PRODUCT &     PROCESS      DESIGNCHAPTER 3         © 2010 Wiley   1
SAMSUNG S3             © 2010 Wiley   2
SAMSUNG GALAXY NOTE                © 2010 Wiley   3
IPHONE 4           © 2010 Wiley   4
IPHONE 5           © 2010 Wiley   5
© 2010 Wiley   6
Can   we do it?How will we do it?How much longer will it take?How much will it cost?                 © 2010 Wiley   7
Product Design & ProcessSelection  Product design – the process of defining all of    the companies product characteristic...
DESIGN OFSERVICES versus GOODS Servicedesign is unique; it defines the characteristics of a service    • Physical element...
The Product Design ProcessIdea development: all products begin with  an idea whether from: ◦ customers, ◦ competitors or ◦...
 Ideadevelopments selection affects  ◦ Product quality  ◦ Product cost  ◦ Customer satisfaction  Overall manufacturabilit...
Havaianas vs Havana                      © 2010 Wiley   12
Louis Vuitton                © 2010 Wiley   13
Product Design   Process         © 2010 Wiley   14
The Product Design ProcessStep 1 - Idea DevelopmentStep 2 - Product ScreeningStep 3 – Preliminary Design and TestingStep 4...
The Product Design ProcessStep 1 - Idea Development - Someone thinks of a need and a product/service design to satisfy it:...
17
© 2010 Wiley   18
The Product Design ProcessStep 3 – Preliminary design and Testing – Technical specifications are developed, prototypes bui...
© 2010 Wiley   20
© 2010 Wiley   21
To further understand watch thisvideo                       © 2010 Wiley   22
Product Screening Tool- Break-Even AnalysisComputes    the quantity of goods company needs to sell to cover its costs    ...
Product Screening Tool – Break-Even Analysis con’tBreak-even    analysis considers two functions of Q ◦ Total cost – sum ...
Break-Even Analysis: GraphicalApproach   Compute quantity of goods    that must be sold to break-    even   Compute tota...
A company is planning to establish a chain of  movie theaters. It estimates that each new  theater will cost approximately...
 Break-Even    Point      Total revenues = Total costs @ break-even point Q       Selling price*Q = Fixed cost + variable...
Design for Manufacturing(DFM)   Guidelines to produce a    product easily and    profitably    ◦ Simplification -      Mi...
Product Life Cycle also affectsdecisions Productlife cycle – series of changing product demand Consider    product life ...
© 2010 Wiley   30
© 2010 Wiley   31
Concurrent EngineeringOld “over-the-wall” sequential  products design process   Each function did its work    and passed ...
Remanufacturing Use components of old product in the production of new onesGood for: Computers, televisions and automobile...
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Ch03 (1)

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Ch03 (1)

  1. 1. PRODUCT & PROCESS DESIGNCHAPTER 3 © 2010 Wiley 1
  2. 2. SAMSUNG S3 © 2010 Wiley 2
  3. 3. SAMSUNG GALAXY NOTE © 2010 Wiley 3
  4. 4. IPHONE 4 © 2010 Wiley 4
  5. 5. IPHONE 5 © 2010 Wiley 5
  6. 6. © 2010 Wiley 6
  7. 7. Can we do it?How will we do it?How much longer will it take?How much will it cost? © 2010 Wiley 7
  8. 8. Product Design & ProcessSelection Product design – the process of defining all of the companies product characteristics ◦ Product design defines a product’s characteristics of: •appearance, •tolerances, and •materials, •performance •dimensions, standards. Process Selection – the development of the process necessary to produce the designed product. © 2010 Wiley 8
  9. 9. DESIGN OFSERVICES versus GOODS Servicedesign is unique; it defines the characteristics of a service • Physical elements ,aesthetic & psychological benefits e.g. Promptness, friendliness and ambiance Product and service design must match the needs and preference of the targeted customer group © 2010 Wiley 9
  10. 10. The Product Design ProcessIdea development: all products begin with an idea whether from: ◦ customers, ◦ competitors or ◦ suppliersReverse engineering: buying a competitor’s product © 2010 Wiley 10
  11. 11.  Ideadevelopments selection affects ◦ Product quality ◦ Product cost ◦ Customer satisfaction Overall manufacturability – the ease with which the product can be made IDEA DEVELOPMENT © 2010 Wiley 11
  12. 12. Havaianas vs Havana © 2010 Wiley 12
  13. 13. Louis Vuitton © 2010 Wiley 13
  14. 14. Product Design Process © 2010 Wiley 14
  15. 15. The Product Design ProcessStep 1 - Idea DevelopmentStep 2 - Product ScreeningStep 3 – Preliminary Design and TestingStep 4 – Final Design © 2010 Wiley 15
  16. 16. The Product Design ProcessStep 1 - Idea Development - Someone thinks of a need and a product/service design to satisfy it: customers, marketing, engineering, competitors, benchmarking, reverse engineeringStep 2 - Product Screening - Every business needs a formal/structured evaluation process: fit with facility and labor skills, size of market, contribution margin, break-even analysis, return on sales © 2010 Wiley 16
  17. 17. 17
  18. 18. © 2010 Wiley 18
  19. 19. The Product Design ProcessStep 3 – Preliminary design and Testing – Technical specifications are developed, prototypes built, testingStep 4 – Final Design – Final design based on test results, facility, equipment, material & labor skills defined, suppliers identified © 2010 Wiley 19
  20. 20. © 2010 Wiley 20
  21. 21. © 2010 Wiley 21
  22. 22. To further understand watch thisvideo © 2010 Wiley 22
  23. 23. Product Screening Tool- Break-Even AnalysisComputes the quantity of goods company needs to sell to cover its costs Q= Break-Even Quantity Q= F/(SP-VC) F=Fixed Costs SP= Selling Price/Unit VC=Variable Cost © 2010 Wiley 23
  24. 24. Product Screening Tool – Break-Even Analysis con’tBreak-even analysis considers two functions of Q ◦ Total cost – sum of fixed and variable cost Total cost = F + (VC)*Q ◦ Revenue – amount of money brought in from sales Revenue = (SP) * Q Q = number of units sold © 2010 Wiley 24
  25. 25. Break-Even Analysis: GraphicalApproach Compute quantity of goods that must be sold to break- even Compute total revenue at an assumed selling price Compute fixed cost and variable cost for several quantities Plot the total revenue line and the total cost line Intersection is break-even Sensitivity analysis can be done to examine changes in all of the assumptions made © 2010 Wiley 25
  26. 26. A company is planning to establish a chain of movie theaters. It estimates that each new theater will cost approximately $1 Million. The theaters will hold 500 people and will have 4 showings each day with average ticket prices at $8. They estimate that concession sales will average $2 per patron. The variable 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 Example: © 2010 Wiley 26
  27. 27.  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)Break-Even Example Calculations © 2010 Wiley 27
  28. 28. Design for Manufacturing(DFM) Guidelines to produce a product easily and profitably ◦ Simplification - Minimize parts ◦ Standardization  Design parts for multiply applications ◦ Use modular design ◦ Simplify operations © 2010 Wiley 28
  29. 29. Product Life Cycle also affectsdecisions Productlife cycle – series of changing product demand Consider product life cycle stages ◦ Introduction ◦ Growth ◦ Maturity ◦ Decline Facility& process investment depends on life cycle © 2010 Wiley 29
  30. 30. © 2010 Wiley 30
  31. 31. © 2010 Wiley 31
  32. 32. Concurrent EngineeringOld “over-the-wall” sequential products design process Each function did its work and passed it to the next functionImproved Concurrent Engineering process All functions form a design team that develops specifications, involves customers early, solves potential problems, reduces costs, & shortens time to market © 2010 Wiley 32
  33. 33. Remanufacturing Use components of old product in the production of new onesGood for: Computers, televisions and automobiles © 2010 Wiley 33
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