PRODUCTION AND OPERATIONS MANAGEMENT

MODULE-2 (6)
PRODUCT DESING AND DEVELOPMENT
Product,
Process Product design is defined as the determination and specification of the
parts of a product and their interrelationship so that they became a unified
and whole. It may also be defined as the idea generation, concept
Service design development, testing and manufacturing or implementation of a physical
object or service.
• Product design
A product is designed to perform a particular function or set of functions
and
effectively and reliably, to be economically manufacturability, to be
development profitably salable, to suit the purposes and the attitudes of the consumer,
and to be durable, safe, and economical to operate,
• Process planning
and process BENEFITS OF PRODUCT DESIGN AND DEVELOPMENT
design
10. Attract new customers with an improved, larger product line.
• Production 11. Retain current customers through continuous product improvement.
processes, 12. Identify alternate designs.
13. Determine and reduce product limitations
• Service
Operations CLASSIFICATION OF PRODUCT DESIGN

• Production 17. Customized product design Eg. Boilers, turbines

Technology 18. Standard product desing Eg. Coolers, fans, television

• Problems
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6)
CONTRIBUTION OF FUNCTIONAL AREAS TO PRODUCT D&D
Product,
MARKETING
Process Customer needs
and PURCHASING Information on competitors &
Service design Availability of cost of material Their products desirability
Supplier with design Of specific product features
capabilities
• Product design R&D
and Technological
development advances
FINANCE
• Available investment
Process planning
funds PRODUCT
and process
Financial feasibility DESIGN
design
projected H.R
In house Skills required
• Production Training plan
processes, competencies

• Service
Operations
LEGAL
Legal environment OPERATIONS
• Production patents Resource flexibility
Technology product serviceability
Process capabilities
• Problems
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6)
STAGES IN PRODUCT D&D
Product,
Process
Product Preliminary
and Idea Feasibility
Feasible? design
Service design generation study

• Product design
and
development
Final Process
• Process planning design Prototype planning
and process
design

• Production
processes, Design and Manufacturing
Specifications
• Service
Operations

• Production
Technology
Manufacturing

• Problems
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6) PHASES IN PRODUCT D & D

Product, I. PHASE -1- CONCEPTUAL DESIGN

Process a) Production specification
b) Design Concept
and
Service design
II. PHASE-2- FEASIBILITY
h) Proof-of-concept prototype
• Product design i) Alpha prototype
and
development
III. PHASE-3-DEVELOPMENT AND DESIGN
l) Beta prototype
• Process planning m) Pre-production
and process
design
IV. PHASE-4-INTRODUCTION

• Production V. PHASE-5 STANDARDIZATION

processes,
V1. PHASE-6 – SUCESSION PLANNING
• Service
Operations

• Production
Technology

• Problems
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6)
PRODUCT LIFE CYCLE
Product,
Process
and
Service design

• Product design
and
Level of effort

development

• Process planning
and process
design

• Production
processes,

• Service Introduction Growth Maturity Decline

Operations
Research Product High volume
Development Process Termination
• Production Production
Modification And Capacity Of production
Technology With
Enhancement Determination/ If necessary
Innovation
Supplier Enhancement Cost control
• Problems Development Reduction
In options
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6) CADD (COMPUTER AIDED DRAFTING AND DESIGN)

Product, CADD involves both software and sometimes special purpose hardware,
current packages range from 2D vector based drafting systems to 3D
Process parametric surface and solid design modellers.
and
Service design AREAS OF USE

• Product design 7. Architecture

and development 8. Mechanical (MCAD)
9. Ship building.
• Process 10. Electronic and Electrical (ECAD)
planning and 11. Apparel and Textile CAD
process design

• Production
processes,

• Service
Operations

• Production
Technology

• Problems
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6)
PROCESS DESIGN
Process design can be the design of new facilities or it can be
Product, modifications expansion of existing facilities
Process
PROCESS PLANNING
and Process planning is concerned with planning the transformation needed to
Service design convert materials into finished goods. These steps are designed in
sequence in order to produce the desired level of output

• Product design MAJOR FACTORS EFFECTING PROCESS DESIGN

and
development • Nature of Product and Service Demand
• Degree of Vertical Integration
• Product flexibility
• Process
• Degree of Automation
planning and
• Product/Service quality
process
design

• Service
Operations

• Production
Technology

• Problems
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6) PROCESS PLANNING AND DESIGN SYSTEM
PROCESS PLANNING
INPUTS
Product, & DESIGN
Process-type selection
Process •Product/Service OUTPUTS
-Coordinated with strategies
Information •Process
and •Vertical integration studies
-Product/service demand Technology
-Vendor capabilities
Service design -Prices/volumes -Design of
-acquisition decisions
-patterns Specific
-make-or-buy decisions
-Competitive environment Process
• Product design •Process/product studies
-Consumer wants/needs -Linkages
and -Major technological steps
-Desired product characteristics Among
-Minor technological steps
development -Product simplification processes
•Production system •Facilities
-Product standardization
information -Building
• Process -product design for
-Resource availability Design
producibility
planning and -Production economics -layout of
•Equipment studies
process -Known technologies
-Level of automation Facilities
design -Technology that can -selection
-Linkages of machines
be acquired Of equipment
-equipment selection
-predominant strengths •Personal
-tooling
• Service & weakness Estimates
•Production procedures
Operations •studies -skill level
•Operation Strategy Requirements
-Production sequence
-Positioning strategies -training/
• Production -Material specifications
-Competitive weapons needed retraining
-Personal requirements
Technology -Outsourcing plans
•Facilities studies
-allocation of resources
-Building designs
• Problems -layout of facilities
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6) PROCESS LIFE CYCLE

Product,
Process
and
Service design

• Product design
and
development
Job
• Process Shop
Batch Assembly Continuous
planning and
process line flow
design

Startup Rapid Growth Maturation

• Service
Operations

• Production
Technology Time Commodity

• Problems
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6)
TYPES OF PROCESS DESIGN
• Product focused Production System
Product,
Process RM C
and
2 4 SA
Service design
A FG
• Product design 5
and 3 1
1
development
RM C SA
• Process
planning and 6
process
PC
design

• Service
Operations

RM-Raw material FG- Finished goods

• Production C – Components PC- Purchased components
Technology SA- Sub assemblies

• Problems
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6)

Product, 3) Process focused production system

Process
and cutting Drilling Shaping Assembly Sanding Finishing
Service design

• Product design 1 2 5 6 7
and development
JOB-A
• Process 2 3
planning and
process design
2 4
• Service
Operations
1 3 5 6 7
• Production
Technology
JOB-B

• Problems

3) Group Technology / Cellular Manufacturing

 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6)
3) Group Technology / Cellular Manufacturing
Product,
Process
and Lathe 3
Service design RM

• Product design Saw 2

and development Grinder 2

• Process
planning and
process design

Drill 1
• Service
Operations
Weld 3
• Production
Technology
FG
• Mill 2
Problems
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6)
DECIDING AMONG PROCESS ALTERNATIVES

Product, 1) Dependence of process design on product diversity and batch size

Process Product
and Focused

Large
Dedicated
Service design
Product
Focused
• Product design Batch size Batch
and System Cellular
development Manufacturing

Process-Focused
Small

• Process Job Shop

planning and
process
design Number of product designs

• Service
Operations

2) Capital requirement for process design

• Production 3) Economic analysis of production process
Technology 4) Cost function of processing alternatives

• Problems
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6)
BREAK-EVEN ANALYSIS/COST VOLUME PROFIT MODEL
Product,

PROFIT
Process
and
Sales Revenue line
Service design
Loss
Region
• Product design
and development BEP

TOTAL VC
COSTS BEC
OR
• Process planning INCOME Total cost line
and process
design
Profit Margin

TOTAL FC
• Production Region of
FIXED
processes, COST Safety

• Service
Operations
BEO

• Production VOLUME OF OUTPUT

Technology

• Problems
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6) • ASSUMPTIONS IN BREAK-EVEN ANALYSIS

Product, 3) Selling price per unit of output will remain constant throughout the volume
of output
Process
4) There is a linear relationship between sales volume and costs ie. There are
and no whole sale rates.
Service design 5) Costs can be divided into two categories-fixed costs and variable costs
6) Production and sales quantities are equal i.e. there is no inventory.
• Product design 7) No other factor will influence the cost except the quantity of out put.
and development
ANALYTICAL CALCULATIONS
• Process planning
and process Let F = Fixed costs
design Q = Quantity of output produced and sold
s = Selling price per unit of output
• Production v = Variable price per unit of output
processes, sQ = S = Sales revenue (income) for quantity Q
vQ = V = Variable costs for quantity Q
• Service Total costs = Fixed costs + Variable costs
Operations = F + vQ

• Production At Break even point

Technology Total costs = Total income
F + vQ = sQ where Q = Break even output
s-v = Contribution per unit
• Problems

Q (BEP) = F / s-v = Fixed Cost / Contribution/unit of O/P

 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6) PROFIT VOLUME (P/V) RATIO

Product, measures the profitability in relation to sales. Higher the P/V ratio more
Process profitable will be the product
and
P/V Ratio = ( Contribution / Total Sales Revenue ) X 100
Service design

= {(Total Sales Revenue – Total Variable costs) / Total sales revenue} X 100
• Product design
and development
ANGLE OF INCIDENCE

• Process planning Large angle of incidence indicates large profitl and extremely favourable
and process business positions.
design
MARGIN OF SAFETY
• Production
processes, Large margin of safety indicates that the business can earn profit even if there is
a great reduction in output
• Service
Operations Margin of Safety ={( Actual sales – Break even sales) / Actual sales} X 100

• Production CONTRIBUTION
Technology At any given volume of output, if contribution is greater than the fixed costs,
profit will result. Contribution always equals fixed cost at Break even
output
• Problems
Contribution = Sales Revenue – Variable costs
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6)
USES OF BEA
Product,
Process
and • Break even chart helps the management to know at a glance the profits at
different levels of output
Service design
• Useful in determining the minimum output necessary to break even and go
after profit
• Product design • The effects of altering selling price or the effects of controlling costs on
and development the profits earned can be quickly understood by looking at the chart
• It helps comparing the profitability of tow or more proposals
• Process planning • It helps in computing the output required to maintain a particular level of
and process profit
design • It helps in taking decisions regarding production, plant locations, make or
buy components etc.
• Production
processes, LIMITATIONS OF BEA

• The major assumption of B.E analysis is that the whole of the production
• Service output is sold, which may not be so in reality.
Operations • BEA assumes that all costs can easily be classified as Fixed or Variable for
the whole range of production costs. In some cases it is very difficult to
• Production ascertain the nature of the cost
Technology • BEA assumes that profits depend only on selling price and sales volume
ignoring the fact that they are also affected by technological changes,
price volume discounts, etc
• Problems • It is suitable only when the firm produces only one type of product.
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6)
Problems
Product,
Process 4) The production processes A,B, and C leave the following cost structure
and
Service design Process FC/Year VC/Year

• A Rs. 1,20,000 Rs. 3

Product design
and development
B Rs. 90,000 Rs. 4
• Process planning
C Rs. 80,000 Rs. 4.50
and process
design

o) What is the most economical process for a volume of 8,000 units per year?
• Production
processes,
q) What is the annual break-even quantity for the process A,B and C of selling
price of the product is Rs. 6.95 per unit?
• Service
Operations

• Production
Technology

• Problems
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6)
Problems
Product,
Process 2) The production processes automated (A), cellular manufacturing ( C ), and
and job shop (J) have the following structure.
Service design
Process FC/Year VC/Year

• Product design
A Rs. 1,100,00 Rs. 2
and development
C Rs. 80,000 Rs. 4
• Process planning
and process
J Rs. 75,000 Rs. 5
design

• Production o) What is the most economical process for a volume of 10,000 units per
processes, year?
p) At what volume would each of the processes be preferred?
• Service q) What is the annual break-even quantity for the automated process (A) if the
Operations selling price of the product is Rs. 14 per unit?

• Production
Technology

• Problems
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6)
Problems
Product,
Process 3) The production processes automated (A), cellular manufacturing ( C ), and
and job shop (J) have the following structure.
Service design
Process FC/Year VC/Year

• Product design
A Rs. 1,25,000 Rs. 2.50
and development
C Rs. 85,000 Rs. 4.00
• Process planning
and process
J Rs. 75,000 Rs. 5.00
design

• Production o) What is the most economical process for a volume of 12,000 units per
processes, year?
p) If the product is sold at Rs. 6/ unit, to earn a profit of Rs. 50,000, how much
• Service you need to produce and sell?
Operations

• Production
Technology

• Problems
 PRODUCTION AND OPERATIONS MANAGEMENT
MODULE-2 (6) 4) Mr. Mendoza is the production Manager at airsoft athletic shoes, a
manufacturer of high end running shoes. Mr. Mendoza would like to
Product, automate the process of gluing the rubber soles onto shoe uppers, a
process currently being performed manually.
Process
Five companies offer automated machines that perform this processes,
and but they vary in initial cost and operating cost. Due to ever changing
Service design competition in the running shoe industry. Airsoft’s sales vary substantially
from year to year and are difficult to forecast accurately.
Mr. Mendoza feels that part of his machine selection analysis should
• Product design be to evaluate the annual cost of each machine. The uncertainty of annual
and development sales volume has made the comparison of annual cost more difficult than
he anticipated. Mr. Mendoza has decided that it would be most useful to
• obtain a range of annual volumes in which each machine would be the
Process planning
preferred alternative. The annual fixed cost and the variable cost per shoe
and process for each machine are shown below
design
Process FC/Year VC/shoe
• Production
processes, A Rs. 20,500 Rs. 0.83
B Rs. 28,200 Rs. 0.59
• Service C Rs. 21,100 Rs. 0.85
Operations D Rs. 11,900 Rs. 0.99
E Rs. 29,600 Rs.0.68
• Production a) Rearrange the machine cost information in order of increasing annual FC.
Technology Are any machines clearly inferior to any other machines? If so, eliminate
them from further analysis
• b) For what range of annual volumes is each machine the preferred
Problems
alternative, based only on annual cost ?
c) What factors other than the annual cost should be considered in selecting
the machine