1. Product Development

2. Product Selection and Development Stages Figure 5.4, pg. 138

3. Quality Function Deployment (DFD) QFD: The process of –Determining what are the customer “requirements” / “wants”, and –Translating those desires into the target product design. House of quality: A graphic technique for defining the relationship between customer desires and the developed product (or service) (Discuss Example 1: pgs 139-140)

4. Deploying the Quality Effort Discuss Figure 5.5 The final outcome: Product Excellence, i.e., determining what the customer wants and providing it!

5. Organizing the Product Development Effort The traditional US approach (department-based): Research & Development => Engineering => Manufacturing => Production Clear-cut responsibilities but lack of communication and “forward thinking”! The currently prevailing approach (cross-functional team-based): Product development (or design for manufacturability, or value engineering) teams: Include representatives from: –Marketing –Manufacturing –Purchasing –Quality assurance –Field service –(even from) vendors Concurrent engineering: Less costly and more expedient product development

6. Manufacturability and Value Engineering Promote improved designs and product specifications through the R&D, design and production stages of the product development, by seeking to –Control the product complexity –(further) standardize the employed components –Improve job design and job safety –Improve the product maintainability / serviceability –promote robust design practices

7. Some current issues in product design Robustness: the insensitivity of the product performance to small variations in the production or assembly process => ability to support product quality more reliably and cost- effectively. Modularity: the structuring of the end product through easily segmented components that can also be easily interchanged or replaced => ability to support flexible production and product customization;increased product serviceability. Environmental friendliness: –Safe and environmentally sound products –Minimizing waste of raw materials and energy –Reducing environmental liabilities –Increasing cost-effectiveness of complying with environmental regulations –Being recognized as good corporate citizen. –(example: BMW-Figure of pg. 145)

8. The time factor: Time-based competition Some advantages of getting first a new product to the market: –Setting the “standard” (higher market control) –Larger market share –Higher prices and profit margins Currently, product life cycles get shorter and product technological sophistication increases => more money is funneled to the product development and the relative risks become higher. Product development strategies for time-based competition (Figure 5.7, pg. 147)

9. Documenting Product Designs Engineering Drawing: a drawing that shows the dimensions, tolerances, materials and finishes of a component. (Fig. 5.9) Bill of Material (BOM): A listing of the components, their description and the quantity of each required to make a unit of a given product. (Fig. 5.10) Assembly drawing: An exploded view of the product, usually via a three-dimensional or isometric drawing. (Fig. 5.12) Assembly chart: A graphic means of identifying how components flow into subassemblies and ultimately into the final product. (Fig. 5.12) Route sheet: A listing of the operations necessary to produce the component with the material specified in the bill of materials. Engineering change notice (ECN): a correction or modification of an engineering drawing or BOM. Configuration Management: A system by which a product’s planned and changing components are accurately identified and for which control of accountability of change are maintained

10. Documenting Product Designs (cont.) Work order: An instruction to make a given quantity (known as production lot or batch) of a particular item, usually to a given schedule. Group technology: A product and component coding system that specifies the type of processing and the involved parameters, allowing thus the identification of processing similarities and the systematic grouping/classification of similar products. Some efficiencies associated with group technology are: –Improved design (since the focus can be placed on a few critical components –Reduced raw material and purchases –Improved layout, routing and machine loading –Reduced tooling setup time, work-in-process and production time –Simplified production planning and control

11. “Make-or-buy” decisions Deciding whether to produce a product component “in- house”, or purchase/procure it from an outside source. Issues to be considered while making this decision: –Quality of the externally procured part –Reliability of the supplier in terms of both item quality and delivery times –Criticality of the considered component for the performance/quality of the entire product –Potential for development of new core competencies of strategic significance to the company –Existing patents on this item –Costs of deploying and operating the necessary infrastructure

12. A simple economic trade-off model for the “Make or Buy” problem Model parameters: c1 ($/unit): cost per unit when item is outsourced (item price, ordering and receiving costs) C ($): required capital investment in order to support internal production c2 ($/unit): variable production cost for internal production (materials, labor,variable overhead charges) Assume that c2 < c1 X: total quantity of the item to be outsourced or produced internally X Total cost as a function of X C C+c2*X c1*X X0 = C / (c1-c2)

13. Example: Introducing a new (stabilizing) bracket for an existing product Machine capacity available Required “infrastructure” for in-house production –new tooling: $12,500 –Hiring and training an additional worker: $1,000 Internal variable production (raw material + labor) cost: $1.12 / unit Vendor-quoted price: $1.55 / unit Forecasted demand: 10,000 units/year for next 2 years  X0 = (12,500+1,000)/(1.55-1.12) = 31,395 > 20,000  Buy!

14. Evaluating Alternatives in Product Design through Decision Trees Decision Trees: A mechanism for systematically pricing all options / alternatives under consideration, while taking into account various uncertainties underlying the considered operational context. (Example 3)

15. The Silicon Inc. Example Developing and marketing a new microprocessor Company Options: –Purchase a sophisticated CAD system: $500,000 => manufacturing cost: $40/unit –Hiring and training three new engineers: $375,000 => manufacturing cost $50/unit –do nothing! Possible market responses: –Favorable: 25,000 units sold at $100 each – 40% chances –Unfavorable: 8000 units sold at $100 each – 60% chances Pick an option that maximizes the expected monetary value (EMV)