1. An Integrated Goods and Services Approach
OPERATIONS MANAGEMENT
An Integrated Goods and Services Approach
CHAPTER 6
Designing Goods and Services
JAMES R. EVANS
AND
DAVID A. COLLIER
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western 1

2. Chapter 6 Learning Objectives
To understand how goods and services are designed, how OM principles can facilitate and improve the design process, and how a well-designed customer benefit package can help organizations gain competitive advantage.
To understand some of the fundamental design approaches and tools used for developing manufactured goods and associated manufacturing processes.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

3. Chapter 6 Learning Objectives
To understand how the elements of a service delivery system support customer benefit package design and set the stage for service encounter design and execution.
To understand the issues and decisions necessary to design effective service encounters.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

4. Chapter 6 Learning Objectives
To understand that primary and peripheral goods and services require well-designed manufacturing processes, service delivery systems, and service encounters through an integrative case study.
To understand the importance of speed of design and its implications for business strategy, and to learn some important approaches for improving design speed.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

5. Chapter 6 Designing Goods and Services
Goods & Service Design – Big Picture
What goods and services an organization chooses to offer depends greatly on the organization’s operational capability to produce and deliver them at the appropriate cost and level of quality.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

6. Chapter 6 Designing Goods and Services
Goods & Service Design – Big Picture
The success of a firm is driven by the customer benefit packages (CPBs) it offers and how they address both order-qualifying and order-winning criteria as perceived by customers.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

7. Chapter 6 Designing Goods and Services
The Story of Schwinn
Sold 1 in 4 bicycles in 1950.
Sold 1 in 10 by 1975.
Schwinn failed to
change with the market such as mountain bikes and lighter bikes,
to keep costs low and quality high, and
build bikes offshore.
Schwinn filed for bankruptcy in 1992.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

8. Chapter 6 Designing Goods and Services
Customer Benefit Package (CBP) Design & Configuration
Concept development involves proposing and evaluating potential customer benefit package (CPB) ideas for feasibility.
“You can have any color car you want as long as it is black.” Henry Ford, 1900s.
See Chapter 1 on CBP design and configuration.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

9. Chapter 6 Designing Goods and Services
Customer Benefit Package (CBP) Design & Configuration
OM Spotlight: The “Hear Music Coffeehouse.”
“We’ve know for a long time that Starbucks is more than just a wonderful cup of coffee. It’s the experience …. We saw that [Hear Music] were doing for music what we had done for coffee.”
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

10. An Integrated Framework for Goods and Service Design (slide 1)
Exhibit 6.1
An Integrated Framework for Goods and Service Design (slide 1)
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

11. An Integrated Framework for Goods and Service Design (slide 2)
Exhibit 6.1
An Integrated Framework for Goods and Service Design (slide 2)
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

12. Chapter 6 Designing Goods and Services
CBP design and configuration choices revolve around a
solid understanding of customer needs and target markets
And the value that customers place on attributes such as:
Time: reduce waiting time, more responsive to customer needs.
Place: location selected for customer convenience.
Information: product support, user manuals.
Entertainment: enhance customer experience.
Exchange: channels used for purchases.
Form: how well the physical characteristics of a good address customer needs.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

13. Chapter 6 Designing Goods and Services
Service Design According to G. Lynn Shostack
The design of a “service” cannot be done independently from the “process” by which the service is delivered.
A service is a dynamic, living process that is performed and rendered.
The process by which the service is created and delivered is, in essence, the service itself.
A service cannot be stored or shipped; only the means for creating it can.
Service design is addressed from two perspectives: the service delivery system and the service encounter.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

14. Product and Process Design in Manufacturing
Chapter 6 Product & Process Design in Manufacturing
Product and Process Design in Manufacturing
Prototype testing is the process by which a model (real or simulated) is constructed to test the goods’ physical properties or use under actual operating conditions, as well as consumer reactions to the prototype.
Goods that are insensitive to external sources of variation are called robust.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

15. Robust Design and the Taguchi Loss Function
Chapter 6 Product & Process Design in Manufacturing
Robust Design and the Taguchi Loss Function
Genichi Taguchi states that instead of constantly directing effort toward controlling a process to assure consistent quality, design the manufactured good to achieve high quality despite the variations that will occur in the production line.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

16. Robust Design and the Taguchi Loss Function
Chapter 6 Product & Process Design in Manufacturing
Robust Design and the Taguchi Loss Function
Taguchi’s loss function explains the economic value of reducing variation in manufacturing.
L(x) = k(x - T)2 [5.1]
where:
L(x) is the monetary value of the loss associated with deviating from the target, T
x is the actual value of the dimension,
k is a constant that translates the deviation into dollars
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

17. Traditional Goal Post View of Conforming to Specifications
Exhibit 6.2
Traditional Goal Post View of Conforming to Specifications
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

18. Variation in U.S.-Made Versus Japanese-Made Television Components
Exhibit 6.3
Variation in U.S.-Made Versus Japanese-Made Television Components
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

19. Nominal-Is-Best Taguchi Loss Function
Exhibit 6.4
Nominal-Is-Best Taguchi Loss Function
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

20. Chapter 6 Designing Goods and Services
Taguchi Example
Suppose that the specification on a part is ± cm. A detailed analysis of product returns and repairs has discovered that many failures occur when the actual dimension is near the extreme of the tolerance range; that is, when the dimensions are approximately 0.48 or 0.52 and costs $50 for repair.
Thus, in Equation 5.1, the deviation from the target, x – T is 0.02 and L(x)
= $50. Substituting these values we have 50 = k(0.02)2 or k = 50/0.0004
= 125,000.
Therefore the loss function is L(x) = (x – T)2.
This means when the deviation is 0.10, the firm can still expect an average loss per unit of L(0.10) = 125,000(0.10)2 = $12.50
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

21. Chapter 6 Designing Goods and Services
Taguchi Example (continued)
Knowing the Taguchi loss function helps designers to determine appropriate tolerances economically. For example, suppose that a simple adjustment can be made at the factory for only $2 to get this dimension very close to the target.
If we set L(x) = $2 and solve for x – T we get
2 = (x – T)2
x – T = 0.004
Therefore, if the dimension is more than away from the target, it is more economical to adjust it at the factory and the specifications should be set as ±
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

22. Chapter 6 Designing Goods and Services
Product and Process Design in Manufacturing
Quality engineering refers to a process of designing quality into a manufactured good based on a prediction of potential quality problems prior to production.
Value engineering refers to cost avoidance or cost prevention before the good or service is created.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

23. Chapter 6 Designing Goods and Services
Product and Process Design in Manufacturing
Value analysis refers to cost reduction of the manufactured good or service process.
Design reviews ensure that all important design objectives are taken into account during the design process.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

24. Chapter 6 Designing Goods and Services
FMEA: Failure-Mode-and-Effects-Analysis
A technique in which each component of a product is listed along with the way it may fail, the cause of failure, the effect or consequence of failure, and how it can be corrected by improving the design.
A FMEA can uncover serious design problems prior to manufacturing and improve the quality and reliability of a product considerably.
DFM: Design for Manufacturability
A technique for evaluating product designs to ensure they can be built efficiently using available technology.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

25. Chapter 6 Designing Goods and Services
Product and Process Design in Manufacturing
Product and process simplification is the process of trying to simplify designs and reduce complexity an costs and thus improve productivity, quality, flexibility, and customer satisfaction.
Process simplification of the Cadillac Seville rear-bumper assembly reduced the number of parts in half and cut assembly time by 57 percent to less than 8 minutes.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

26. Chapter 6 Designing Goods and Services
Product and Process Design in Manufacturing
Modular design entails designing goods using modules that can be configured in many different ways, resulting in higher product variety and ease of assembly.
A focus on improving the environment by better good or service design is often called green manufacturing or green practices.
Green manufacturing example: packaging for fast food restaurants
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

27. Chapter 6 Designing Goods and Services
Reliability: the probability (a value between 0 and 1) that a manufactured good, piece of equipment, or system performs its intended function for a stated period of time under specified operating conditions.
Two types of failures:
Functional: failure that occurs in a product’s life due to manufacturing or material defects.
Reliability: failure that occurs after some period of use.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

28. Chapter 6 Designing Goods and Services
Reliability is defined as a probability, that is, a value between 0 and 1.
A 97% reliable part has a probability of 0.97 that it will perform its function for a given period of time under specified operating conditions.
Redundancy is the use of backup components in a design.
A system is a related group of components that work together to accomplish a task.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

29. Exhibit 6.5
Reliability of a Serial System
The total reliability of a serial system is the product of the individual probabilities of each process in a system.
Rn = (p1)(p2)(p3) (pn) [5.2]
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

30. Exhibit 6.6
Reliability of a Parallel System
In parallel systems, functions are independent and the entire system will fail only if all components fail.
Rn = 1-(1 - p1)(1- p2)(1 - p3) (1 - pn) [5.3]
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

31. The reliability of this series system is 0.883, or 83.3%.
Exhibit 6.7
Subassembly Reliabilities
The reliability of this series system is 0.883, or 83.3%.
R = (.98)(.91)(.99) = or 88.3%
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

32. Exhibit 6.8 Modified Design
The reliability of the parallel system for subassembly B is R = 1 - ( )( ) = =
Thus, the reliability of the equipment is R =(.98)(.9919)(.99) = .962 or 96.2%.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

33. Chapter 6 Designing Goods and Services
Service delivery system design includes
the following:
Facility location and layout,
The servicescape,
Process and job design,
Technology and information support systems, and
Organizational structure.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

34. Chapter 6 Designing Goods and Services
Service Delivery System Design
A poor choice on any one of these service delivery system design components, such as technology or job design, can degrade service system efficiency and effectiveness.
Integrating all of these elements is necessary to design a service that provides value to customers and can create a competitive advantage.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

35. Chapter 6 Designing Goods and Services
Service Delivery System Design
Facility location and layout:
Location creates customer’s convenience.
Great store layout, process design, and service encounter design are meaningless if the store is in the wrong location.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

36. Chapter 6 Designing Goods and Services
Service Delivery System Design
Facility location and layout:
Example facilities: health clinics and clubs, retail stores, rental car firms, libraries, hotels, emergency service facilities, branch banks, post offices, gasoline stations, airports, and so on.
The Internet is making physical locations less important for some information-intensive services such as Charles Schwab, Vanguard, and Scottrade.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

37. Chapter 6 Designing Goods and Services
Servicescape:
All of the physical evidence a customer might use to form an impression.
The servicescape provides the behavioral setting where service encounters take place.
Standardization of servicescape and service processes enhances efficiency, especially for multiple site organizations.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

38. Chapter 6 Designing Goods and Services
Servicescape: 3 dimensions
Ambient conditions – manifest by sight, sound, smell, touch, and temperature; five human senses; leather chairs in the lobby; cartoon characters in children’s hospital; music at a coffee shop.
Spatial layout and functionality – how furniture, equipment, and office spaces are arranged; also streets, parking lots, stadiums, etc.; law firms, fast food restaurants, hospitals.
Signs, symbols, and artifacts – explicit signals that communicate an image of the firm; diplomas hanging on the wall in a medical clinic; company logos and uniforms, artwork, mission statements
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

39. Chapter 6 Designing Goods and Services
Process and job design:
The activity of developing an efficient sequence of activities to satisfy internal and external customer requirements.
Specifications on how work is done at job and process levels.
Flowcharts of process flows integrated layout, technology, servicescape, and organizational structure.
Chapter 7 Process Selection, Design & Analysis
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

40. Chapter 6 Designing Goods and Services
Service Delivery System Design
Technology and information support systems:
What technology does each job require?
What information technology best integrates all parts of the value chain?
Technology ensures speed, accuracy, customization, and flexibility.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

41. Chapter 6 Designing Goods and Services
Service Delivery System Design
Organizational structure:
Organize by process or by function (Exhibit 1.7)
Who owns the process?
Functional approach requires many different handoffs between work activities and no one owns the total process.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

42. Chapter 6 Designing Goods and Services
Courtyard by Marriot Example:
Designed for two specific market segments.
167 possible physical features (see Exhibit 6.9).
Integration of service delivery system.
Detailed physical features of hotel and services.
Example: Design option #2 with large bar os soap, shampoo packet and shoeshine mitt.
Once the set of features were determined, architects and Marriot managers designed the hotel layout, processes, job functions, and information support systems.
Good example of designing a service business.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

43. Chapter 6 Designing Goods and Services
Service encounter design focuses on the
interaction, directly or indirectly, between
the service provider and the customer. The
Principal dimensions include:
Customer contact behavior and skills
Service provider selection, development, and empowerment,
Recognition and reward, and
Service recovery and guarantees.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

44. Chapter 6 Designing Goods and Services
Service Encounter Design
Customer contact refers to the physical or virtual presence of the customer in the service delivery system during a service experience.
Customer contact is measured by the percentage of time the customer must be in the system relative to the total time it takes to provide the service.
Systems in which the percentage is high are called high-contact systems; those in which it is are called low-contact systems.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

45. Chapter 6 Designing Goods and Services
Service Encounter Design
Examples of high-contact systems are estate planning and hotel check-in.
Examples of low contact systems are construction services and package sorting and distribution.
High customer contact areas of the organization are sometimes described as the "front room or front office" and low customer contact areas as "back room or back office."
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

46. Exhibit 6.10
Operational Implications of High versus Low Customer Contact Systems (slide 1)
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

47. Exhibit 6.10
Operational Implications of High versus Low Customer Contact Systems (slide 2)
Parts of this exhibit are based on concepts originally suggested by Richard B. Chase, “Where Does the Customer Fit in a Service Operation?” Harvard Business Review, November–December 1978, 137–142.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

48. Chapter 6 Designing Goods and Services
Service Encounter Design
Service-Provider Selection, Development,
and Empowerment
Hire the right people, train then well, empower them, recognition and reward.
A script dialogue is a prescribed response to a given service situation.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

49. Chapter 6 Designing Goods and Services
Service Encounter Design
Empowerment simply means giving people authority to make decisions based on what they feel is right, to have control over their work, to take risks and learn from mistakes, to promote change.
Ritz-Carlton Hotel employees can spend up to $2,000 to resolve customer complaints with no questions asked.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

50. Chapter 6 Designing Goods and Services
Recognition & Reward
Attract, retain and motivate
Keep good employees
Rewards such as free trips, parking spots, team recognition, and discounts.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

51. Chapter 6 Designing Goods and Services
Service Recovery & Guarantees
A service upset is any problem a customer has – real or perceived – with the service delivery system and includes terms such as service failure, error, defect, mistake, or crisis.
Service recovery is the process of correcting a service upset and satisfying the customer.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

52. Chapter 6 Designing Goods and Services
Service Recovery & Guarantees
Video or audiotapes demonstrating good and bad service incidents and how the service-providers should handle them are often used to train service-providers.
Script dialogues are used to train service-providers and represent the official company response to each type of service upset, error or mistake.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

53. U.S. Bank Service Guarantee Examples
Exhibit 6.12
U.S. Bank Service Guarantee Examples
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

54. Bl Service Recovery Process
Exhibit 6.11
Bl Service Recovery Process
A service upset is any problem a customer has with the service delivery system.
Service recovery is the process of correcting a service upset and satisfying the customer.
Source: Courtesy of Guy Schoenecker, president and chief quality officer.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

55. Chapter 6 LensCrafters Integrative Case Study
An Integrative Case Study of LensCrafters
LensCrafters’ ( mission statement suggests that time and service quality are the most important competitive priorities and potential order winners.
CBP is the integrated set of goods (eyewear) and services (accurate eye exam and one-hour service).
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

56. Chapter 6 LensCrafters Integrative Case Study
An Integrative Case Study of LensCrafters
Eyewear produced in “store backroom factory” in rapid response without sacrificing quality, efficient production procedures.
Service delivery system design:
Located in high-traffic areas for convenience
Servicescape of quality and professionalism
11 different in-store job roles.
Customer’s can see the “store backroom factory.”
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

57. One Example View of LensCrafter’s Customer Benefit Package
Exhibit 6.13
One Example View of LensCrafter’s Customer Benefit Package
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

58. A Schematic of a Typical LensCrafters Store Layout
Exhibit 6.14
A Schematic of a Typical LensCrafters Store Layout
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

59. Chapter 6 Designing Goods and Services
Design Speed
Design speed is the time it takes from the conception of an idea for a good, service, or CBP until it is available to customers.
Concurrent engineering is a process in which all major functions are involved with product development from conception through sales.
Boeing took 54 months to design the 777 airplane but would like to reduce the time to 10 months.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

60. Chapter 6 Designing Goods and Services
Quality Function Deployment (House of Quality)
Quality function deployment (QFD) is both a philosophy and a set of planning and communication tools that focus on customer requirements in coordinating the design, manufacturing, and marketing of goods or services.
QFD fosters improved communication and teamwork among all constituencies in the design process.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

61. Chapter 6 Designing Goods and Services
The House of Quality
QFD translates customer wants and needs to technical requirements of a product or service.
Building the House of Quality:
Determine customer requirements through the voice of the customer (VOC).
Define technical requirements of the product.
Determine interrelationships between the technical requirements.
The relationship matrix defines what technical requirements satisfy VOC needs.
Customer priorities and competitive evaluation help select which VOC requirements the product should focus on.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

62. Exhibit 6.15 The House of Quality
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

63. House of Quality Example for a Pizza
Exhibit 6.16
House of Quality Example for a Pizza
Operations Management/Ch. 6 Designing Goods and Services
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64. The Four Houses of Quality Hierarchy
Exhibit 6.17
The Four Houses of Quality Hierarchy
The voice of the customer is carried throughout the production/delivery process through three other “Houses of Quality.” These deploy VOC into component part characteristics, process plans, and quality control.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

65. Solved Problem # 2 –Taguchi Loss Function
2. A quality characteristic understudy has a manufacturing specification (in cm) of  Historical data indicates that if the quality characteristic takes on values larger than 0.25 cm or smaller than 0.15 cm, the product fails and a cost of $75 is incurred. Based on these data,
a. Determine the Taguchi Loss Function using Equation 5.1.
Solution:
L(x) = $75
(x-T) = 0.05
k = (75)/(0.05)2
k = 30,000
The loss function is: L(x) = 30,000(x-T)2.
b. Estimate the loss for a quality characteristic of cm.
L(x) = 30,000(x-T)2 where: x = and T = 0.200
L(0.135) = 30,000( )2 = $ This means that the firm can expect to incur a cost of $ per unit when the value of the quality characteristic is instead of the target value of
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

66. Solved Problem # 3 -- Series Production System
Exhibit 6.19
Solved Problem # 3 -- Series Production System
3. An automated production system shown in Exhibit 6.18 with three operations: turning, milling, and grinding. Individual parts are transformed from the turning center to the milling center, and then to the grinder by a robot; thus, if one machine or the robot fails, the entire production process must stop. The probability that any one component of the system will fail, however, does not depend on any other component of the system. Conceptually, we can think of the robot and machines in series, as shown in Exhibit 6.19.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

67. Chapter 6 Designing Goods and Services
Solved Problem #3
If we assume that the reliability of the robot, turning center, milling machine, and grinder are 0.99, 0.98, 0.99, and 0.96, respectively, what is the reliability of the complete system?
Solution:
Using equation 5.2, the reliability of the system can be computed as
R = (0.99)(0.98)(0.99)(0.96) = 0.92 or 92%.
This means there is a .92 probability that the system will be working over a specified period of time. As stated, this calculation assumes that the probability of failure of each operation in the system is independent of the others.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

68. Chapter 6 Designing Goods and Services
Solved Problem #3
(b) Suppose the system is redesigned with two grinders that operate in parallel; if one grinder fails, the other grinder may still work and hence the total system will continue to function. Such a system is illustrated in Exhibit What is the reliability of this new configuration?
Solution:
Using equation 5.3 and letting pg1 denote the reliability of grinder 1 and pg2 denote the reliability of grinder 2, the probability that both grinders will fail is given by Rboth fail = (1 - pg1)(1 - pg2))
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

69. Series Production System with Parallel Grinders
Exhibit 6.20
Series Production System with Parallel Grinders
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

70. Chapter 6 Designing Goods and Services
Solved Problem #3
Since either both grinders will fail, or at least one grinder will not fail, we can compute the probability that at least one grinder will not fail, Rone not fail, as Rone not fail = [(1 - pg1)(1 - pg2))]
Therefore, if each grinder has a reliability of 0.96, the reliability of both grinders together is Rone not fail = 1 - [(1- .96)(1- .96)] = = or 99.84%. Thus we have R = (0.99)(0.98)(0.99)(0.9984) = 0.96 or 96%.
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

71. House of Quality for a Fitness Center – Question #3
Exhibit 6.21
House of Quality for a Fitness Center – Question #3
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

72. Insurance Underwriting Service Process Configuration – Problem # 15
Exhibit 6.22
Insurance Underwriting Service Process Configuration – Problem # 15
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

73. Case: AMS Air Bag Sensor Case
Exhibit 6.23
Case: AMS Air Bag Sensor Case
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

74. AMS Sensor Block Diagram Case
Exhibit 6.24
AMS Sensor Block Diagram Case
Case: Automotive Airbag Reliability--EMS Sensor Reliability Diagram Case
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

75. ES Sensor Reliability Diagram Case
Exhibit 6.25
ES Sensor Reliability Diagram Case
Case: Automotive Airbag Reliability--EMS Sensor Reliability Diagram Case
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western

76. ES Sensor Reliability Diagram Case
Exhibit 6.26
ES Sensor Reliability Diagram Case
Case: Automotive Airbag Reliability--EMS Sensor Reliability Diagram Case
Operations Management/Ch. 6 Designing Goods and Services
©2007 Thomson South-Western