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# Week 2 - PowerPoint PPT Presentation

Week 2 . Spring 2 2011. Intro to Decision Making. Decision Analysis. Payoff Table - craps tables Maximax - maximum of maximum payoffs - optimistic - “hard ways” Maximin - maximum of minimum payoffs - safe bets or even odds bets

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Presentation Transcript

### Week 2

Spring 2

2011

Decision Analysis
• Payoff Table - craps tables
• Maximax - maximum of maximum payoffs - optimistic - “hard ways”
• Maximin - maximum of minimum payoffs - safe bets or even odds bets
• Minimax regret - minimum of maximum regrets or opportunity costs
Decision Trees
• Graphical method of analyzing a decision - similar to Theory of Constraints
• Payoff table can be translated to a Decision Tree
The Payoff Table
• A method of organizing & illustrating the payoffs from different decisions given various states of nature
• A payoff is the outcome of the decision – a Craps table pay off chart is an example of a payoff chart
Payoff Table

States Of Nature

(Alternatives)

Decision a b

1 Payoff 1/a Payoff 1/b

2 Payoff 2/a Payoff 2/b

STATES OF NATURE

Good Foreign Poor Foreign

DECISION Competitive Conditions Competitive Conditions

Expand \$ 800,000 \$ 500,000

Maintain status quo 1,300,000-150,000

Sell now 320,000 320,000

Maximums: 1,300,000; 800,000, 320,000

Minimums: 500,000; 320,000; -150,000

### Decision Making

Product Design
• Specifies materials
• Determines dimensions & tolerances
• Defines appearance
• Sets performance standards
Service Design
• Specifies what the customer is to experience
• Physical items
• Sensual benefits
• Psychological benefits
An Effective Design Process
• Matches product/service characteristics with customer needs
• Meets customer requirements in simplest, most cost-effective manner
• Reduces time to market - haste vs. speed to market
• Minimizes revisions - quality designed into the product
Stages in the Design Process
• Idea Generation — Product Concept - can you create your own market? What role does the voice of the customer play in idea generation?
• Feasibility Study — Performance Specifications
• Preliminary Design — Prototype - testing and redesign
• Final Design — Final Design Specifications
• Process Planning — Manufacturing Specifications - make to order/stock – assembly line?

Idea

generation

Feasibility

study

Performance specifications

Product or service concept

Form design

Suppliers

Customers

R&D

Revising and testing prototypes

Marketing

Competitors

Production design

Functional

design

Design specifications

Manufacturing or delivery specifications

New product or service launch

Pilot run

and final tests

Final design

& process plans

The Design Process
Idea Generation
• Suppliers, distributors, salespersons
• Trade journals and other published material
• Warranty claims, customer complaints, failures
• Customer surveys, focus groups, interviews
• Field testing, trial users
• Research and development
More Idea Generators
• Perceptual Maps
• Visual comparison of customer perceptions
• Benchmarking
• Comparing product/service against best-in-class
• Reverse engineering
• Dismantling competitor’s product to improve your own product

GOOD TASTE

LOW NUTRITION

HIGH NUTRITION

Perceptual Map of Breakfast Cereals

GOOD TASTE

Cocoa Puffs

LOW NUTRITION

HIGH NUTRITION

Cheerios

Rice

Krispies

Wheaties

Shredded

Wheat

Perceptual Map of Breakfast Cereals
Feasibility Study
• Market Analysis - Market Segmentation
• Economic Analysis
• Technical / Strategic Analysis
• Performance Specifications
Risk Analysis

1. Identify the Hazards

2. Assess hazards to determine risks.

3. Develop controls and make risk decisions.

4. Implement controls.

5. Supervise and evaluate.

From FM 100-14

Preliminary Design

How will it look?

• Create form & functional design
• Build prototype
• Test prototype
• Revise prototype
• Retest
Functional Design(How the Product Performs)
• Reliability
• Probability product performs intended function for specified length of time
• Maintainability
• Ease and/or cost or maintaining/repairing product
Systems Reliability, Availability, Maintainability
• Reliability
• Availability
• Maintainability
• MTBF
• MTTR

0.90

0.90

Computing Reliability

Components in series

0.90 x 0.90 = 0.81

0.90

0.90

0.90

R2

0.95

R1

Computing Reliability

Components in series

0.90 x 0.90 = 0.81

Components in parallel

0.95 + 0.90(1-0.95) = 0.995

MTBF

MTBF + MTTR

System Availability, SA =

System Availability

MTBF

MTBF + MTTR

System Availability, SA =

PROVIDER MTBF (HR) MTTR (HR)

A 60 4.0

B 36 2.0

C 24 1.0

System Availability

MTBF

MTBF + MTTR

System Availability, SA =

PROVIDER MTBF (HR) MTTR (HR)

A 60 4.0

B 36 2.0

C 24 1.0

System Availability

SAA = 60 / (60 + 4) = .9375 or 93.75%

SAB = 36 / (36 + 2) = .9473 or 94.73%

SAC = 24 / (24 + 1) = .96 or 96%

Production Design
• Part of the preliminary design phase
• Simplification
• Standardization
• Modularity
Final Design & Process Plans
• Produce detailed drawings & specifications
• Create workable instructions for manufacture
• Select tooling & equipment
• Prepare job descriptions
• Determine operation & assembly order
• Program automated machines
Improving the Design Process
• Design teams
• Concurrent design
• Design for manufacture & assembly
• Design to prevent failures and ensure value
• Design for environment
• Measure design quality
• Utilize quality function deployment
• Design for robustness
• Engage in collaborative design
Design Teams

Preferred solution = cross functional teams

• Marketing, manufacturing, engineering
• Suppliers, dealers, customers
• Lawyers, accountants, insurance companies
Concurrent Design
• Improves quality of early design decisions
• Decentralized - suppliers complete detailed design
• Incorporates production process
• Scheduling and management can be complex as tasks are done in parallel
• include the customer in the process!!
Design for Manufacture and Assembly
• Design a product for easy& economical production
• Incorporate production design early in the design phase
• Improves quality and reduces costs
• Shortens time to design and manufacture
• also known as Design for Six Sigma
Design for Six Sigma
• Define – the goals of the design activity
• Measure – customer input to determine what is critical to quality from the customers’ perspective – what are customer delighters? What aspects are critical to quality?
• Analyze – innovative concepts for products and services to create value for the customer
• Design – new processes, products, and services to deliver customer value
• Verify – new systems perform as expected
DFM Guidelines
• Minimize the number of parts, tools, fasteners, and assemblies
• Use standard parts and repeatable processes
• Modular design
• Design for ease of assembly, minimal handling
• Allow for efficient testing and parts replacement
Design Review
• Failure Mode and Effects Analysis (FMEA)
• A systematic approach for analyzing causes & effects of failures
• Prioritizes failures
• Attempts to eliminate causes
Value Analysis (Value Engineering)

• Ratio of value / cost
• Assessment of value :

1. Can we do without it?

2. Does it do more than is required?

3. Does it cost more than it is worth?

4. Can something else do a better job

5. Can it be made by less costly method, tools, material?

6. Can it be made cheaper, better or faster by someone else?Should we contract it out?

Design for Environment
• Design from recycled material
• Use materials which can be recycled
• Design for ease of repair
• Minimize packaging
• Minimize material & energy used during manufacture, consumption & disposal
• green laws in Europe -
Examples
• Recycling of oil
• carpets in land fills - 4 billion pounds in land fills annually
• Xerox and Hewlett-Packard - pay for return of printer cartridges on larger printers
Design for Robustness
• Product can fail due to poor design quality
• Products subjected to many conditions
• Robust design studies
• Controllable factors - under designer’s control
• Uncontrollable factors - from user or environment
• Designs products for consistent performance
Characteristics of Services
• Services are intangible
• Service output is variable
• Service have higher customer contact
• Services are perishable
• Service inseparable from delivery
• Tend to be decentralized and dispersed
• Consumed more often than products
• Services can be easily emulated
• Call girl principle – value diminishes after service is rendered
A Well-Designed Service System is
• Consistent with firm’s strategic focus
• Customer friendly
• Easy to sustain
• Effectively linked between front & back office
• Cost effective
• Visible to customer
Process Strategy
• Overall approach to producing goods and services
• Defines:
• Capital intensity
• Process flexibility
• Vertical integration
• Customer involvement
Types of Processes
• Projects
• Batch production
• Mass production
• Continuous production
Process Planning
• Process selection
• Specific equipment selection
• Process plans
• Process analysis

1. Cost

2. Capacity

3. Quality

4. Speed

5. Reliability

6. Expertise

Proprietary Information?

Source: Aberdeen Research,

“Low-Cost Country Sourcing Success Strategies: Maximizing and

Sustaining the Next Big Supply Savings Opportunity,” Jun 2005

Specific Equipment Selection

Purchase cost

Operating cost

Annual savings

Revenue enhancement

Replacement analysis

Risk and uncertainty

Piecemeal analysis – “one piece at

a time”

Process Plans
• Blueprints
• Bill of material Flat or multiple layers - part or assembly
• Assembly chart /product structure diagram
• Operations process chart - list of operations involved in assembly
• Routing sheet - sequence of events

Part name Crevice Tool

Part No. 52074

Usage Hand-Vac

Assembly No. 520

Oper. No. Description Dept. Machine/Tools Time

10 Pour in plastic bits 041 Injection molding 2 min

20 Insert mold 041 #076 2 min

30 Check settings 041 113, 67, 650 20 min & start machine

40 Collect parts & lay flat 051 Plastics finishing 10 min

50 Remove & clean mold 042 Parts washer 15 min

60 Break off rough edges 051 Plastics finishing 10 min

Operations Process Chart
Process Analysis
• The systematic examination of all aspects of a process to improve its operation
• Faster
• More efficient
• Less costly
• More responsive
• Basic tools
• Process flowchart
• Process diagrams
• Process maps

Date: 9-30-02

Location: Graves Mountain

Analyst: TLR

Process: Apple Sauce

Step

Operation

Transport

Inspect

Delay

Storage

Description

of

process

Distance

(feet)

Time

(min)

1

20

2

Move to inspection station

100 ft

3

Weigh, inspect, sort

30

4

Move to storage

50 ft

5

360

Wait until needed

Move to peeler

6

20 ft

7

Apples peeled and cored

15

8

Soak in water until needed

20

9

5

Place in conveyor

10

Move to mixing area

20 ft

11

30

Weigh, inspect, sort

Page 1 0f 3

Total

480

190 ft

Process Flowchart

UPS

Active Bins

Parcel Post

Picking

Packing

Receiving

Shipping

Reserve Storage

Mono-gramming

Next-Day UPS

Embroid-ering

Quality Assurance

Back to Vendor

Hemming

Process Diagram
Principles for Redesigning Processes
• Remove waste, simplify, consolidate
• Link processes to create value
• Let the swiftest and most capable execute
• Capture information digitally and propagate
Principles for Redesigning Processes
• Provide visibility through information about process status
• Fit the process with sensors and feedback loops
• Connect, collect and create knowledge around the process
• Personalize the process
Define

Measure

Improve

Define

Measure

Analyze

Improve

Control

Other ways to redesign the process

Velocity Management

Methodology

General Electric’s

Six Sigma Methodology

Techniques for Generating Innovative Ideas
• Vary entry point to a problem
• Draw analogies
• Use attribute brainstorming
Enterprise Software
• Collect, analyze, and make decisions based on data
• ERP - Enterprise Resource Planning
• Managing wide range of processes
• Human resources, materials management, supply chains, accounting, finance, manufacturing, sales force automation, customer service, customer order entry
• Finding hidden patterns through data mining
ERP
• SAP – 43% of market
• Oracle – 23%
• Sage Group – 6%
• Microsoft – 4%
• Horror Stories – Hershey’s, Dell
• Electronic data interchange (EDI)
• Internet, extranets
• Wireless communications
• Teleconferencing & telecommuting
• Bar coding, Radio Frequency Identification
• Virtual reality

Distance Learning?

Active Tags

Always on

Battery powered

Can be read from up to 300 ft

US Army

Savi Tags

Passive Tags

Small

Must be activated

May be turned off

England

California

Rolex

RFID
Automated Material Handling
• Conveyors
• Automated guided vehicle (AGV)
• Automated storage & retrieval system (ASRS) Grainger/Defense Distribution Center, San Joaquin
Robotics
• Programmable manipulators
• Better than humans with respect to
• Hostile environments
• Long hours
• Consistency
• Adoption has been slowed by ineffective integration and adaptation of systems
• Welding at Harley Davidson Plant
Next Week
• Next Week: Facility Planning, Project Management
• Take home exam – to be posted to website