Chapter 3 - Product Design &

Process Selection
 Concurrent Engineering

Old “over-the-wall” sequential products

design process

• Each function did its work and

passed it to the next function

Improved Concurrent Engineering process

• All functions form a design team
that develops specifications,
involves customers early, solves
potential problems, reduces costs,
& shortens time to market

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 Product Design & Process Selection -
defined
Product design – the process of defining all of the companies product
characteristics
– Product design must support product manufacturability (the ease
with which a product can be made)
– 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.

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 The Product Design Process
Step 1 –Planning & Idea Development - Someone thinks of a need and a
product/service design to satisfy it: customers, marketing, engineering,
competitors, benchmarking, reverse engineering
Step 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
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

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 The Product Design Process
Idea development: all products begin with an
idea whether from:
– customers,
– competitors or
– suppliers

Reverse engineering: buying a competitor’s

product

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 Product Design Process
• Idea developments selection affects
– Product quality
– Product cost
– Customer satisfaction
– Overall manufacturability – the ease with which
the product can be made

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 Product Screening
• After a product idea has been developed it is
evaluated to determine its likelihood of
success.
• Operations: What are the production needs of the proposed new product
and how do they match our existing resources?
• Marketing What is the potential size of the market for the proposed new
product?
• How much effort will be needed to develop a market for the product ?
• Finance What is the proposed new product’s financial potential, cost, and
return on investment?

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 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

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 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

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 Break-Even Analysis: Graphical Approach

• 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

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 Preliminary Design and Testing
• Design engineers translate general
performance specifications in to technical
specifications.
• Prototypes are built and tested.
• Changes are made based on test results, and
the process of revising, rebuilding a prototype,
and testing continues.
 Final Design
• This is where final product specifications are
drawn up.
• The final specifications are then translated into
specific processing instructions to manufacture
the product, which include selecting equipment,
outlining jobs that need to be performed,
identifying specific materials needed and
suppliers that will be used, and all the other
aspects of organizing the process of product
production.
FACTORS IMPACTING PRODUCT
DESIGN
• Design for Manufacture
• Product Life Cycle
• Concurrent Engineering
 Design for Manufacturing (DFM)

• Guidelines to produce a product easily and profitably

– Simplification - Minimize parts
– Standardization
• Design parts for multiply applications
– Simplify operations

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 Product Life Cycle also affects decisions

• Product life cycle – series of

changing product demand
• Consider product
life cycle stages
– Introduction
– Growth
– Maturity
– Decline
• Facility & process
investment depends on life
cycle

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 Process

• Process: Any set of activities performed by an

organization that takes inputs and transforms
them into outputs ideally of grater value to the
organization.
 Process Selection
• Intermittent processes:
– Processes used to produce a variety of products with
different processing requirements in lower volumes. (such
as healthcare facility)
• Repetitive processes:
– Processes used to produce one or a few standardized
products in high volume. (such as a cafeteria, or car wash)

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 Process Types
• 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 or specifications
– Line process – large quantities of a standard product
– Continuous process – very high volumes of a fully standard
product

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Product-Process Grid

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Intermittent VS. Repetitive Facility Layouts

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 Process Selection Considerations

• Process selection is based on five principal

considerations
1. Product-Process Grid
2. Degree of vertical integration
3. Flexibility of resources
4. Mix between capital & human resources
5. Degree of customer contact

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 Process Decisions-Vertical Integration

• Vertical integration refers to the degree a firm chooses to do

processes itself- raw material to sales
– Backward Integration means moving closer to primary
operations
– Forward Integration means moving closer to customers
 Linking Product Design & Process
Selection
• Impact of Product Life Cycle:
Intermittent and repetitive operations typically focus on
producing products in different stages of the product life
cycle. Intermittent is best for early in product life; repetitive
is better for later when demand is more predicable.

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 Flowchart Symbols for Process Design
• Process flow analysis : A technique used for evaluating a
process in terms of the sequence of steps from inputs to
outputs with the goal of improving its design.

• Process flowchart: A chart showing the sequence

• of steps in producing the product or service.
Flowchart Symbols for Process Design
Purpose and Examples
Examples:
Examples: Giving
Givinganan
admission ticket to a
Tasks or operations admission ticket to a
customer,
customer,installing
installingaa
engine
enginein
inaacar,
car,etc.
etc.

Examples:
Examples: How
Howmuch
much
Decision Points change
changeshould
shouldbe
be
given
givento
toaacustomer
customer
Flowchart Symbols for Process Design
Purpose and Examples
Examples:
Examples: Sheds,
Sheds,
Storage areas or lines
linesofof people
peoplewaiting
waiting
queues for
for aaservice,
service,etc.
etc.

Examples:
Examples: Customers
Customers
moving
movingto toaaseat,
seat,
Flows of
mechanic
mechanicgetting
gettingaa
materials or
tool,
tool, etc.
etc.
customers
Process Improvement

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 Product and Service Strategy
• Type of operation is directly related to
product 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
Product and Service Strategy Options

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Flowchart for Different Product Strategies
at Antonio’s Pizzaria

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 Process Performance Metrics

Process performance metrics – defined:

Measurement of different process
characteristics that tell us how a process is
performing
– Determining if a process is functioning properly is
required
– Determination requires measuring performance

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Process Performance Metrics

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 Process Performance Metrics
• Run Time: is time required to produce a batch
of parts
• Setup Time: is the time required to prepare a
machine to make a particular item
• Operation time: is the sum of the run time and
setup time
• Throughput rate: The output rate that the
process is expected to produce over a period
of time
 Metrics Example: At Zelle’s Dry Cleaning, it takes an
average of 3 ½ hours to dry clean & press a shirt,
with value-added time estimated at 110 min. Workers
are paid for a 7-hour workday but work 5 ½ hr/day,
accounting for breaks and lunch. Zelle’s completes 25
shirts per day, while the industry standard is 28 for a
comparable facility.
Process Velocity = (Throughput Time)/(Value-added time)
= (210 minutes/shirt)/(110 minutes/shirt) = 1.90
Labor Utilization = (Time in Use)/(Time Available)
= (5 ½ hr)/(7 hr) = .786 or 78.6%
Efficiency = (Actual Output)/(Standard Output)
= (25 shirts/day)/(28 shirts/day) = .89 or 89%
 Principle (Little's Law)
• Little's Law says that, under steady state
conditions, the average number of items in a
queuing system equals the average rate at
which items arrive multiplied by the average
time that an item spends in the system.
• WIP = Throughput Time * Throughput Rate
• Throughput Time =WIP * Cycle Time
 Throughput Time

A basic process performance

metric is throughput time. A
lower throughput time means
that more products can move
through the system. One goal of
process improvement is to
reduce throughput time.

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