Product Design

5
PowerPoint presentation to accompany
Heizer and Render
Operations Management, Global Edition, Eleventh Edition
Principles of Operations Management, Global Edition, Ninth Edition

PowerPoint slides by Jeff Heyl

© 2014
© 2014
Pearson
Pearson
Education
Education 5-1
 OUTLINE
▶ Goods and Services Selection
▶ New Product Development
▶ QFD
▶ Organizing for Product Development
▶ Key Isues for Product Design
▶ Documents for Product Definition
▶ Documents for Production
▶ Service Design
▶ Application of Decision Trees to Product Design

© 2014 Pearson Education 5-2

 Goods and Services Selection
► Organizations exist to provide
goods or services to society
► Goods and services selection are
critical to achieving competitive
advantage
► Great products are the key to
success
► Top organizations typically focus
on core products
© 2014 Pearson Education 5-3
 Some Well Known Companies Having
Competitive Advantage Through Their
Products
Honda: engine technology
Microsoft: PC software
Intel: Microprocessors
Michelin: Tires
Dell Computer: Customized hardware
and software and Dell does this very
fast.

© 2014 Pearson Education 5-4

 Product Decision

The objective of the product decision

is to develop and implement a
product strategy that meets the
demands of the marketplace with a
competitive advantage

© 2014 Pearson Education 5-5

 Product Strategy Options
► Differentiation
 Shouldice Hospital in Canada
specializing in hernia operation
► Low cost
► Taco Bell, Wallmart
► Rapid response
 Toyota (product development
under 2 years. Industry standard is
over 2 years)
© 2014 Pearson Education 5-6
 Product Life Cycles

► May be any length from a few

days to decades
► The operations function must be
able to introduce new products
successfully

© 2014 Pearson Education 5-7

 Product Life Cycles
 May be any length from a few hours
(a newspaper), months (cell
phones), years (furnitures), to
decades (Wolgswagen Beetle)
 A product’s life is divided into four
phases:1. Introduction, 2. Growth, 3.
Maturity, 4. Decline
 The operations function must be able
to introduce new products
successfully
© 2014 Pearson Education 5-8
 Importance of New Products
Percentage of Sales from New Products

50%

40%

30%

20%

10%

Industry Top Middle Bottom

leader third third third
Position of Firm in Its Industry Figure 5.2a
© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as 5-9
Prentice Hall
 Product Life Cycle
Cost of development and production
Sales, cost, and cash flow

Sales revenue
Net revenue (profit)

Cash
flow

Negative
cash flow Loss

Introduction Growth Maturity Decline

Figure 5.2

© 2014 Pearson Education 5 - 10

 Life Cycle and Strategy
Introductory Phase
► Fine tuning may warrant
unusual expenses for
1. Research
2. Product development
3. Process modification and
enhancement
4. 3Supplier development

© 2014 Pearson Education 5 - 11

 Product Life Cycle

Growth Phase
► Product design begins to
stabilize
► Effective forecasting of capacity
becomes necessary
► Adding or enhancing capacity
may be necessary

© 2014 Pearson Education 5 - 12

 Product Life Cycle
Maturity Phase
► Competitors now established
► High volume, innovative
production may be needed
► Improved cost control, reduction
in options, paring down of
product line

© 2014 Pearson Education 5 - 13

 Product Life Cycle

Decline Phase
► Unless product makes a special
contribution to the organization,
must plan to terminate offering

© 2014 Pearson Education 5 - 14

 Product-by-Value Analysis
 Lists products in descending order
(from largest to smallest) of their
individual dollar contribution to the
firm
 Lists the total annual dollar
contribution of the product
 Helps management to evaluate
alternative strategies so that limited
existing resourses are to be invested
in few critical and not in many trivial.

© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as 5 - 15

Prentice Hall
 Product-by-Value Analysis
Sam’s Furniture Factory

Individual Total Annual

Contribution ($) Contribution ($)
Love Seat $102 $36,720
Arm Chair $87 $51,765
Foot Stool $12 $6,240
Recliner $136 $51,000

© 2014 Pearson Education © 2011 Pearson 5 - 16

 Quality Function
Deployment (QFD)
1. A planning tool used to fulfill customer
expectations
2. Identify what will satisfy the customer
3. Translate those customer desires into the
TARGET DESIGN
4. Originally developed in Japan in the late
1960s.
5. Now widely used not only in Japan but in
Europe, US and all over the world.
© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as 5 - 17
Prentice Hall
 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

© 2014
© 2011 Pearson
Pearson Education
Education, Inc. publishing as Prentice Hall 5 - 18
 House of Quality Example
Interrelationships

How to Satisfy
Customer Wants

Competitors
Analysis of
What the
Relationship
Customer
Matrix
Wants

What the Technical

Attributes and

customer Evaluation

wants
Customer
importance
rating
(5 = highest)
Lightweight 3
Easy to use 4
Reliable 5
Easy to hold steady 2
Color correction 1

© 2014
© 2011 Pearson
Pearson Education
Education, Inc. publishing as Prentice Hall 5 - 19
 House of Quality Example
Interrelationships

How to Satisfy
Customer Wants

Competitors
Analysis of
What the
Relationship
Customer
Matrix
Wants

Technical
Attributes and
Evaluation

Low electricity requirements

Aluminum components

Auto focus

Auto exposure
How to Satisfy
Paint pallet Customer Wants

Ergonomic design

© 2014
© 2011 Pearson
Pearson Education
Education, Inc. publishing as Prentice Hall 5 - 20
 Four Approaches to Organizing for
Product Development
1) Historically – distinct departments
R&D Dept, Eng. Dept, Mnfg. Eng. Dept,
Prod. Dept.
 Duties and responsibilities are well
defined (Advantage)
 Difficult to foster forward thinking
(Disadvantage)

© 2014 Pearson Education 5 - 21

 Organizing for Product
Development
2) A Champion
To assign a product manager to
champion the product through the
product development system and
related organizations

© 2014 Pearson Education 5 - 22

 Organizing for Product
Development
3) Team approach (Concurrent Engineering)
 Cross functional – representatives from
all disciplines or functions
 Product development teams, design for
manufacturability teams, value
engineering teams
Marketability, manufacturability, serviceability
4) Japanese “whole organization” approach
 No organizational divisions
© 2014 Pearson Education 5 - 23
 Design for
Manufacturability and
Value Engineering
 DESIGN FOR MANUFACTURABILITY AND VALUE
ENGINEERING activities
 reduce complexity of products,
 reduce cost,
 improve functional aspects of product,
 improve maintainability (serviceability) of the
product.
 In short, they help to meet the customer
requirements in an optimal way.
© 2014 Pearson Education 5 - 24
 Design for
Manufacturability and
Value Engineering and Concurrent
Engineering
Concurrent Engineering: Team approach to
design products
Cross functional – representatives from all
disciplines or functions
 Product development teams, design for
manufacturability teams, value
engineering teams
Marketability, manufacturability,
serviceability
© 2014 Pearson Education 5 - 25
 Issues for Product Design
► Robust design
► Modular design

► Computer-aided design (CAD)

► Computer-aided manufacturing

(CAM)
► Virtual reality technology

► Value analysis

► Environmentally friendly design

© 2014 Pearson Education 5 - 26

 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

© 2014 Pearson Education 5 - 27

 Modular Design
► Products designed in easily segmented
components
► Adds flexibility to both production and

marketing
► Improved ability to satisfy customer

requirements

© 2014 Pearson Education 5 - 28

 Computer Aided Design

(CAD)
Using computers to design
products and prepare
engineering documentation
 Shorter development cycles,
improved accuracy, lower
cost
 Supports “mass
customization”
 3-D Object Modeling
Small prototype
development

© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as 5 - 29

Prentice Hall
 Computer-Aided
Manufacturing (CAM)
 Utilizing specialized computers
and program to control
manufacturing equipment
 Often driven by the CAD system
(CAD/CAM)
 CNC Machines

© 2014 Pearson Education © 2011 Pearson Education, Inc. publishing as 5 - 30

Prentice Hall
 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

© 2014 Pearson Education 5 - 31

 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 with less environmental impact
► Note that while Value Engineering focuses on
preproduction design improvement, Value
Analysis takes place during the production
process.

© 2014 Pearson Education 5 - 32

 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
© 2014 Pearson Education 5 - 33
 Guidelines for Environmentally
Friendly Designs
1. Make products recyclable
2. Use recycled materials
3. Use less harmful ingredients
(Using soy-based inks)

4. Use lighter components

Mercedes is using banana plant fiber for car exteriors

Biodegradable and lightweight

5. Use less energy
6. Use less material
© 2014 Pearson Education 5 - 34
 Product Definition
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

© 2014 Pearson Education 5 - 35

 Engineering Drawings

Figure 5.8

© 2014 Pearson Education 5 - 36

 Bills of Material
Figure 5.9 (a) BOM for a Panel Weldment

NUMBER DESCRIPTION QTY

A 60-71 PANEL WELDM’T 1
A 60-7 LOWER ROLLER ASSM. 1
R 60-17 ROLLER 1
R 60-428 PIN 1
P 60-2 LOCKNUT 1
A 60-72 GUIDE ASSM. REAR 1
R 60-57-1 SUPPORT ANGLE 1
A 60-4 ROLLER ASSM. 1
02-50-1150 BOLT 1
A 60-73 GUIDE ASSM. FRONT 1
A 60-74 SUPPORT WELDM’T 1
R 60-99 WEAR PLATE 1
02-50-1150 BOLT 1

© 2014 Pearson Education 5 - 37

 A Product Structure Diagram
Showing BOM

© 2014 Pearson Education 5 - 38

 Documents for Production

► Assembly drawing
► Assembly chart
► Route sheet
► Work order
► Engineering change notices (ECNs)

© 2014 Pearson Education 5 - 39

 Assembly Drawing
► Shows exploded
view of product
► Details relative
locations to show
how to assemble
the product

Figure 5.11 (a)

© 2014 Pearson Education 5 - 40

 Assembly Chart
R 209 Angle
1
Left
R 207 Angle SA bracket Identifies the point of
2 A1
1 assembly
Bolts w/nuts (2)
production where
3 components flow into
R 209 Angle subassemblies and
4 ultimately into the final
Right
5
R 207 Angle SA bracket A2 product
2 assembly
Bolts w/nuts (2)
6
Bolt w/nut
7
R 404 Roller
8 A3
Lock washer Poka-yoke
9 inspection
Part number tag
10 A4
Box w/packing material Figure 5.11 (b)
11 A5

© 2014 Pearson Education 5 - 41

 Route Sheet
Lists the operations and times required to
produce a component

Setup Operation
Process Machine Operations Time Time/Unit
1 Auto Insert 2 Insert Component 1.5 .4
Set 56
2 Manual Insert Component .5 2.3
Insert 1 Set 12C
3 Wave Solder Solder all 1.5 4.1
components
to board
4 Test 4 Circuit integrity .25 .5
test 4GY

© 2014 Pearson Education 5 - 42

 Work Order
Instructions to produce a given quantity of a
particular item, usually to a schedule

Work Order

Item Quantity Start Date Due Date

157C 125 5/2/08 5/4/08

Production Delivery
Dept Location

F32 Dept K11

© 2014 Pearson Education 5 - 43

 Engineering Change Notice
(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

© 2014 Pearson Education 5 - 44

 Service Design
 Service typically includes direct
interaction with the customer
 Increased opportunity for
customization
 Reduced productivity
▶ Service productivity is low partially
because of customer involvement in
the design or delivery of the service,
or both
© 2014 Pearson Education 5 - 45
 Strategies to Improve Service
Efficiency
▶ Limit the options
▶ Improves efficiency and ability to meet customer
expectations (a menu in a restaurant or a series
of photographs in the case of hairstyle)
▶ Delay customization
▶ (Which dressing would you prefer with your salad?)
▶ Modularization
▶ Eases customization of a service (Burger King)

© 2014 Pearson Education 5 - 46

 Strategies to Improve Service
Efficiency
▶ Automation
▶ Reduces cost, increases customer
service (ATM’s)
▶ Moment of truth
▶ Critical moments between the customer
and the organization that determine
customer satisfaction (call center)

© 2014 Pearson Education 5 - 47

 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

© 2014 Pearson Education 5 - 48

 Application of Decision Trees
to Product Design
Procedure
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

© 2014 Pearson Education 5 - 49

 Decision Tree Example
(.4)
Purchase CAD
High sales

(.6) Low sales

Hire and train engineers

(.4)
High sales

(.6)
Low sales
Do nothing

Figure 5.13
© 2014 Pearson Education 5 - 50
 Decision Tree Example
$2,500,000 Revenue
(.4) – 1,000,000 Mfg cost ($40 x 25,000)
Purchase CAD – 500,000 CAD cost
High sales
$1,000,000 Net

$800,000 Revenue
(.6) Low sales – 320,000 Mfg cost ($40 x 8,000)
– 500,000 CAD cost
Hire and train engineers – $20,000 Net loss

(.4)
High sales= (.4)($1,000,000) + (.6)(– $20,000)
EMV (purchase CAD system)

(.6)
Low sales
Do nothing

Figure 5.13
© 2014 Pearson Education 5 - 51
 Decision Tree Example
$2,500,000 Revenue
(.4) – 1,000,000 Mfg cost ($40 x 25,000)
Purchase CAD – 500,000 CAD cost
$388,000 High sales
$1,000,000 Net

$800,000 Revenue
(.6) Low sales – 320,000 Mfg cost ($40 x 8,000)
– 500,000 CAD cost
Hire and train engineers – $20,000 Net loss

(.4)
High sales= (.4)($1,000,000) + (.6)(– $20,000)
EMV (purchase CAD system)
= $388,000
(.6)
Low sales
Do nothing

Figure 5.13
© 2014 Pearson Education 5 - 52
 Decision Tree Example
$2,500,000 Revenue
(.4) – 1,000,000 Mfg cost ($40 x 25,000)
Purchase CAD – 500,000 CAD cost
$388,000 High sales
$1,000,000 Net

$800,000 Revenue
(.6) Low sales – 320,000 Mfg cost ($40 x 8,000)
– 500,000 CAD cost
Hire and train engineers – $20,000 Net loss
$365,000
$2,500,000 Revenue
(.4) – 1,250,000 Mfg cost ($50 x 25,000)
– 375,000 Hire and train cost
High sales
$875,000 Net

$800,000 Revenue
(.6) – 400,000 Mfg cost ($50 x 8,000)
– 375,000 Hire and train cost
Low sales
Do nothing $0 $25,000 Net

$0 Net Figure 5.13

© 2014 Pearson Education 5 - 53