CHAPTER THREE

DESIGN OF THE
OPERATION SYSTEM
By: Ast-Proefssor-Wendwesen Siyum
Learning objectives
At the end of this chapter you will be
able to
 Define product design and explain its strategic
impact on the organization.
 Describe the steps used to develop a product
design.
 Use break-even analysis as a tool in deciding
between alternative products.
 Identify different types of processes and explain
their characteristics.
 Learning
objectives……………
Define capacity planning.
Define location analysis.
Describe the relationship between capacity
planning and location and their importance
to the organization.
Explain the steps involved in capacity
planning and location analysis.
Production system:
The Concept of Design of the Operation System

 the way a firm acquires inputs then converts and disposes

outputs
Design:
 refers to the process of originating and developing a plan for
a product, service or process
 Product and Service Design

Product design:-
 is deciding on the unique characteristics and features of the company’s product
•Product design and process selection affect;
 product quality,
product cost, and
 customer satisfaction.
•Therefore, to achieve customer satisfaction, product must have the combined
characteristics of good design, competitive pricing, and the ability to fill a market
need
Product Design…
The objectives of product design may vary from situation to situation.
Generally, the objectives/reasons are:
 To introduce new or revised products to the market as quickly as possible;
 To design product that have customer appeal;
 To increase the level of customer satisfaction;
 To reduce costs and;
 To increase quality
 to become competitive by offering new products or services
 to make the business grow and make profit
 to develop new products or services as an alternative to downsizing
etc
Factors Affecting Product Design
 Decision pertaining to the final product design will influence or determine;
the firm’s image profitability, opportunities and the problems it may face in
the future
 Therefore, product designer can require the input of different functional
managers
 production manager’s viewpoint
 a marketing viewpoint
 a financial manager’s view
 a top management view point
 Quality Control View Point
Other Design Considerations
1.Consumer Quality level
2.Standardization:
 is a means of achieve lower production and assembly costs through reducing variety

3.Value analysis and value engineering

Value analysis:
 is a systematic organizational effort to reduce the costs of materials and purchased parts for
producing a product, without sacrificing aesthetic or functional requirements, which is the
(responsibility purchasing).

Value engineering (VE)

 is a systematic method to improve the "value" of goods or products and services by using
an examination of function.
 Value, as defined, is the ratio of function to cost.
 Value can therefore be increased by either improving the function or reducing the cost.
Other Design Considerations ..

4. Product Diversification and Simplification

 Product diversification

 is the explosion of product designs or

 an increase in the types, qualities, sizes, and colors of a particular product.

 Product Simplification,

 is the elimination of the complex features of a product with reduced costs,

higher quality and more custom satisfaction.

 A useful tool in service design is service blueprint
Service Design

Service Blueprint:
 is a method for describing and analyzing a service or proposed service.
 It is tool that provides guidance on how a service will be provided,
specifying the physical evidence, staff actions, and support systems /
infrastructure needed to deliver the service across its different channels.
 A key element of a service blue print is flow chart of the service
Example of service blueprint

.
 Certain steps are common in the development of most product designs.
The Product Design Process

 idea generation

 product screening

 preliminary design & testing and

 final design.
 Product designs are never finished, but are always updated with new ideas .
 Product Design Process…

I. Idea Development
 All product designs begin with an idea.

The idea might come from

A. Internal sources
– a product manager who spends time with customers and has a sense of what customers want,
– from an engineer with a flare for inventions, or

– from anyone else in the company.

B. Sources of Ideas
 customers

 Suppliers
 Competitors : by looking at product design, pricing strategy etc ,
 For example reverse Engineering. using competitors’ ideas, buying a competitor’s new product and
study its design features
Product Design Process…
II. Product Screening

 evaluating likelihood of success of product idea

 the product design idea will be evaluated according to the needs of the
major business functions
 Evaluation executives from each function area.
 .

Product Design Process…

Major Function Area

Operations:-
 production needs of the proposed new product and how to match with existing
resources, facilities and equipment needed
Marketing:-
 potential size of the market for the proposed new product
 The long-term product potential
Finance:-
 new product’s financial potential, cost and return on investment
 Product Design Process…

III. Preliminary Design and Testing

 design engineers translate general performance specifications into
technical specifications
 Prototypes are built and tested
 For service companies involves testing the offering on a small scale and
working with customers to refine the service offering
Product Design Process…

IV. Final Design

 final product specifications are drawn up
 The final specifications are then translated into specific processing
instructions to manufacture the product;
 selecting equipment,
 outlining jobs that need to be performed and
 identifying specific materials needed and suppliers
Process Planning And Process Design
Process:
 Is any part of an organization which takes a set of input resources then used to
transform something into outputs of products or services
 Process planning and design is the complete description of the specific steps in
production
 It involves choice of technology & related issues and
 it has major implications for capacity planning, layout of facilities, equipment,
and design of work systems
 Types of Processes
There are three main categories :

1. Conversion Processes
Is
 the reaction under specific controlled conditions yields products that may hardly look like their parents.

For example, changing iron ore into steel sheets .

2. Fabricating Processes
This
 process involves changing raw materials into some specific form.

For
 example making chair out of wood

3. Assembly processes
it brings together necessary raw materials or components that makeup a product.

For
 examples, assembly automobiles, building construction, house appliances etc.

 
 
Types of process flow structure

 There are basically, four (4) types of processing systems:

1. continuous,

2. assembly line,
3. intermittent and

4. project processing
1. Continues process (product-focused)
 In which production departments are organized according to the type of
product being produced.
 All of the production operation required to produce a product are
ordinarily grouped in to one production department.
 It is also called line flow production or continuous production because; the
product follows a pre-determined sequence of steps
Continues process….

 It produce high volume of standardized output.

 The ultimate continues processing systems produce a single product.

such as
 powder ,
 sugar,
 chemicals,

 liquid, etc
2.Assembly line process (Repetitive process)
 It refers to production of discrete parts moving from workstation to
workstation at a controlled rate, following the sequence steps needed to
build the product
 produces output that allows for some variety;
 products are highly similar but not identical.
 Examples
 include assembly of automobiles, televisions, computers ,calculators,
cameras, appliances/ machine etc.

 Typically, these products are produced in discrete units.

3. Intermittent Processing (Process-focused)

 is used when systems handle a variety of processing requirements on

a start-and stop basis
 i.e. irregular
 This system is characterized by:
 A low volume of output than continuous process
 Require semiskilled or skilled workers who operate the general equipment
 The system is relatively flexible.
 Span of supervision is narrow than in the case of continuous process system.
Intermittent Processing takes two forms:

Batch Processing-
 Produces the same item again and again, usually in a specified lot sizes.
 i.e . each of which is produced in periodic batches, either to customers order or
for inventory.

Job shop process-

 Used to handle/produce small batches/lots of a large number of different
products that require a different set or sequence of processing steps
 Examples
 Commercial printing firms,
 publication
4. Projects

 Projects are set up to handle complex jobs consisting of unique sets

of activities that must be completed in a limited time span.
 Examples:

 of application include large or unusual construction projects, new

product development or promotion and so on.
 This process in characterized by:
 high variable cost

 Involves the manufacture of a single, one-of-a kind product

 High skilled manpower
1. Batch size and product variety
 This factor includes the amount of product variety and the volume to be
demanded of each product model

2. Capital requirements for process Designs

3. Economic analysis- includes:
 Cost function of processing alternatives 
 Concept of operating leverage
 Break even Analysis (BEA)
STRATEGIC CAPACITY PLANNING

 Capacity can be defined as ability to produce certain out put with in a

specified time period or the rate of out put that can be achieved from a
process.
 Capacity is also a product design specification
Important Concepts of Capacity Decisions
Design Capacity
 It represents the maximum output that can be achieved in a specific time period under
ideal condition

Effective Capacity
 It represents the maximum output per unit time given a particular product mix, labour
skills, product quality level, material quality, available maintenance, and time between
setups
Important Concepts of Capacity Decisions….

Actual or Operating Capacity

 It is the average output per unit of time over a preceding time period adjusted

to reflect actual reject levels and scheduling and maintenance losses.

Capacity Measures
 the two measures frequently cited to justify investments in equipment and
processes are:

1. Efficiency and

2. Utilization
Cont…

 Efficiency is a measure of the use of effective capacity in producing a

particular result.  

 Efficiency = actual output per time period

Effective capacity per time period

 Utilization is a measure relating design capacity to output

 Utilization = actual output per time period
Design capacity per time period
Factors Influencing Effective Capacity

 The major factors affecting effective capacity are the following.

 Product Design
 Layout of facilities
 Job design
 Out put standards
 The quality of and variation
 Employee attitude and motivation
 External factors.
 Operational factors:( Inventory stocking decisions, late deliveries,
acceptability of purchased materials)
 Capacity planning decisions
Capacity planning normally involves the following steps.
1. Assessing existing capacity

2. Forecasting capacity needs

3. Identifying alternative ways to modify capacity

4. Evaluating financial, economical and technological capacity alternatives.

5. Selecting a capacity alternative the most suited to achieving strategic

mission.
Evaluating Capacity Alternatives

1. Break-Even Analysis
2. Decision Tree
Facility Location & Layout
4.4.1 Facility Layout
 facility layout is to locate people, machines, and processes in an optimal
time-saving and money saving relationship that meets the anticipated
production level
 It refers to the arrangement of departments, work centers and equipment
with a particular emphasis on movement of work through the system.
Objectives of Facility layout

 layout is to provide a smooth work flow and control;

 reducing cost of material through the factory or uncomplicated
pattern for both consumers and workers in a service
organization.
  Provide enough production capacity
Specific objectives of layout decision for manufacturing firm

 Minimize material handling cost and effort

 Minimize labour requirements
 Provide a smooth flow of materials and product
 Provide for volume and product flexibility
 Maximize the uses of machine tools
 Maximize output
 Minimize health hazards etc
Specific objectives of layout decision for service operations

 provide for customer comfort and convenience

 allow attractive display
 reduce travel of personnel and customers
 provide for private in work areas
 promote communication
Basic Types of Layouts
 There are four basic types of plant or facility layouts.
 The basic difference among these layouts is in their handling of the flow of
materials and product
1. Process layout /for job-shops/
2. Product or Line Layout
3. Cellular Manufacturing (CM) Layouts’
4. Fixed position Layout
Basic Types of Layouts…

i. Process layout /for job-shops

 It is concerned with the grouping of machines, processes or services
according to their function
 i.e. similar equipments or functions are grouped together.
 For example, map-reading, typing, shipping etc are activities that require
such types of arrangements
 Basic Types of Layouts…

ii.Product or Line Layout

 It is the sequence of production or assembly operation required for
producing a part or a product
 Eg cement, oil refining, auto assembly and the so on
. Basic Types of Layouts…

Iii).Cellular Manufacturing (CM) Layouts’

 Machines are grouped into cells

 this layout groups dissimilar machines into work centers (or cells) to work
on products that have similar shapes and processing requirements
Basic Types of Layouts…

Iv)Fixed position Layout

 The product by virtue of its bulk or weight remaining at one location,
 It minimizes the amount of product movement required
 For example, Shipbuilding, dam construction, power generating (steam)

turbines, bridge etc which are (bulky, large, heavy, and fragile).
Developing and Analyzing Facility Layouts
 Important inputs to the layout decision are:
 Specification of objectives of the system in terms of output and flexibility
 Estimation of product or service demand on the system
 Processing requirements in terms of number of operations and amount of
flow between departments and work centers.
 Space availability with in the facility itself.
.
 Reading Assignment
 Try to identify the Major Advantages
and Disadvantages of four facility layouts i.e
1. (Process layout /for job-shops/
2. Product or Line Layout
3. Cellular Manufacturing (CM) Layouts’
4. Fixed position Layout
 Facility Location

 Facility location is the process of determining a geographic

site for a firm’s operations.
 The selection of location is a key-decision because improper
location of plant may lead to waste of all the investments
made in building and machinery, equipment
 The purpose of the location study is to find an optimum
location result in the greatest advantage to the organization.
Facility location…
 Globalization allows companies greater flexibility in their location choices
 However, in practice, the question of location is very much linked to two
competitive imperatives
 The need to produce close to the customer due to time based competition,
trade agreements, and shipment costs
 The need to locate near the appropriate resource pool to take advantage of
low costs
 
The Need for location Decisions
 Some of the reasons for such decisions (other than the need for greater capacity).
 Opportunity for expanding market share
 Business growth in demand
 Depletion of Basic resources =if existing resources depleted
 Operating Costs = particular location reach a point where other location begin to
look more attractive. In this case, the company may shift to a cost effective
location.  
 Shift in Market /demand
 Merge of companies
 Introduction of new product
Factors Affecting Location Decisions
(A) Regional factors
 Business Climate.
 Total Costs.
 Infrastructure
 Quality of Labor
 Suppliers
 Location of raw materials
Factors Affecting Location Decisions …..

B. Community Considerations
 a number of factors determine the desirability of a community as a peace for its
workers and managers to live. They include:
 Facilities for education, shipping, recreation transportation , religious workshop,
entertainment, the quality of policy and medical services
 attitude towards the company
 The size of the community
 Cost and availability of utilities
 Environmental regulations
 Taxes and
 Existence of development support or incentive.
 Job Design and Work Measurement
 Job design: is planned structuring of work effort performed by an individual
or a team of persons
 Good job designs must answer
 what work is to be performed
 who is to perform the work
 where the work is to be done
 when the work is to be done
 why the job is necessary and how should the work be accomplished.

 Job designers usually attempt to minimize the amount of physical human

effort.
 Cont…
 job design has two basic elements, a human element and a work element.
 The objective of job design is :
 to develop work assignments that meet the requirements of the
organization and the technology
 To satisfy the personal and individual requirements of the job holder.
Cont…
Degree of Labor Specialization
 Specialization of labor is the two-edged sword of job design
 Advantages of specialization to management
 rapid training of the workforce
 ease in recruiting new workers
 high output due to simple and repetitive work
 low wages due to ease of substitutability of labor and
 Close control over work flow and workloads.
 Disadvantages to Management

 difficulty in controlling quality since no one person has responsibility for

the entire product

 hidden' costs of worker dissatisfaction

Disadvantages to Labor

(a) Boredom stemming from repetitive nature of work

(b) little satisfaction from the work

(c) little or no control over the work place leading to frustration and fatigue

(d) little opportunity to progress to a better job

(e) little opportunity to show initiative through developing better methods

or tools
 Work Measurement

 It is determining the amount of time required to perform a unit of work

 It may be used to determine the standard number of minutes that a
qualified properly trained, and experienced person should take to perform a
specific task or operation when working at a normal pace
 makes available the necessary data for effective planning and scheduling
 provides a basis for wage and salary administration for devising sound
incentive schemes.
basic steps
Work Measurement Procedure

Select the work to be studied.

Record all the relevant data

Measure each element in terms of time over a sufficient number of cycles of activity

to ensure that a representative picture has been obtained.

Examine the recorded data and time elements critically to ensure that unproductive or

random elements are separated from productive elements; also examine the recorded

times of each element and determine a representative time for each.

Compile (bring together )a time for the operation will provide a realistic standard of

performance

Define precisely the series of activities and method of operation for which the time has

been allowed and issue the standard time for the activities and methods specified.
Cont…
 Techniques of Work Measurement
 Time study
 Work sampling: Estimates percent of time a worker spends on various
tasks
 Pre-determined motion-time system (PMTS):-Divide manual
work into small basic elements that have established times
 Analytical estimating
 Synthesis from standard data
 MOST(Maynard Operation Sequence Technique) :- is to
calculate the cycle time for an operation based on Pre-
determined time study data
Time Study
 Time study is a technique for determining as accurately as possible from a
limited number of observations, the time necessary to carry out a given
activity at a defined standard of performance.
 One of the primary methods of work measurement, is the stop watches
technique of time study
 The operation to be studied is divided into small elements each of these
elements and the the times are added together to get the total selected time
for performing the operation(normal time).
Time Study Procedure
1. Select the job to be studied (short cycle or long cycle, repetitive or non-
repetitive).
2. Record all the information about the job, the operator and the surrounding
conditions which are likely to affect carrying out of the work
3. Measure with a stop watch the time for each element repeated for sufficient
number of cycles

4. Rating is a comparison of actual performance with some standard notion or

normal performance
Normal performance (or pace) is the working rate of the average worker working
under capable supervision but without the stimulus of an incentive wage plan
CHAP3 End
 Thanks