Chapter 3

Product Design and Process Selection

What and How to Produce

• Product design is to determine what to produce or to offer.

• Process selection is to determine how the product is produced or offered.

Product Design

• Product design defines all aspect of the product to be offered to customers, such as material, measurement, dimension, specification, appearance, performance, components, …

• Product must be consistent with the Business strategy

• Product design is a joint work of marketing, operation and engineering.

Where the Idea Comes from?

• The driving force of the idea of a new product is customer.

• Competitors are also a source of idea.– Reverse engineering on competitor’s

product

• Suppliers are the third source of idea in product design.

Product Screening

• Evaluating the alternatives of a new product in terms of operation, marketing, and finance, and select one.

Break-Even Analysis

• A technique to compute the amount of goods a company needs to sell to cover the cost.

• At break-even point, QBE, total revenue is equal to total cost.

VCSP

F

cost) able(unit variprice) selling(unit

cost fixed

BEQ

Example (p.61)

• Data about a new line of footwear:– Initial investment: $52,000.– Cost of making each pair: $9.

• If it is sold at $25/pair, how many pairs must be sold to break even?

• If 4,000 pairs were sold, what would be the profit?

B-E Analysis in Product Screening

• For each product in each assumed situation, selling price and fixed cost for example, a break-even amount is calculated.

• By comparing the break-even amounts, the alternative products with low performance can be screened out.

Procedure of Product Design

Step 1 - Idea DevelopmentStep 2 - Product ScreeningStep 3 – Preliminary Design and TestingStep 4 – Final Design

Product Life Cycle

• Four stages of a product life:– Introduction– Growth– Maturity– Decline

Concurrent Engineering

Process Selection

• Process selection is to determine how to organize the production or delivery of the product.

Types of Process

• Intermittent Operation– Is used to produce a variety of products

with different processing requirements in lower volumes.

• Repetitive Operation– Is used to produce one or a few

standardized products in higher volumes.

Facility Layout in Intermittent and Repetitive Operations

Layout of an animal clinic

Alternatives of Process

• Based on product standardization (variety) and product volume:

Project process (unit production);Batch process;Line process;Continuous process.

Production / Customer Interface

• Three alternative strategies for production/customer interface:

Make-to-stockAssemble-to-orderMake-to-order

Considerations in Product and Process design

Process Performance Metrics

Example (p.73)

• Data about Frantz Title Company:– It takes 4 hours to get a title ready on average, in

which the value-added time is about 30 minutes;– During 8 hours working time of an officer, only 6

hours are committed to work, taking lunch and break times out;

– The company processes 8 titles per day on average, with an industry standard of 10 titles for a comparable facility.

• Determine process velocity, labor utilization and efficiency for the company.

Classification of Services

Some Terminologies

• Vertical integration (p.78)

• Outsourcing• Automation (p.80)

• Flexible manufacturing system (FMS) (p.81)

• Numerically controlled machine (p.82)

• Computer-aided design (CAD) (p.83)

• Computer-integrated manufacturing (CIM) (p.83)