om section 3 lecturer

8/4/2019 Om Section 3 Lecturer

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Foreign Trade University


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Content Product Design

Process Selection

Capacity Planning


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Product Decision

The good or service the organization provides society

Top organizations typically focus on core products:

Core Competency

Customers buy satisfaction, not just a physical good or

particular service

Fundamental to an organization's strategy with implicationsthroughout the operations function


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Product Decision

Core competency:

- Access to a wide variety of markets- Increase perceived customer benefits

- Hard for competitors to imitate


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Product Strategy Options

Differentiation

Apple

Low cost

Taco Bell

Rapid response

Toyota


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Product and Service DesignProcess

Set of activities:

- Translate customer needs and wants into product and

service requirements;- Refine existing products and services;

- Develop new products and/or services;

- Formulate quality goals;

- Formulate cost target;

- Construct and test prototypes;

- Document specifications


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The Generic Product Development

ProcessPhase 0:Planning

Phase 1:ConceptDevelopment

Phase 2:System-levelDesign

Phase 3:Detail Design

Phase 4:Testing andRefinement

Phase 5:Production Ramp-up

Marketing-Articulate market

opportunity-Define market

segments

-Collect customer

needs.-Identify lead users-Identify

competitive products

-Develop plan for

product options and

extended product

family-Set target sales

price point(s)

-Develop marketing

plan-Develop promotion

and launch materials-Facilitate field

testing

-Place early

production with key

customers

Design-Consider product

platform and

architecture.-Assess new

technologies

-Investigate

feasibility of product

concepts.-Develop industrial

design concepts.-Build and test

experimental

prototypes

-Generate alternative

product

architectures.-Define major

subsystems and

interfaces.-Refine industrial

design

-Define part

geometry.-Choose materials.-Assign tolerances.-Complete industrial

design control

documentation.

-Reliability testing.-Life testing.-Performance

testing.-Obtain regulatory

approvals.-Implement design

changes

Evaluate early

production output.

G


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The Generic Product Development

ProcessPhase 0:Planning

Phase 1:Concept Development

Phase 2:System-level Design

Phase 3:Detail Design

Phase 4:Testing and

Refinement

Phase 5:Production Ramp-up

Manufacturing-Identify production

constraints-Set supply chain

strategy

-Estimate

manufacturing cost.-Assess production

feasibility

-Identify suppliers for

key components.-Perform make-buy

analysis.-Define final assembly

scheme.-Set target costs

-Define piece-part

production processes.-Design tooling.-Define quality

assurance processes.-Begin procurement of

long-lead tooling.

-Facilitate supplier

ramp-up.-Refine fabrication and

assembly processes.-Train work force.-Refine quality

assurance processes.

-Begin operation of

entire production

system.

Other functions-Research:

Demonstrate available

technologies.-Finance: Provide

planning goals.-General

management: Allocate

project resources

-Finance: Facilitate

economic analysis.-Legal: Investigate

patent issues.

-Finance: Facilitate

make-buy analysis.-Service: Identify

service issues.

Sales: Develop sales

plan.


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Designing for the customers

Ideal CustomerProduct

House of quality

Quality Function

Deployment

Value Analysis/

Value Engineering


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Quality Function Deployment An approach to get the voice of the customer into the

design specification of a product.

Use inter-functional teams from marketing, designengineering, and manufacturing

Credited by Toyota Motor Corporation

Reduce costs on its cars by more than 60% (shortening

design times


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Quality Function Deployment

House of Quality

Consumers

needs andpreferences

Customerrequirements

Technicalrequirements


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House of Quality

Customer

Requirements

TechnicalCharacteristics

Important

To Customer

1 2 3 4 ... Competitiveevaluation(Company

and its

competitors)

123 Correlation4...Importance WeightingTarget ValuesTechnical evaluation

Correlation

Matrix


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Value Analysis

Achieve equivalent or better performance at a lower cost while

maintaining all functional requirements defined by the

customer

Does the item have any design features that are notnecessary?

Can two or more parts be combined into one?

How can we cut down the weight?

Are there nonstandard parts that can be eliminated?


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Standardization Extent to which there is absence of variety in a product,

service, or process.

Eg: Computers, milk, automatic car wash services...

Advantages:

- Interchangeable parts => Reduce variety;- Reduce time and cost to train employees, to design jobs,

to schedule job, handle inventory ...

Disadvantages:

- Limit the range of customers;

- A manufacturer may freeze a design prematurely=> high

cost of design changes leads resistance to improvements


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Design for Manufacturing

Traditional Approach

- We design it, you build it or Over the wall

Concurrent Engineering

- Lets work together simultaneously

Computer-Aided Design (CAD)- Use computer graphics to design components and

products to exact measurement and detail


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Measuring Product DevelopmentPerformance

Performance Dimension Measures

Freq. Of new products introduced

Time to market introduction

Number stated and number completed

Actual versus planPercentage of sales from new products

Engineering hours per project

Cost of materials and tooling per project

Actual versus plan

Conformance-reliability in use

Design-performance and customer satisfaction

Yield-factory and field

Time-to-market

Productivity

Quality


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Process Selection

Forecasting

Product and

Service

Design

Technological

Change

Process

Selection

CapacityPlanning

Facilities and

Equipment

Layout

Work Design


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Make or Buy Decisions

Available Capacity

Expertise

Quality Considerations

The nature of demand

Cost


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Process Flow Structure

Job shop (ex. Copy center making a single copy of astudent term paper)

Batch shop (ex. Copy center making 10,000 copies ofan ad piece for a business)

Assembly Line (ex. Automobile manufacturer)

Continuous Flow (ex. Petroleum manufacturer)


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Product Process Matrix


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Capacity Planning

An upper limit that an operating unit can handle. An operating unit might be a plant, department, machine,

store, or worker.

Measurement units: number of cars per shift; gallons of

fuel per day, number of meals served per day...

Questions:

- What kind of capacity is needed?- How much is needed?

- When is it needed?


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Measuring Capacity

Design Capacity: the maximum output that can possibly

be attained (under ideal conditions)

Effective Capacity: the maximum possible output given a

product mix, scheduling difficulties, machine

maintenance, quality factors,...

Actual Output: actual achievement


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Measurement of system effectiveness

- Efficiency = Actual Output / Effective Capacity

- Utilization = Actual Output / Design Capacity

Example:


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Determining Capacity Requirement

Longterm consideration

- Overall level of capacity, eg: facility size

- Forecast trend or cycle

Shortterm consideration

- Probable variations in capacity requirements

- Need for seasonal, random or irregular fluctuations


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Cost Volume Analysis

Also called Break-even analysis

A standard approach to choosing among alternative processes

or equipment

Model seeks to determine the point in units produced (and

sold) where we will start making profit on the process or

equipment

Model seeks to determine the point in units produced (and

sold) where total revenue and total cost are equal


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Cost Volume Analysis

This formula can be used to find any ofits components algebraically if the other

parameters are known

Break-even Demand= Purchase cost of process or equipmentPrice per unit - Cost per unit

orTotal fixed costs of process or equipment

Unit price to customer - Variable costs per unit


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ABR NAMEFC Fixed costAVC Variable cost per unitTC Total costTR Total revenueP Price, revenue per unitQ Quantity or volume of outputQBEP Break-even quantity ProfitMC Marginal costMR

Marginal revenue


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Example

Ha Anh Company wants to make a new product. Cost for

leasing new equipment is $7,000. Variable costs would be

$3 per product, and the product would retail for $8 each.

1. How many products must be sold in order to break

even?

2. What would the profit (loss) be if 1000 products are

made and sold in a month?3. How many products must be sold to realize a profit of

$4000?

om section 3 lecturer

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