Management
Design of Goods and Services
Chapter 5
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Principles of Operations Management, 5e, and Operations 5-1
Management, 7e
Outline
GLOBAL COMPANY PROFILE: REGAL
MARINE
GOODS AND SERVICES SELECTION
Product Strategy Options Support Competitive
Advantage
Product Life Cycles
Life Cycle and Strategy
Product-by-value Analysis
GENERATING NEW PRODUCTS
New Product Opportunities
Importance of New Products
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Principles of Operations Management, 5e, and Operations 5-2
Management, 7e
Outline - continued
PRODUCT DEVELOPMENT
Product Development System
Quality Function Deployment (QFD)
Organizing for Product Development
Manufacturability and Value Engineering
ISSUES FOR PRODUCT DESIGN
Robust Design
Modular Design
Computer-Aided Design (CAD)
Computer-Aided Manufacturing
Virtual Reality Technology
Value Analysis
Environmentally Friendly Design
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Principles of Operations Management, 5e, and Operations 5-3
Management, 7e
Outline - continued
Time-Based Competition
Purchase of Technology by Acquiring Firm
Joint Ventures
Alliances
Defining the Product
Make-or-buy Decisions
Group Technology
DOCUMENTS FOR PRODUCTION
SERVICE DESIGN
Documents for Service
Application of Decision Trees to Product
Design
Transition to Production
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Principles of Operations Management, 5e, and Operations 5-4
Management, 7e
Learning Objectives
When you complete this chapter, you should be able
to :
Identify or Define:
Product life cycle
Product development team
Manufacturabililty and value engineering
Robust design
Time-based competition
Modular design
Computer aided design
Value analysis
Group technology
Configuration management
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Principles of Operations Management, 5e, and Operations 5-5
Management, 7e
Learning Objectives - Continued
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Principles of Operations Management, 5e, and Operations 5-6
Management, 7e
Regal Marine
Global market
3-dimensional CAD
reduced product development time
reduced problems with tooling
reduced problems in production
Assembly line
JIT
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Principles of Operations Management, 5e, and Operations 5-7
Management, 7e
Humor in Product Design
As the customer As Marketing
wanted it. interpreted it.
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Principles of Operations Management, 5e, and Operations 5-8
Management, 7e
What is a Product?
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Principles of Operations Management, 5e, and Operations 5-9
Management, 7e
Product Strategy Options
Product differentiation
Low cost
Rapid response
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Principles of Operations Management, 5e, and Operations 5-10
Management, 7e
Generation of New Product
Opportunities
Economic change
Sociological and demographic change
Technological change
Political/legal change
Changes in
market practice
professional standards
suppliers and distributors
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Principles of Operations Management, 5e, and Operations 5-11
Management, 7e
Legislation/ Implementation Date Stated Purpose Industry Criticism
Electrical-Waste directive Makes electrical equipment Bans some common flame
(2006) easier to recycle in part by retardants, raising the likelihood of
banning some hazardous fires
substances
Telecom-data-protection Protects privacy on e-mail and Makes surfing more onerous by
directive (mid-2003) the internet restricting use of cookies to
remember peoples preferences
Biotech-Labeling laws (2003) Strengthens existing food-label Encourages food processors and
Warning
laws and introduces labeling for supermarkets to avoid using
animal feed containing genetically modified ingredients, and
genetically modified content farmers could stop growing them
Pedestrian-protection Reduces injuries and casualties Raises costs of cars and restricts
initiative (2001-2012) (when in road accidents automakers design freedom
all new cars sold in Europe
must comply)
Chemicals review (staggered Eliminates health hazards due to Restricts even minute use of
through 2012) chemicals dangerous substances, such as
ethanol, in products such as
cosmetics and detergents
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Principles of Operations Management, 5e, and Operations 5-12
Management, 7e
Product Components
Product
Brand Product
Package
(Name) Idea
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Principles of Operations Management, 5e, and Operations 5-13
Management, 7e
Product Life Cycle
Introduction
Growth
Maturity
Decline
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Principles of Operations Management, 5e, and Operations 5-14
Management, 7e
Product Life Cycle
Introduction
Fine tuning
research
product development
process modification and enhancement
supplier development
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Principles of Operations Management, 5e, and Operations 5-15
Management, 7e
Product Life Cycle
Growth
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Principles of Operations Management, 5e, and Operations 5-16
Management, 7e
Product Life Cycle
Maturity
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Principles of Operations Management, 5e, and Operations 5-17
Management, 7e
Product Life Cycle
Decline
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Principles of Operations Management, 5e, and Operations 5-18
Management, 7e
Product Life Cycle, Sales, Cost,
and Profit
Cost of
Development
& Manufacture
Sales Revenue
Sales, Cost & Profit .
Profit
Cash flow
Loss
Time
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Principles of Operations Management, 5e, and Operations 5-19
Management, 7e
Percent of Sales From New Product
50%
45%
40%
35% Industry Leader
30%
25% Top
20% Third Middle
15% Third
10% Bottom
5% Third
0%
Position of Firm in Its Industry
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Principles of Operations Management, 5e, and Operations 5-20
Management, 7e
Products in Various Stages of Life
Cycle
Sales
Growth Maturity
Introduction Roller Decline
Blades Jet Ski
Boeing
Virtual 727
Reality
Time
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Principles of Operations Management, 5e, and Operations 5-21
Management, 7e
Few Successes
Number
2000 Ideas
1750
Market Design review,
1500 requirement Testing, Introduction
1000
Functional
1000 specifications
500 Product
500 specification
One
100 25 success!
0
Development Stage
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Principles of Operations Management, 5e, and Operations 5-22
Management, 7e
Product-by-Value Analysis
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Principles of Operations Management, 5e, and Operations 5-23
Management, 7e
Product Development Stages
Idea generation
Scope of product development team
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Principles of Operations Management, 5e, and Operations 5-24
Management, 7e
Quality Function Deployment
Identify customer wants
Identify how the good/service will satisfy
customer wants
Relate customer wants to product hows
Identify relationships between the firms hows
Develop importance ratings
Evaluate competing products
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Principles of Operations Management, 5e, and Operations 5-25
Management, 7e
QFD House of Quaoity
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Principles of Operations Management, 5e, and Operations 5-26
Management, 7e
House of Quality Sequence Indicates
How to Deploy Resources to Achieve
Customer Requirements
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Principles of Operations Management, 5e, and Operations 5-27
Management, 7e
Idea Generation Stage
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Principles of Operations Management, 5e, and Operations 5-28
Management, 7e
Customer Requirements Stage
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Principles of Operations Management, 5e, and Operations 5-29
Management, 7e
Functional Specification Stage
Defines product in terms of how the
product would meet desired attributes
Identifies products engineering
characteristics
Example: printer noise (dB)
Prioritizes engineering characteristics House of Quality
May rate product compared
to competitors Product
Characteristics
Customer
Requirements
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Principles of Operations Management, 5e, and Operations 5-30
Management, 7e
Product Specification Stage
Determines how product will be made
Gives products physical specifications
Example: Dimensions, material etc.
Defined by engineering
drawing
Done often on computer House of Quality
Computer-Aided
Component
Design (CAD) Specifications
Product
Characteristics
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Principles of Operations Management, 5e, and Operations 5-31
Management, 7e
Quality Function Deployment
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Principles of Operations Management, 5e, and Operations 5-32
Management, 7e
House of Quality Example
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Principles of Operations Management, 5e, and Operations 5-33
Management, 7e
House of Quality Example
Customer Customer
Requirements Importance
Target Values
Average customer
importance rating
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Principles of Operations Management, 5e, and Operations 5-37
Management, 7e
House of Quality Example
Target values for engineering
characteristics (basement);
key output
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Principles of Operations Management, 5e, and Operations 5-40
Management, 7e
Manufacturability and
Value Engineering
Benefits:
reduced complexity of products
additional standardization of products
improved functional aspects of product
improved job design and job safety
improved maintainability of the product
robust design
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Principles of Operations Management, 5e, and Operations 5-41
Management, 7e
Cost Reduction of a Bracket via
Value Engineering
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Principles of Operations Management, 5e, and Operations 5-42
Management, 7e
Issues for Product Development
Robust design
Time-based competition
Modular design
Computer-aided design
Value analysis
Environmentally friendly design
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Principles of Operations Management, 5e, and Operations 5-43
Management, 7e
Robust Design
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Principles of Operations Management, 5e, and Operations 5-44
Management, 7e
Modular Design
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Principles of Operations Management, 5e, and Operations 5-45
Management, 7e
Computer Aided Design (CAD)
Designing products at
a computer terminal or
work station
Design engineer
develops rough
sketch of product
Uses computer to
draw product
Often used with CAM
1995 Corel Corp.
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Principles of Operations Management, 5e, and Operations 5-46
Management, 7e
Benefits of CAD/CAM
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Principles of Operations Management, 5e, and Operations 5-47
Management, 7e
Extensions of CAD
Design for Manufacturing
and Assembly (DFMA)
3-D Object Modeling
CAD/CAM CAD info is
translated into machine
control instructions (CAM)
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Principles of Operations Management, 5e, and Operations 5-49
Management, 7e
Value Analysis
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Principles of Operations Management, 5e, and Operations 5-50
Management, 7e
Environmentally Friendly Designs
Benefits
Safe and environmentally sound products
Minimum raw material and energy waste
Product differentiation
Environmental liability reduction
Cost-effective compliance with environmental
regulations
Recognition as good corporate citizen
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Principles of Operations Management, 5e, and Operations 5-51
Management, 7e
Green Manufacturing
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Principles of Operations Management, 5e, and Operations 5-52
Management, 7e
Time-based Competition
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Principles of Operations Management, 5e, and Operations 5-53
Management, 7e
Product Development Continuum
External Development Strategies
Alliances
Joint Ventures
Purchase Technology or Expertise by Acquiring the
Developer
Internal Development Strategies
Migrations of Existing Products
Enhancement to Existing Products
New Internally Developed Products
Engineering drawing
Shows dimensions, tolerances, &
materials
Shows codes for Group Technology
Bill of Material
Lists components, quantities & where
used
Shows product structure
1984-1994 T/Make
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Principles of Operations Management, 5e, and Operations 5-55
Management, 7e
Monterey Jack
(a) U.S. grade AA. Monterey cheese shall conform to the following requirements:
(1)Flavor. Is fine and highly pleasing, free from undesirable flavors and
odors. May possess a very slight acid or feed flavor.
(2)Body and texture. A plug drawn from the cheese shall be reasonably firm.
It shall have numerous small mechanical openings evenly distributed
throughout the plug. It shall not possess sweet holes, yeast holes, or
other gas holes
(3)Color. Shall have a natural, uniform, bright and attractive appearance.
(4)Finish and appearance - bandaged and paraffin-dipped. The rind shall be
sound, firm, and smooth providing a good protection to the cheese
2-1/2
13/16
1
diameter
13/32
1/4 R
diameter
2-1/4
45 13/16
Scale: FULL
Bracket Drawn: J. Thomas A- 435-038
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Principles of Operations Management, 5e, and Operations 5-57
Management, 7e
Engineering Drawings - Show
Dimensions, Tolerances, etc.
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Principles of Operations Management, 5e, and Operations 5-58
Management, 7e
Bill of Material Example
Bill of Material
P/N: 1000 Name: Bicycle
P/N Desc Qty Units Level
1001 Handle Bars 1 Each 1
1002 Frame Assy 1 Each 1
1003 Wheels 2 Each 2
1004 Frame 1 Each 2
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Principles of Operations Management, 5e, and Operations 5-59
Management, 7e
Bill of Materials Manufacturing Plant
and Fast-Food Restaurant
Bill of Material for a Panel Weldment Hard Rock Cafs Hickory BBQ Bacon
Cheeseburger
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Principles of Operations Management, 5e, and Operations 5-61
Management, 7e
Group Technology Characteristics
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Principles of Operations Management, 5e, and Operations 5-62
Management, 7e 1984-1994 T/Maker Co.
Group Technology Code Example
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Principles of Operations Management, 5e, and Operations 5-63
Management, 7e
Group Technology Schemes
Enable Grouping of Parts
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Principles of Operations Management, 5e, and Operations 5-64
Management, 7e
Group Technology Benefits
Improved product design
Reduced purchases
Reduced work-in-process inventory
Improved routing & machine loading
Reduced setup & production times
Simplified production planning & control
Simplified maintenance
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Principles of Operations Management, 5e, and Operations 5-65
Management, 7e
Production Documents
Assembly Drawing
Assembly chart
Route sheet
Work order
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Principles of Operations Management, 5e, and Operations 5-66
Management, 7e
Assembly Drawing
Shows exploded view of product
Head Neck
End
Cap
Handle
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Principles of Operations Management, 5e, and Operations 5-67
Management, 7e
Assembly Chart for
A Tuna Sandwich
Tuna Fish
1
Tuna
SA1 A1
Assy
2 Sandwich
Mayonnaise
FG
Bread
3 A2
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Principles of Operations Management, 5e, and Operations 5-68
Management, 7e
Assembly Drawing and Assembly
Chart
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Principles of Operations Management, 5e, and Operations 5-69
Management, 7e
Route Sheet
Lists all operations
Route Sheet for Bracket
Sequence Machine Operation Setup Operation
Time Time/Unit
1 Shear # 3 Shear to 5 .030
length
2 Shear # 3 Shear 45 8 .050
corners
3 Drill Drill both 15 3.000
press holes
4 Brake Bend 90 10 .025
press
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Principles of Operations Management, 5e, and Operations 5-70
Management, 7e
Work Order
Authorizes producing a given item, usually to a schedule
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Principles of Operations Management, 5e, and Operations 5-71
Management, 7e
Engineering Change Notice (ECN)
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Principles of Operations Management, 5e, and Operations 5-72
Management, 7e
Configuration Management
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Principles of Operations Management, 5e, and Operations 5-73
Management, 7e
Service Design -
Nature of Customer Participation
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Principles of Operations Management, 5e, and Operations 5-74
Management, 7e
Improving Customer Relations at
a Drive-up Window
Be especially discreet when talking with customer through the
microphone
Provide written instructions for customers who must fill out forms you
provide
Mark lines to be completed or attach a note with instructions
Always say please and thank you
Establish eye contact with the customer if the distance allows it
If the transaction requires that the customer park the car and come
into the lobby, apologize for the inconvenience.
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Principles of Operations Management, 5e, and Operations 5-75
Management, 7e
Moment-of-Truth at a Computer
Company
Experience Detractors Standard Expectations Experience Enhancers
I had to call more than once to Only one local number needs to The operator was
get through. be dialed sincerely concerned and
apologetic about my
A recording spoke to me rather I never get a busy signal
problem
than a person
I get a human being to answer
He asked intelligent
While on hold, I get silence,and my call quickly and he or she is
questions that allowed
wonder if I am disconnected. pleasant and responsive to my
me to feel confident in
problem
The operator sounded like he his abilities
was reading a form of routine A timely resolution to my
The operator offered
questions. problem is offered
various times to have
The operator sounded The operator is able to explain work done, to suit my
uninterested to me what I can expect to take schedule
place
I felt the operator rushed me. Ways to avoid future
problems were
suggested
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Principles of Operations Management, 5e, and Operations 5-76
Management, 7e
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.
Considerations:
Include all possible alternatives and states of nature -
including doing nothing
Enter payoffs at end of branch
Approach determining expected values by pruning tree
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Principles of Operations Management, 5e, and Operations 5-77
Management, 7e
Transition to Production
First issue: knowing when to move to production!
Second: must view product development as
evolutionary, not responsibility of single
individual/department
Third: expect to need a trial production period to work
the bugs out
Fourth: recognize that responsibility must also transition
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Principles of Operations Management, 5e, and Operations 5-78
Management, 7e