available/existing equipment. drawings. standardization of component parts and product explosion are very important in process designing. Therefore.. Now new methods may also be developed and new machines may be used. etc. specifications. Generally. In multi produced concerns. 9|Page of 10 9760000219 .

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