What Does Product and Service Design Do?

Translate customer wants needs into product and service design requirements(Marketing, Operation)

Refine existing product and/or service. (Marketing) Develop new products and/or service. (Marketing, Operation) Formulate cost Goal. (Marketing, Operation) Formulate cost targets. (Accounting, Finance, Operation) Construct and test prototypes. (Operation, Marketing, Engineering) Document specifications. Translate product and service specification into Process specification.

(Engineering, Operations)Product and service design involves or affect nearly every functional area of an

organization however, marketing and operation have major involvement.

Reasons for Product and Service Design or Redesign:

Product and Service design has typically had strategic implication for the access and prosperity of an organization, it has an impact on future activities. Organization become more involve in product and service or redesign for variety to market opportunities and treats can be more changes.

Legal and Ethical Consideration:

Product Liability: The responsibility of a manufacturer for any injuries or damages caused by a faulty product.

Uniform Commercial Code: Products carry an implication of merchantability and fitness.

Sustainability:

Sustainability of Product and Service design is a focal point in the quest for sustainability. The key aspects include life cycle assessment, reducing of cost and materials used, reuse of parts of return product and recycle.

Life Cycle Assessment:

Is the assessment of the environmental impact of a product or service throughout its useful life, focusing in such factors goals warming (The amount of carbon dioxide released into the atmosphere)

The Three R’s

Reduce Value Analysis Examination:

Is the examination of function of parts and materials in an effort to reduce cost and/or improve product performance.

Remanufacturing:

Refurbishing used products by replacing worn-out or defective components. And reselling the products.

Recycle:Recycling means to recovering materials for future use. This only applies not only in manufactured parts but also to materials use during production, such as lubricants and solvents.

Companies Recycle for a variety of reasons, including:

1. Cost savings.2. Environment concerns.3. environment regulations.This are referring to product design that takes into account the ability to disassemble a used product to recover the recyclable parts.

Degree of Standardization:

Refers to the extent to which there is absence of variety in a product, service, or process. Standardized products are made in large quantities of identical items. And it carries a number of important benefits as well as certain disadvantages. Standardized means interchangeable parts, which greatly lower cost of product while increasing productivity and making replacement or repair relatively easy compared with that of customized parts.

The Advantage and Disadvantage of standardization.

Advantage: Fewer parts to deal with in inventory and in manufacturing. Reduced training costs and time. More routine purchasing handling, and inspection procedures. Orders fillable from inventory. Opportunities for long production runs and automation.

Disadvantage: Design may be frozen with too many imperfections remaining. High cost of design changes increases resistance to improvements. Decreased variety results in less consumer appeal.

Designing for Mass Customization:

A Strategy of producing basically standardized goods, but incorporating some degree of customization.

Delayed differentiation:

The process of producing, but not quite completing, a product or service until costumer preferences are known.

Modular design:

A form of standardization in which component parts are grouped onto modules that are easily replace or interchanged.

Reliability:

the ability of a product, part, or system to perform its intended function under a prescribed set condition.

Failure:

Situation in which a product, part or system does not perform as intended.

Normal operating conditions:

the set of condition under which an item’s reliability is specified.

Robust Design:

design that result in products or services that can function over a broad range of condition.

The Phases in Production design and development:

Idea Generation: Supply Chain base- “costumers, suppliers, distribution, employment, and maintenance and repair personnel can provide valuable insights.

Feasibility Analysis: Entails market analysis (demand), economic analysis (Development cost and production cost, profit potential), and technical analysis (capacity requirements and availability, and the skills needed).

Product Specifications: this involves detailed descriptions of what is needed to meet (or exceed) costumer wants, and requires collaboration between legal, marketing and operations.

Prototype Development: with product and process specifications complete, one (or few) units are available are made to see if there are any problems with the product or process specifications.

Design Review: make any necessary changes, or abandon. Involves collaboration among marketing, finance, engineering, design, and operations.

Market Test: a market test is used to determined the extent of consumer acceptance. If unsuccessful, return to the design review phase.

Product Introduction: promote the product. This phase is handled by marketing

Follow-up-evaluation: determined if changes are needed, and refine forecasts. This phase is handled by marketing.

The System Design:

this are the studying a competitor’s product or services and how the competitor operates (Pricing, Policies, Return Policies, Location Strategic, etc), an organization can glean many ideas. Beyond that some companies purchase a competitor’s product and then carefully dismantle and inspect it.

Reverse Engineering- dismantling and inspecting a competitor’s product to discover product improvements.

Research and Development- (R&D) organize efforts to increase scientific knowledge or product innovation.

Design for production:

its a design techniques that have a greater applicability for the design of products than the design of the services.

Current engineering:’ bringing engineering design and manufacturing personnel together early in the design phase.

Computer-Aided Design (CAD):

uses of computer graphics for product design, components to exact measurement and detail.

Service Design: something that is done to or for a costumer Service Delivery System: the facilities processes, and skills needed to

provide a service. Product bundle: the combination of goods and services to a costumer

Service Package: the physical resources needed to perform the service, the accompanying goods, and explicit and implicit service included.

Service Blueprint:

A method used in service design to describe and analyze a proposed service.

What is Capacity:

The upper limit or ceiling on the load that an operating unit can handle

Capacity decisions are strategic:

Are among the most fundamental of all the design decision that managers must make. In fact, capacity decision can be critical for an organization:

Capacity decision have a real impact on the ability of the organization to meet future demands for product and services.

Capacity decision affect operating cost. Ideally capacity and demand requirements will be method, which will tend to minimize operating cost.

Capacity is usually a major determined of initial cost. Typically, the greater the capacity of a productive unit, the greater the cost

Capacity decision often involve long term commitment of resources and the fact that once they are implemented, those decision may be difficult or impossible to modify without incurring major cost.

Capacity decision can affect competitiveness. If a firm has excess capacity, or can quickly add capacity, that fact may serve as a barrier to entry by other firms.

Capacity affect the ease of management; having appropriate capacity makes management easier than when capacity is mismatched.

Design capacity:

The maximum designed service capacity or output rate.

Effective capacity:

Design capacity minus personal and other allowances.

The two useful measures of system effectiveness:

Efficiency- is the ratio of actual output to effective capacity Capacity Utilization- is the ratio of actual output to design capacity.

Actual OutputEfficiency = x 100%

Effective Design

Actual OutputUtilization= x 100%

Design Capacity

Capacity cushion:

Extra capacity used to offset demand uncertaintySteps in the Capacity Planning Process

Estimate future capacity requirements Evaluate existing capacity and facilities and identify gaps Identify alternatives for meeting requirements Assess key qualitative issues for each alternatives Select the alternative to pursue that will be best in the long term Implement the selected alternative Monitor results

The forecasting Capacity Requirements

It involve the long term and short term consideration. The long-term relate to overall level of capacity such as facility size, while short-term consideration relate to probable variation in capacity requirement created by such a thing as seasonal, random and irregular fluctuations in demand

Long-term: capacity needs require forecasting demand over a time horizon and the converting those forecast into capacity requirements.

Short-Term: capacity need less concerned with cycles or trends that with seasonal variation and other variation from average.

Developing capacity alternatives:

Design Flexibility into systems- the long-term nature of many capacity decisions and the risk inherent in long-term forecast suggest its potential benefits from designing flexible systems

Take stage of life cycle into account- Capacity requirements are often closely linked to the stage of the life cycle that a product or service is in.

Take a “big-picture” (i.e systems) approach to capacity changes- when developing capacity qlternatives, it is important to consider how parts of the system interrelate.

Bottleneck Operation- an operation in a sequence of operations whose capacity is lower that of the other operation

Prepare to deal with capacity “chunks”- Capacity increases are often acquired in fairly large chunks rather than increments, making it difficult to achieve

a match between desired capacity and feasible capacity Attempt to smooth out capacity requirements- unevenness in capacity

requirements also can create certain problems. For instance, during periods of inclement weather, public transportation ridership tends to increase substantially relative to periods of pleasant weather.

Identify the optimal operating level- production units typically have an ideal or optimal level of operation in terms of unit cost of output

Choose strategy if expansion is involved- consider weather incremental expansion or single step is more appropriate. Factors include competitive pressures, market opportunities, cost and availability of funds, disruption of operations, and training requirements.

Economic scale:

If the output is less than the optimal level, increasing the output rate results in decreasing average unit costs.

Diseconomies of scale:

If the output rate is more than the optimal level, increasing average unit costs.

Constraint Management:

Is something that limits the performance of a process or system in achieving its goals.

The 7 categories of constraints:

Market: Insufficient demand

Resources: Too little of one or more resources Material: Too little of one or more materials Financial: Insufficient funds Supplier: Unreliable, long lead time, substandard quality Knowledge or competency: needed knowledge or skills missing or

imcomplete Policy: Laws or regulations interfere

Financial analysis:

A common approach is to use financial analysis to rank investment proposal, taking into account the time value of money

2 important term in financial analysis:

Cash-flow- refers to difference between the cash received from sales (of goods or services) and other sources (e.g...,sale of old equipment) and the cash flow for labor, material, overhead and taxes.

Present value- expresses in current value the sum of all future cash flow of an investment.

The 3 most commonly use of financial analysis are payback, present value, internal rate of return.

Payback- focuses on length of time it will take for an investment to return its original cost

Present value(PV)- the summarizes the initial cost of an investment, its estimated annual cash flows, and any expected salvage value in single value called the equivalent current value, taking into account the time value of money.

Internal rate of return(IRR)- summarize the initial cost, expected annual cash flows, and estimated salvage future salvage value of an investment proposal in an equivalent interest rate.

Simulation:

Simulation can be a useful tool in evaluating “what-if” scenarios. Simulation is describe on the book web site.The basic categories “Decision environment” such as certainty, risk and uncertainty:

Certainty- environment in which relevant parameters have know values Risk- environment in which certain future events have probable outcomes.

Uncertainty- environment in which it is impossible to assess the likelihood of various future events.

The decision making under uncertainty:

Maximin- chooses the alternative with the best of the worst possible payoffs. Maximax- choose the alternative with the best possible payoffs. Laplace- choose the alternative with the best average payoffs of any of the

alternatives Maximax regret- choose the alternative that has the least of the worst

regrets.

Expected monetary value (EMV) criterion: Determined the expected payoff of each alternative, and choose the alternative that has the best expected payoffs.

Decision Trees:

Is a schematic representation of the alternatives available to a decision maker and their possible consequences.

Expected value of perfect information(EVPI):

The difference between the expected payoff with perfect information and the expected payoff under risk.

Sensitivity analysis:

Determining the range of probability for which an alternative has the best expected payoff.

Technological innovation:

The discovery and development of new or improved products, services or processes for producing or providing them

Technology:

The application of scientific discoveries to the development and improvement of products and services and operations processes.

The 3 different kinds of technology:

Facilities and equipment

layout

Work designed

Product and service design

forecasting

Technological change

Operations management is primarily concerned with three kinds of technology, all of which can have a major impact on costs, productivity, and competitiveness:

Product and service technology: is the discovery and development of new products and services. This is done mainly by researcher and engineers, who use the scientific approach to develop new knowledge and translate that into commercial application.

Process technology: includes methods , procedures and equipment used to produce goods and provide services. This not only involves processes within a organization, it also extend to supply chain processes.

The process of selection and capacity planning influence system design.

Process types:

Job shop- it usually operate on relatively small scale. It is uses when a low volume of high-variety goods and services will be needed. Processing is intermittent: work includes small jobs, each with somewhat different processing requirement.

Batch- is used when a moderate volume of goods or services is desired, and it can handle a moderate variety in products or services.

Repetitive- when higher volumes of more standardized good or services are needed, repetitive processing is used.

Continuous- when a very high volume of nondiscrete, highly standardized output is desired, a continuous system is used, these system have almost variety in output and hence, no need for equipment flexibility.

Product or service profiling:

Linking key product or service requirements to process capabilities.

Capacity planning

Process selection

Automation Machinery:

That has sensing and control devices that it to operate automatically.

The general speaking, there are three king of automation:

Fixed-automation- it uses high cost, specialized equipment for a fixed sequence of operations. Low cost and high volume are its primary advantages; minimal variety and the high cost of making major changes in either product or process are its primary limitation.

Programmable automation- is at the opposite end of the spectrum. It involves the use of high-cost, general purpose equipment controlled by a computer program that provides both the sequence of operations and specific details about each operation.

Computer-aided manufacturing(CAM):

the use of the computers in process control.

Numerical controlled (N/C) machines:

Machines that perform operation by following mathematical processing instructions.

Repetitive processing:

Product layouts- layout that uses standardized processing operation to achieve smooth, rapid, high-volume flow.

Production line- standardized layout arranged according to fixed sequence of production tasks

Assembly line- standardized layout arranged according to a fixed sequence of assembly tasks.

The main advantages of product layouts are:

A high rate output Low unit cost due high volume. The high cost of specialized equipment is

spread over many units. Labor specialization, which reduce training cost and time, and results in a

wide span of supervision. A high utilization of labor and equipment. Fairly routine accounting, purchasing, and inventory control.

The primary disadvantage of product layouts includes the following:

Repetitive jobs that provide little opportunity of advancement and may lead to morale problems and to repetitive stress injuries

Poor skilled workers may exhibit little interest in maintaining equipment or in the quality output.

The system is fairly inflexible in response to changes in the volume of output or changes in product or process design

Fixed position layouts:

Layout in which the product or project remains stationary, and workers, material, and equipment are moved as needed.

Cellular layouts:

Layout in which workstations are grouped into cell that can process items that have similar processing requirements.

Flexible manufacturing system (FMS):

A group of machines designed to handle intermittent processing requirements and produce a variety of similar product

Computer-integrated manufacturing:

A system for linking a broad range of manufacturing activities through an integrated computer system.

Service layouts:

It categorized as product layout, process layouts, or fixed position layouts. However, service layouts requirements are somewhat different from manufacturing layout requirements.

Warehouse and storage layouts.

The design storage facilities present different set of factors than the design of factory layouts.

Retail layout:

The objectives that guide design of manufacturing layouts often pertain to cost minimization and product flow.

Line balancing:

The process of assigning tasks to workstations in such a way that the workstation have approximately equal time requirements.

Cycle time:

The maximum time allowed each workstation to complete its set of tasks on a unit.

Precedence diagram:

A diagram that shows elemental tasks and their precedence requirements.

Designing Process layouts:

Is concerns with the relative positioning of the departments involved.

Measurements of effective:

The ability to satisfy a variety of processing requirements.

Information requirements.

A list of departments or work centers to be arranged, their approximate dimensions, and the dimension of the building or building that will house departments.

A projection of future work flows between that various work centers. The distance between location and the cost per unit distance to move back

loads between locations.

Liner programming models

Objective function. Decision variables. Constraints. Parameters. Objective function- mathematical statement profit (Cost, etc) for a given

solution Decision variables- amounts of either input or outputs. Constraints- limitation that restrict the available alternatives. Feasible solution space- the set of all feasible combinations of decision

variable as defined by the constraints.

Graphical linear programming:

Is a method for finding optimal solutions to two variable problems.

Outline graphical procedure:

Set up the objective function and the constraints in mathematical format. Plot the constraints. Identify the feasible solution space Plot the objective function Determine the optimum solution.

Redundant Constraints:

A constraint that does not form a unique boundary of the feasible solution space.

Enumeration approach:

Substituting the coordinates of each corner point into the objective function to determine which corner point is optimal.

Slack and surplus:

Building constraints- a constraints that forms the optimal corner point of the feasible solution space.

Surplus- when the values of decision variables are substituted into a ≥ constraints the amount by which the resulting value exceeds the right-side value.

Slack- when the values of decision variable are substituted into a ≤ constraints the amount by which the resulting value is less than the right side.

Simplex:

A linear programming algorithm that can solve problems having more than two decision variables.

Sensitivity analysis:

Assessing the impact of potential changes to the numerical values of a LP model.

Range of optimality:

Range of values over which the solution quantities of all the decision variables remain the same.

Changes in the Right-Hand side (RHS) value of constraints:

By substituting the values of the decision variables that solution into the left side of the constraints result in a value that is equal to RHS value.

Shadow price:

Amount by the value of the objective function would change with a one-unit changes in the RHS value of a constraint.

Range of feasibility:

Range of values for the RHS of a constraints over which the shadow price remains the same.

Work design:

The importance of work system design is underscored by an organization’s dependence on human efforts (i.e., work) to accomplish its goals. Work design is one of the oldest aspects of operation management.

Compensation:

Is a significant issue for the design issue for the design of work systems. It is important for organization to develop suitable compensation plans for their employees.

Time-based system:

Compensation based on time an employee has worked during a pay period.

Output-based (incentive) system:

Compensation based on amount of output employee produced during a pay period.

Job design:

Involves in specification and it focus on what will be done in a job. Who will do the job, how the jobe will be done, and where the job will be done.

Specification:

Work that concentrates on some aspect of product or service.

Job enlargement:

Giving a worker a large position of the total tasks, by horizontal loading.

Job rotation:

Workers periodically exchange jobs.

Job enrichment:

Increasing responsibility for planning and coordination tasks, by vertical loading.

Self directed teams:

Groups empowered to make certain changes in their work processes.

Ergonomics:

Incorporation of human factors in the design of the workplace.

Method analysis:

Analyzing how a job is done.

The need for methods analysis can come from a number of different sources.

Changes in tools and equipment. Changes in product design or introduction of new product. Changes in materials or procedures. Government regulations or contractual agreements. Other factors(e.,g accident, quality problem)

The basic procedure in methods analysis is as follows:

Identify the operation to be studied, and gather all pertinent facts about tools, equipment materials and so on.

For existing jobs, discuss the job with the operation and supervisor to get their input.

Study and document the present method of an existing job using process charts,

Analyze the job.

Selecting an operation study:

Have a high labor content Are done frequently Are unsafe, tiring, unpleasant, and/or noisy

Are designated as problem (e.,g quality problems, processing bottlenecks)

Flow process chart:

Chart used to examine the overall sequence of an operation by focusing ib movement of the operator or flow material.

Worker-machine chart:

Chart used to determine portions of a work cycle during which an operator and equipment are busy or idle.

Motion study:

Systematic study of the human motions used to perform an operation.

Techniques that motion study analysts can use to develop efficient procedures.

Motion study principles Analysis of therbligs. Micromotion study Charts.

Motion study principles:

Guidelines for designing motion efficient work procedure.

Development works methods that are motion efficient

Eliminate unnecessary motions. Combine activities Reduce fatigues Improve the arrangement of the workplace Improve the design of tools and equipment.

Therbligs:

Basic elemental that make a job.

Micromotion study :

Use of motion pictures and slow motion to study motions that otherwise would be too rapid to analyze.

Standard elemental times:

Its a time standards derived from a firm’s historical time data

The standard elemental consist of the following

Analyze the job to identify the standard elements. Check the file for elements that have historical times, and record them. Modify the file if necessary Sum the elemental times to obtain the normal time, and factor in allowance

to obtain the standard time.

Predetermined time standards:

Published data based on extensive research to determined standard elemental times.

Work sampling:

Technique for estimating the proportion of time that a worker or machine spends on various activities and the idle time.

Random number table:

Table consisting of unordered sequence of number, used to determine random observation schedules.

The concept learning curves:

The degree of phenomenon, the degree of improvement is a function of the task being done.

Application learning curves:

Manpower planning and schedule Negotiated purchasing Pricing new pricing Budgeting, purchasing, and inventory planning Capacity planning.

Caution and criticisms:

Learning rates may differ organization to organize and by type of work, the learning objective is empirical studies rather than assumed rates where possible.

Projection based on leaning curve should be regarded as approximations of actual times and treated accordingly

Because time estimates are based on the time for first fruit, considerable care should be taken to ensure that the time is valid.

It is possible that at some point curve might level off or even tip upward, especially near end of a job. The potential for saving at that point is so slight that most jobs do not command the attention or interest to sustain improvements.

Some of the improvement may be more apparent than real: Improvement in times may be caused in part by increase in indirect labor cost

In mass production situation, learning curves may be of initial use in predicting how long it will take before stabilize. for the most part, however, the concept does not apply to mass production because in time per unit is imperceptible for all practical purpose.

User of learning curves sometimes fail to include carryover effects: previous experience with similar activities can reduce activity times, although it should be noted that the learning rate remain the same

Shorter product life cycle, flexible manufacturing, and cost-functional workers can affect the ways in which learning curves may be applied

InspectionIs an appraisal activity that compares goods or a service to a standard and it is also a vital, but often unappreciated aspect of quality control.

Inspection can occur at three points: Before production During production After production

This are often involves acceptance sampling procedures, monitoring during the production process is referred to as process control.

How much to Inspect and Often?The amount of inspection can range from no inspection whatsoever to inspection of each item numerous times. High-cost, low-volume items that have large cost associated with passing defective products often require more intensive inspection.

Where to inspect in the Process

Many operations have numerous possible inspection points. Because each inspection add to the cost of the product or service, it is important to restrict inspection efforts to the point where they can do the most good.

Raw Material and Purchased PartsThere is little sense in paying for goods that do not meet quality standard and expanding time and effort on material that is bad to begin with.

Finish ProductsCustomer’s satisfaction and the firm’s image are at stake here, and the factory.

Before a costly operationThe point is to not waste costly labor or machine time on items that are already defective.

Before an irreversible processIn many cases, items can be reworked up to a certain point

Before a covering processPainting, plating, and assemblies often mask defects.

Centralized versus On-site inspectionThe central issue in the decision concerning on-site or lab inspection is whether the advantages of specialized lab test are worth the time and interruption needed to obtain the result.

Statistical Process Control

Two types of quality control concerned with:

Quality of conformance A – product or service conforms to specificationsStatistical Process Control – statistical evaluation of the output of a process.

Process Variability

All processes generate output that exhibits some degree of variability.

Random variation Natural

Variation in the output of a process, created by countries minor factors Assignable variation in

Process output, a variation whose cause can be identified.

Sampling and Sampling Distribution

In statistical process control, periodic samples of process output are taken and sample statistics, such as sample means or the number of occurrences of a certain type of outcome, are determined.

Sampling Distribution

A theoretical distribution of sample statistics

Central limit theorem

Distribution of sample averages tends to be normal regardless of the shape of the process distribution.

The Control ProcessSampling and corrective action are only part of the control process. Effective control requires the following steps:

Define – the 1st step means to define in sufficient details what is to be controlled.

Measure – only those characteristics that can be counted or measured are candidates for control.

Compare - there must be a standard of comparison that can be used to evaluate the measurement.

Evaluate – Management must establish a definition of out of control Correct – when a process is judged out of control, corrective action

must be taken.

Monitor Result :

to ensure the corrective action is effective, the output of a process must be mentioned for a sufficient period of time to verify that the problem has been eliminated.

Control Charts: The Voice of the Process:

An important tool in statistical process control is the control chart, which was developed by Walter Shewhart.

Control chart

Is a time-ordered plot of sample statistics, used to distinguish between random and nonrandom variability.

Control Limits the Dividing

Lines between random and nonrandom deviations from the mean of the distribution

Type 1 Error concludingA process is not in control when it actually is.

Type 2 Error concludingA process is in control when it is not.

VariablesGenerate data that are measured.

AttributesGenerate data are counted

Control Charts for VariablesMean and range chart are used to monitor Variables

Mean control ChartControl chart used to monitor the central tendency of a process

Control Chart for AttributesControl charts for attributes are used when the process characteristic is counted rather than measured.

P-chartControl chart for attributes used to monitor the proportion of defective items in a process

C-chartControl chart for attributes, used to monitor the number of defects per unit.Managerial Considerations Concerning Control ChartUsing control chart adds to the cost and time needed to obtain output. Ideally a process is so good that the desired level of quality could be achieved without the use of any control charts.

Run TestsA test for pattern in a sequence

RunSequence of observations with a certain characteristic

What Happens When a Process Exhibits possible Nonrandom Variation?Nonrandom variation is indicated when a pint is observed that is outside the control limits, or a run test procedures a large z-value. Managers should have response plans in place to investigate the cause. It may be false alarm, or it may be real indication of the presence of an assignable cause of variation.

Process CapabilityIt is necessary to determine if the process is capable of producing output that is with an acceptable range. The variability of a process becomes the focal points of the analysis.

SpecificationA range of acceptable values established by engineering design or customer requirements.

Process VariabilityNatural or inherent variability in a process

Process CapabilityThe inherent variability of process output relative to the variation allowed by the design specification.

Capability AnalysisCapability analysis is the determination of whether the variability inherent in the output of a process that is in control falls within the acceptable range of variability allowed by the design specification for the output.

Improving Process CapabilityImproving process capability requires changing the process target value and/ or reducing the process variability that is inherent in a process.

Taguchi Cost FunctionA Japanese quality expert, holds a nontraditional view of what constitutes poor quality, and hence the cost of poor quality. The traditional view is that as long as output is within specifications, there is no cost.