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Week 2

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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Week 2

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  1. Week 2 Spring 2 2011

  2. Intro to Decision Making

  3. 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

  4. Decision Trees • Graphical method of analyzing a decision - similar to Theory of Constraints • Payoff table can be translated to a Decision Tree

  5. 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

  6. Payoff Table States Of Nature (Alternatives) Decision a b 1 Payoff 1/a Payoff 1/b 2 Payoff 2/a Payoff 2/b

  7. 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

  8. Decision Making

  9. Products and Services

  10. Product Design • Specifies materials • Determines dimensions & tolerances • Defines appearance • Sets performance standards

  11. Service Design • Specifies what the customer is to experience • Physical items • Sensual benefits • Psychological benefits

  12. 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

  13. 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?

  14. 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

  15. 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

  16. 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

  17. GOOD TASTE LOW NUTRITION HIGH NUTRITION BAD TASTE Perceptual Map of Breakfast Cereals

  18. GOOD TASTE Cocoa Puffs LOW NUTRITION HIGH NUTRITION Cheerios Rice Krispies Wheaties Shredded Wheat BAD TASTE Perceptual Map of Breakfast Cereals

  19. Feasibility Study • Market Analysis - Market Segmentation • Economic Analysis • Technical / Strategic Analysis • Performance Specifications

  20. 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

  21. Preliminary Design How will it look? • Create form & functional design • Build prototype • Test prototype • Revise prototype • Retest

  22. 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

  23. Systems Reliability, Availability, Maintainability • Reliability • Availability • Maintainability • MTBF • MTTR

  24. 0.90 0.90 Computing Reliability Components in series 0.90 x 0.90 = 0.81

  25. 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

  26. MTBF MTBF + MTTR System Availability, SA = System Availability

  27. 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

  28. 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%

  29. Production Design • Part of the preliminary design phase • Simplification • Standardization • Modularity

  30. 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

  31. 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

  32. Breaking Down Barriers to Effective Design

  33. Design Teams Preferred solution = cross functional teams • Marketing, manufacturing, engineering • Suppliers, dealers, customers • Lawyers, accountants, insurance companies

  34. 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!!

  35. 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

  36. 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

  37. 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

  38. Design Review • Failure Mode and Effects Analysis (FMEA) • A systematic approach for analyzing causes & effects of failures • Prioritizes failures • Attempts to eliminate causes

  39. Value Analysis (Value Engineering) Is there value added? • 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?

  40. 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 -

  41. 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

  42. 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

  43. 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

  44. 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

  45. Processes and Technologies

  46. Process Strategy • Overall approach to producing goods and services • Defines: • Capital intensity • Process flexibility • Vertical integration • Customer involvement

  47. Types of Processes • Projects • Batch production • Mass production • Continuous production

  48. Process Planning • Make-or-buy decisions • Process selection • Specific equipment selection • Process plans • Process analysis

  49. Make-or-Buy Decisions 1. Cost 2. Capacity 3. Quality 4. Speed 5. Reliability 6. Expertise What about Proprietary Information? Barrier to Make-or-Buy?

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