production design and process

7/30/2019 Production Design and Process

1/39

2007 Wiley

Chapter 3 - Product Design &

Process Selection

Operations Management

by

R. Dan Reid & Nada R. Sanders

3rd Edition Wiley 2007PowerPoint Presentation by R.B. Clough UNH

M. E. Henries - UAA


2/39

2007 Wiley

Learning Objectives Define product design and its strategic

impact on organization

Describe steps to develop a productdesign

Using break-even analysis as a tool in

selecting between alternative products Identity different types of processes

and explain their characteristics


3/39

2007 Wiley

Learning Objectives -

continued Understand how to use a process flowchart

Understand how to use process performance

metrics Understand current technology advancements

and how they impact process and productdesign

Understand issues impacting the design ofservice operations


4/39

2007 Wiley

Product Design Product design the process of defining all of the

companies product characteristics

Product design must supp0ort product manufacturability(the ease with which a product can be made)

Product design defines a products characteristics of;

appearance,

materials,

dimensions,

tolerances, and

performance standards


5/39

2007 Wiley

Design of Services versus

Goods Service design is unique in that the service

and entire service concept are being designed

must define both the service and concept

- Physical elements, aesthetic &

psychological benefits

e.g. promptness, friendliness, ambiance Product and service design must match the needs

and preferences of the targeted customer group


6/39

2007 Wiley

Product & Service Design Product design and process selection

affects

Product quality

Product cost

Customer satisfaction Overall manufacturability the ease

with which the product can be made


7/39

2007 Wiley

The Product Design Process Step 1 - Idea Development

- Someone thinks of a need and a product/service design to satisfy it

e.g. customers, marketing, engineering, competitors,

benchmarking, reverse engineering Step 2 - Product Screening

- Every business needs a formal/structured evaluation process

e.g. fit with facility and labor skills, size of market, contribution margin,

break-even analysis, return on sales

Step 3 Preliminary Design and Testing- Technical specifications are developed, prototypes built, testing starts

Step 4 Final Design

- Final design based on test results, facility, equipment, material, & labor

skills defined, suppliers identified


8/39

2007 Wiley

Product Screening Tool

Break-Even Analysis Computes the quantity of goods

company needs to sell to cover its costs

QBE = F/ (SP - VC)

QBE Break even quantity

F Fixed costs

SP selling price/unit

VC Variable cost


9/39

2007 Wiley

Product Screening Tool

Break-Even Analysis Break-even analysis also includes calculating

Total cost sum of fixed and variable cost

Total cost = F + (VC)*Q

Revenue amount of money brought in fromsales

Revenue = (SP) * Q

Q = number of units sold


10/39

2007 Wiley

Break-Even Analysis: Graphical Approach Compute quantity of goods that

must be sold to break-even

Compute total revenue at anassumed selling price

Compute fixed cost and variablecost for several quantities

Plot the total revenue line andthe total cost line

Intersection is break-even

Sensitivity analysis can be doneto examine changes in all of theassumptions made


11/39

2007 Wiley

Break-even calculation: A company is planning to establish a chain of movietheaters. It estimates that each new theater will cost approximately $1 Million. Thetheaters will hold 500 people and will have 4 showings each day with average ticketprices at $8. They estimate that concession sales will average $2 per patron. Thevariable costs in labor and material are estimated to be $6 per patron. They will be

open 300 days each year. What must average occupancy be to break-even?

Break-Even Point

Total revenues = Total costs @ break-even point Q

Selling price*Q = Fixed cost + variable cost*Q

($8+$2)Q= $1,000,000 + $6*Q

Q = 250,000 patrons (42% occupancy)

What is the gross profit if they sell 300,000 tickets

Profit = Total Revenue Total Costs

P = $10*300,000 (1,000,000 + $6*300,000)P = $200,000

If concessions only average $.50/patron, what is break-even Q now? (sensitivity analysis)

($8.50)Q = 1,000,000 - $6*Q

Q = 400,000 patrons (67% occupancy)


12/39

2007 Wiley

Factors Impacting Product Design Need to Design for

ManufacturingDFM

Series of guidelines to

follow in order to producea product easily and

profitably

Simplification - Minimize

parts

Standardization

Design parts for multiply

applications

Use modular design

Simplify operations


13/39

2007 Wiley

Factor In Product Life Cycle Product life cycle

series of changingproduct demand

Consider product

life cycle stages Introduction

Growth

Maturity

Decline

Facility & processinvestment depends onlife cycle


14/39

2007 Wiley

Concurrent Engineering Old over-thewall sequential

design process should not be used

Each function did its work and passed it to

the next function

Replace with a Concurrent

Engineering process

All functions form a design team working

together to develop specifications, involve

customers early, solve potential problems,

reduce costs, & shorten time to market


15/39

2007 Wiley

Process Selection Product design considerations must

include the process

Two broad process classificationsinclude Intermittent operations produce a

variety of products in lower volumes

Repetitive operations produce one ora few standardized products in highvolume


16/39

2007 Wiley

Process Selection

Process selection is based on fiveconsiderations

Type of process; range from intermittent tocontinuous

Degree of vertical integration

Flexibility of resources Mix between capital & human resources

Degree of customer contact


17/39

2007 Wiley

Process Selection

Process types can be: Project process make a one-at-a-time product

exactly to customer specifications Batch process small quantities of product in

groups or batches based on customer orders orspecifications

Line process large quantities of a standardproduct

Continuous process very high volumes of a fullystandard product

Process types exist on a continuum


18/39

2007 Wiley

Underlying Process RelationshipBetween Volume and StandardizationContinuum


19/39

2007 Wiley

Differences between Intermittentand Continuous Operations

Decision Intermittent Operation Continuous Operation

Product variety Great Small

Degree of standardization Low HighOrganization of resources Grouped by Function Line flow

Path of products Varied, depends on product Line flow

Factor driving production Customer orders Forecast of demand

Critical resource Labor CapitalType of equipment General purpose Specialized

Degree of automation Low High

Throughput time Longer Shorter

Work-in-process inventory More Less


20/39

2007 Wiley

Designing Processes

Process design tools include

Process flow analysis

Process flowchart

Design considerations include

Make-to-stock strategy

Assemble-to-order strategy

Make-to-order strategy


21/39

2007 Wiley

Process Design Tools

Process flow analysis isa tool used to analyze anddocument the sequence ofsteps within a totalprocess. Usually first step

in Process Reengineering. Process Re-

engineering is astructured approachused when majorbusiness changes are

required as a result of: Major new products Quality improvement

needed Better competitors Inadequate

performance


22/39

2007 Wiley

Facility Layout and Process Choice


23/39

2007 Wiley

Process Performance Metrics

Determining if a process is functioningproperly is required

Determination requires measuringperformance

Process performance metrics

measurement of different processcharacteristics that tell us how a process isperforming


24/39

2007 Wiley

Process Performance Metrics


25/39

2007 Wiley

Linking Product Design &Process Selection

Product design and process selection directlylinked

Type of product selected defines type ofoperation required

Type of operation available defines broaderorganizational aspects such as

Equipment required Facility arrangement

Organizational structure


26/39

2007 Wiley

Linking Design & Process Selection

Organizational Decisions appropriate for different types of operations


27/39

2007 Wiley

Intermittent VS. Repetitive Layouts


28/39

2007 Wiley

Product and Service Strategy

Type of operation is directly related toproduct and service strategy

Three basic strategies include Make-to-stock; in anticipation of demand

Assemble-to-order; built from standard

components on order Make-to-order; produce to customer

specification at time of order


29/39

2007 Wiley

Product and Service Strategy Options


30/39

2007 Wiley

Process Decisions-Vertical Integration& Make or Buy

Vertical integrationrefers to the degree a firm chooses to doprocesses itself- raw material to sales Backward Integration means moving closer to primary operations

Forward Integration means moving closer to customers

A firms Make-or-Buychoices should be based on the followingconsiderations: Strategic impact

Available capacity

Expertise

Quality considerations

Speed

Cost (fixed cost + variable cost)make = Cost (fixed cost + Variable cost)buy

Business are trending toward less backward integration, moreoutsourcing


31/39

2007 Wiley

Manufacturing Technology Decisions

Simplify first then apply appropriate technology

Information Technology: ERP, GPS, RFID

Automation

Automated Material Handling:

Automated guided vehicles (AGV)

Automated storage & retrieval systems (AS/RS)

Flexible Manufacturing Systems (FMS)

Robotics & Numerically-Controlled (NC) equipment


32/39

2007 Wiley

E-manufacturing

Web-based environment creates numerousbusiness opportunities to include; Product design collaboration Process design collaboration

Computer-aided design uses computergraphics to design new products

Computer-integrated manufacturing

integration of product design, processplanning, and manufacturing using anintegrated computer system


33/39

2007 Wiley

How Are Services Differentfrom Manufacturing

Services are different frommanufacturing as they;

Produce intangible products

Involve a high degree of customer contact

Type of service is classified according to

degree of customer contact


34/39

2007 Wiley

Designing Services

Service Characteristics

Pure services

Quasi-Manufacturing

Mixed services Service Package

The physical goods

The sensual benefits

The psychologicalbenefits

Differing designs Substitute technology for

people

Get customer involved

High customer attention


35/39

2007 Wiley

Product Design and ProcessSelection Across the Organization

Strategic and financial of product designand process selection mandates

operations work closely across theorganization Marketing is impacted by product that is

produced

Finance is integral to the product designand process selection issues due tofrequent large financial outlays


36/39

2007 Wiley

Product Design and Process SelectionAcross the Organization - continued

Strategic and financial of product design andprocess selection mandates operations work

closely across the organization Information services has to be developed to match

the needs of the production process

Human resources provides important input to the

process selection decisions for staffing needs


37/39

2007 Wiley

Chapter 3 Highlights

Product design is the process of deciding on the uniquecharacteristics and features of a companys productProcess selection is the development of the processnecessary to produce the product being designed.

Steps in product include idea generation, productscreening, preliminary design and testing, and final design

Break-even analysis is a tool used to compute the amountof goods that have to be sold just to cover costs.

Production processes can be divided into two broad

categories: intermittent and repetitive operation project tobatch to line to continuous


38/39

2007 Wiley

Chapter 3 Highlights

Product design and process selection decisions arelinked

Process flow charts is used for viewing the flow of

the processes involved in producing the Different types of technologies can significantly

enhance product and process design. These includeautomation, automated material handling devices,CAD, NC, FMS, and CIM

Designing services have more complexities thanmanufacturing, because service produce anintangible product and typically have a high degreeof customer contact.


39/39

2007 Wil

The End

Copyright 2007 John Wiley & Sons, Inc. All rights reserved.Reproduction or translation of this work beyond that permittedin Section 117 of the 1976 United State Copyright Act withoutthe express written permission of the copyright owner is

unlawful. Request for further information should be addressedto the Permissions Department, John Wiley & Sons, Inc. Thepurchaser may make back-up copies for his/her own use onlyand not for distribution or resale. The Publisher assumes noresponsibility for errors, omissions, or damages, caused by theuse of these programs or from the use of the information

contained herein.

production design and process

Documents