1 / 19

Product Design and Process Selection

Product Design and Process Selection. Based on slides for Chase Acquilano and Jacobs, Operations Management, McGraw-Hill. What is a Product?. A product is a package of : Goods Services Experiences Ongoing Relationships A product has: Tangible attributes Intangible attributes. Examples

goldy
Download Presentation

Product Design and Process Selection

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Product Design and Process Selection Based on slides for Chase Acquilano and Jacobs, Operations Management, McGraw-Hill

  2. What is a Product? A product is a package of: Goods Services Experiences Ongoing Relationships A product has: Tangible attributes Intangible attributes Examples Automobile Airplane trip Diamond Ring Restaurant Meal Dishwasher College Education Tax Preparation Basketball Game

  3. Product Design Issues • Value analysis/value engineering • Obtain better performance at lower cost • Two Design Approaches: • Over the Wall Approach vs. Concurrent Engineering • Complexity of design • Implications?? • Reliability • How can it be increased? • Standardization • Advantages & disadvantages? • Modular design • Advantages & disadvantages? • Environmental Implications

  4. Exercise • Pick several products and list some issues that need to be considered in its design and manufacture • Include aesthetic, manufacturability, after-sales service issues among others • Deliverable • List and present to the class

  5. Process Selection

  6. Process Structures Continuous Processing Repetitive (assembly lines) Manufacturing cells Batch processing Job Shops Projects “continuous or semi-continuous” “intermittent”

  7. Example: Job Shop

  8. Example: Batch Processing

  9. Example: Assembly Line Processing

  10. Example: Continuous Processing

  11. Manufacturing

  12. Break-Even Analysis Some managerial questions: • How much should we produce to break even? • For a specific volume, should we manufacture the product ourselves, or outsource? • For machine alternatives A and B, at what volumes should we use machine A and at what volumes, machine B?

  13. Break-Even Analysis (example) • Sale Price = $300 • Option 1: • Purchase = $200 * Demand • Option 2: • Lathe = $80,000 + $75 * Demand • Option 3: • Machine center = $200,000 + $15 * Demand Purchase vs. Lathe? Lathe vs. Machining Center?

  14. Calculations Purchase versus Lathe: $200 * Demand = $80,000 + $75 * Demand ($200 * Demand) - ($75 * Demand) = $80,000 $125 * Demand = $80,000 Demand = $80,000/$125 = 640 units so – less than 640 units, purchase; 640 of greater, use Lathe Lathe versus Machine Center: $80,000 + $75 *Demand = $200,000 + $15 * Demand Demand = $120,000/$60 = 2,000 units so – less that 2000 units use the Lathe; 2000 or more use the machining center

  15. Break Even Analysis Example • You are starting a new business and your fixed costs are estimated to be $500,000. Your product sells for $100 and costs you $50 to manufacture. What is the breakeven point? If you sell 15,000 units, what will be your profit? • Answer: Break Even Value is 10,000 and Profit is $250,000

  16. Break Even Analysis Formulas • Total Revenue = Total Cost • P x = F + V x implies: • BEP(x) = F/[P-V] • Profit = TR-TC = (P-V) x – F • Breakeven between two machines: • F1 + V1 x and F2 + V2 x --assume F2 > F1 & V2 < V1 • (F2 – F1) / (V1 – V2) Note: F = Fixed Cost; P = Price; V = Variable Cost

  17. Break Even Analysis Example • In your business you are considering two machines. Machine 1 costs $500,000 and has a variable per unit cost of $50 per item. Machine 2 has a fixed cost of $200,000 and has a variable per unit cost of $80 per item. What is the break-even volume for the two machines. If a friend tells you to use Machine 2 if the volume is 5,000 items, is she right or wrong? • Answer: Break Even Value is 10,000

  18. Break Even Analysis Graphical Answer

  19. Summary • Production Strategies • Process focused >>> Product focused • Other alternatives: Project, Cellular • Technology • Break-even Analysis

More Related