PRODUCT AND SERVICE DESIGN government agencies like the DTI,

primary consideration : customer LGUs Business Permits and

satisfaction Licensing requirements, to ensure
Secondary : cost or profit, quality, products meet safety standards and
ability to produce minimize risks of harm to users.
(manufacturability /serviceability), • Intellectual Property - This covers
ethics/ safety and sustainability protecting original designs,
Idea generation (sources of design inventions, and creative expressions
ideas: through patents, copyrights, and
Reverse engineering - dismantling trademarks to prevent unauthorized
and inspecting a competitor’s use by others.
product to discover product •Consumer protection: This
improvements ensures fair and transparent
Research and development (R&D) business practices, including
: organized effort to increase accurate advertising, clear labeling,
scientific knowledge or product and responsible data collection and
innovation usage.
* basic research – the objective of •Accessibility: This involves
advancing the state of knowledge designing products and services that
about a subject without any nearterm are usable by individuals with
expectation of commercial disabilities, complying with
applications regulations like the PWDs
* Applied research – has the Ethical Considerations:
objective of achieving commercial •Privacy: This concerns respecting
applications user privacy by collecting and using
* Development – converts the result data responsibly, obtaining informed
of applied research into useful consent, and implementing robust
commercial applications. security measures.
Reasons for Product and Service •Bias and discrimination: This
Design or Redesign involves avoiding creating products
* Economic (Low demand, or services that perpetuate biases or
excessive warranty claims, need to discriminate against certain groups
reduce costs of people.
• Social and demographic (e.e. •Environmental impact: This
aging baby boomers, population considers the environmental footprint
shift) of products and services throughout
• Political, liability or legal their lifecycle, aiming to minimize
(government changes, safety issues, resource consumption, pollution, and
new regulations) waste generation.
• Competitive ( new or changed •Social responsibility: This
products / services, new advertising / involves considering the broader
promotions) societal implications of products and
• Cost or availability ( raw services, such as their potential
materials, components, labor, water impact on employment,
and energy) communities, and cultural values
• Technology (product Environmental Factors
components , processes) • Cradle to Grave Assessment –
Legal Considerations: environmental impact throughout its
•Product safety: This involves useful life
adhering to regulations set by
• End-of-life programs – reduce the Standardization – the extent to
dumping of products, particularly which a product, service or process
electronic equipment in landfills or lacks variety.
third world countries Mass customization – strategy of
• 3Rs – reduce, reuse and recycle producing basically standardized
Reduce–value analysis - goods, but incorporating some
examination of the function of part degree of customization.
and materials in an effort to reduce Delayed differentiation – the
costs and or improve performances process of producing but not quite
Reuse / remanufacturing – completing, a product or service until
refurbishing used products by customer preferences are known
replacing worn-out or defective Modular design – a form of
components Design for disassembly standardization in which component
(DFD) – design so that used parts are grouped into modules that
products can be easily taken apart are easily replaced or interchanged
Recycle – recycling – recovering Service Design
materials for future use (cost saving, - Phases in the Service Design
environment concerns, Phases
environmental considerations - Service Blueprinting
Design for recycling (DFR) – - Characteristics of a well-designed
design that facilitates the recovery of service systems
materials and components in used - Challenges of Service Designs
products for reuse. - Guidelines for Successful Service
Human factors, also known as Design
ergonomics, - is a scientific Several key issues in product or
discipline that studies how people service design:
interact with devices, products, and Reliability - measure of the ability of
systems. It focuses on designing a product, part or system to perform
products and systems that are safe, its intended function under a
usable, and efficient by considering prescribed set of conditions.
the physical, cognitive, and Failure – is used to describe a
emotional capabilities and limitations situation in which a product, part or
of users. system does not perform as
Phases of Product design and intended.
development Normal Operating Procedures –
Product Life Cycle Mgt (PLM) - a the set of conditions under which an
systematic approach to managing item’s reliability is specified.
the series of changes a product goes Improving reliability:
through from its conception to its ➢ Improve component design
end-of-life. ➢ Improve production and/or
Beginning – involves design and assembly techniques
development ➢ Improve testing
Middle of life – working with ➢ Use backups
suppliers, managing product ➢ Improve preventive maintenance
information and warranties procedures
End of life – involves strategies for ➢ Improve user education
product discontinuance, disposal or ➢ Improve system design
recycling Robust Design – design that results
in products nad services that can
function over a broad range of 1. Customer Requirements - the
conditions. starting point for the design process
Taguchi’s Approach - is a powerful 2. Planning Matrix - information on
philosophy and set of techniques how the market sees current
used in quality control and product offerings
design. It emphasizes minimizing the 3. Technical Requirements - a
variation of a product or process translation of customer requirements
around a target value. into in-house speculations
DEGREE OF NEWNESS 4. Interrelationship Matrix - a table
➢ Modification of an existing product showing how customer requirements
or service affect individual technical
➢ Expansion of an existing product specifications
line or service 5. Technical Correlations - these
➢ Expansion of an existing product show possible compromises you
line or service offering may need to make, or opportunities
➢ Clone of a competitor’s product or you can take advantage of
service 6. Design Targets - the final output,
➢ New product or service defined using all the information
➢ Impact : above
➢ Organization : low level of KANO Model – developed insights
newness can mean a fairly quick and ped by Dr. Noriaki Kano
easy transition, while a high level of Noriaki Kano – Japanese professor
newness will mean slower and – he offered a perspective on
difficult & costly. customer perception of quality
➢ Market – low level =little difficulty different from the traditional view.
of market acceptance = possibly low Basic requirements are the
profit - high level = more difficulty essential features that customers
with acceptance or rapid gain with expect from any product or service in
high potential of profit your category.
Quality Function Deployment – an Performance requirements are the
approach that integrates the voice of attributes that customers use to
the customer into both product and compare and evaluate different
service development (based on a set options.
of matrices – what & how) Excitement requirements are the
House of Quality / HOQ, is a unexpected or innovative features
product planning matrix that is used that delight customers and create
to show how your customer loyalty.
requirements relate directly to the PHASES IN PRODUCT DESIGN
actions you can take to achieve AND DEVELOPMENT
those requirements. HOQ diagrams > Feasibility Analysis – entails
resemble the shape of a house and market analysis (demand) ,
should be created using direct economic (dev’t, cost & prodtn,
customer input if applicable. profit) technical analysis (capacity
- HOQ is considered the primary tool and availability)
in QFD and serves as the roadmap ➢ Product Specifications –
for describing the journey from initial detailed description of customer’s
idea to final product or service needs (or exceed), that requires
specifics. collaboration between, legal,
House of Quality has four main marketing & operations).
sections
➢ Process Specifications - also COMPUTER-AIDED DESIGN (CAD)
known as minispecs, are detailed is the use of computers to create,
descriptions of the steps involved in modify, analyze, or optimize a
a specific process within a larger design.
operation. They act like a roadmap, - It's a digital toolkit widely used by
guiding individuals on how to engineers, architects, product
perform a task or series of tasks designers, and other creative
consistently and efficiently. professionals to bring their ideas to
➢ Prototype Development – is a life.
crucial stage in the product PRODUCTION REQUIREMENTS
development lifecycle. It's the (CAPABILITIES) (designing for
creation of a working or visual assembly and disassembly)
representation of a product concept Design for Manufacturing (DFM) –
to test its feasibility, functionality, designing products that are
and user experience. compatible with an organization’s
➢ Design Review - is a formal capabilities. Design for Assembly
evaluation process within a product (DFA) – design that focuses on
development lifecycle. It's essentially reducing the number of parts of a
a meeting where a design, typically product and on assembly and on
of a product, process, or service, is methods. Manufacturability – the
carefully examined against capability if an organization to
predetermined criteria. The aim is to produce an item at an acceptable
identify strengths, weaknesses, and profit
potential issues before committing to Component commonality in
further development or production. product design refers to the practice
➢ Market Test – used to determine of using the same components
the extent of consumer acceptance across multiple products within a
(c/o marketing) product line or family. Imagine you're
➢ Product Introduction – new building different sizes of bicycles.
product is promoted. (handled by The handlebars, brakes, and pedals
marketing) might be common across all sizes,
➢ Follow-up evaluation – based on while the frame and wheels would be
user feedback, changes may be specific to each size.
made (c/o marketing) - The key to successful component
Concurrent engineering (CE), also commonality lies in striking a
sometimes referred to as balance between the benefits of cost
simultaneous engineering or reduction and efficiency with the
integrated product development need for product differentiation and
(IPD), is a powerful approach to performance optimization.
product development that Examples of Component
emphasizes collaboration and Commonality:
parallel execution of tasks across •Car Manufacturers: Car
various stages of the development companies often share engines,
lifecycle. Unlike the traditional transmissions, and other
sequential approach where stages components across different car
happen one after another models within a brand. •Electronics
- CE breaks down silos and Manufacturers: Smartphone
encourages different teams to work manufacturers might use the same
together from the very beginning. camera module or battery across
various phone models.
•Appliance Manufacturers: Service Delivery System - How to
Washing machines and dryers from provide the facilities, processes and
the same brand might share skills need to provide a service
common components like motors or Product Bundle – combination of
control panels. goods and services provided to a
Service can have two main customer.
interpretations: Service Package – the physical
1. An act or performance provided resources needed to perform the
for someone else: service, the accompanying goods,
In this context, a service is an and the explicit and implicit services
intangible offering that fulfills a need included.
or solves a problem for a customer. y)
Here are some key characteristics of Customer’s participation makes
services: •Intangible: Services quality and demand variability more
cannot be physically touched or difficult to manage Resolution: (limit
held, unlike a product. For example, customer participation and use staff
a haircut or a tax consultation are flexibility)
both services. • Reducing customer choices
•Process-Oriented: Services are • Standardizing or simplifying
delivered through a series of actions elements of service
or steps performed by a person or a • Incorporating flexibility in capacity
system. For instance, a restaurant management Design objectives
meal involves preparing food, based on customer perspective
serving it to the customer, and require understanding the customer
cleaning up afterwards. experience and focusing on how to
•Perishable: Services cannot be maintain control over service
stored for later use. An empty bus delivery to obtain customer
seat on a departing bus or a missed satisfaction.
doctor's appointment opportunity are Phases in the Service Design
lost services that cannot be Process
recovered. •Heterogeneity: - Conceptualize
Services can vary in quality - Identify service package
depending on the provider, the components
customer, and the specific situation. - Determine package components
Two haircuts from the same barber - Determine performance
might differ slightly depending on the specifications
customer's instructions and the - Translate performance
barber's level of focus. •Customer specifications into design
Interaction: Services often involve a specification
significant degree of interaction - Translate design
between the service provider and the
customer. The quality of this
interaction can significantly impact Specifications into delivery
the customer's experience. specifications
2. Employment or work performed Service blueprints visualize
for someone else: organizational processes to optimize
In this sense, service refers to a job how a business delivers a user
or occupation, particularly one experience.
involving serving or helping others.
Service blueprinting is the primary 7. Effective linkages between back
mapping tool used in the service operations
design process. 8. Single unifying theme
Benefits: 9. Ensuring reliability and high
➢ discover weaknesses quality
➢ identify opportunities for Challenges of Service Design
optimization 1. Variable requirements
➢ bridges crossdepartment efforts 2. Difficult to describe
Key Elements : 3. High customer contact
➢ Customer Actions - Steps, 4. Service - customer encounter
choices, activities, and interactions Guidelines for Successful Service
that customers perform while Design
interacting with a service to reach a 1. Define service package
particular goal. 2. Focus on customer’s perspective
➢ Frontstage Actions - Actions that 3. Consider the image of the service
occur directly in view of the package
customer. These actions can be 4. Recognize the designer’s
human-to-human or human-to- perspective is different from the
computer actions customer’s perspective
➢ Backstage Actions - Steps and 5. Make sure that managers are
activities that occur behind the involved
scenes to support onstage 6. Define quality for tangibles and
happenings. These actions could be intangibles
performed by a backstage employee 7. Make sure that requiretment,
(e.g., a cook in the kitchen) or by a trainings and rewards are consistent
frontstage employee who does with service expectations
something not visible to the 8. Establish procedures to handle
customer (e.g., a waiter entering an exceptions
order into the kitchen display 9. Establish systems to monitor
system). service.
➢ Processes - Internal steps, and STRATEGIC CAPACITY
interactions that support the PLANNING FOR PRODUCTS AND
employees in delivering the service. SERVICES
➢\ CAPACITY - An upper limit or ceiling
– lines of interaction, line of visibility on the load that an operating unit
and line of internal interaction can handle
➢ Evidence - which is made of the - The load may be in terms of the
props and places that anyone in the number of physical units produced or
blueprint has an exchange with. number of services performed.
Evidence can be involved in both - The operating unit might be a plant,
frontstage and backstage processes department, machine, store, or
and actions. worker
Service Systems - Capacity needs include equipment,
1. Consistent with organization space, and employee skills
mission - • The goal of strategic capacity
2. User friendly planning is to achieve a match
3. Robust between the long-term supply
4. Easy to sustain capabilities of the organization and
5. Cost effective the predicted long-term demand.
6. Value to customers
Overcapacity causes operating different measures of capacity are
costs to be high. useful in defining two measures of
Under capacity causes strained system effectiveness: efficiency and
resources and possible loss of utilization
customers Efficiency - The ratio of actual
Key Questions in Capacity output to effective capacity
Planning Efficiency = Actual Output /
1. What kind of capacity is needed? Effective Capacity X 100%
2. How much is needed to match Capacity Utilization - The ratio of
demand? actual output to design capacity
3. When is it needed? utilization = Actual Output Design
CAPACITY DECISION IS Capacity X 100%
STRATEGIC Determinants of Effective
- Capacity decisions have a real Capacity
impact on the ability of the FACILITIES
organization to meet future demands ➢The design of faciltiies, including
for products and services. size and provision for expansion, is
- Capacity decisions affect operating key.
costs ➢Location factors, such as
- Capacity is usually a major transportation costs, distance
determinant of initial cost market, labor supply, energy sources
- Capacity decisions often involve a and room expansion are also
long-term commitment of resources important
- Capacity decisions can affect ➢Layout of the work area and
competitiveness environmental factors also play a
- Capacity affects the ease of significant role.
management PRODUCT AND SERVICE
- Globalization has increased the FACTORS ➢Product and service
importance and complexity of design can have a tremendous
capacity decisions influence on capacity.
- It is necessary to plan capacity ➢The ore uniform the output, the
decisions in advance more opportunities there are for
Defining and Measuring Capacity standardization of methods and
Design Capacity materials
• Maximum output rate or service PROCESS FACTORS
capacity an operation, process, or ➢The quantity capability of a
facility is designed for. process is an obvious determinant of
• The maximum designed service capacity but subtle determinant is
capacity or output rate. the influence of output capacity.
Effective Capacity ➢Process improvement that
• Design capacity minus allowances increase quality and productivity can
such as personal time , maintenance result in increased capacity.
and scrap. HUMAN FACTORS
Availability of Inputs ➢The tasks that make up a job, the
• Measure of capacity. variety of activities involved, also the
Actual Output training, skill and experience
• Rate of output actually achieved required to perform a job all have an
which cannot exceed effective impact on the potential and actual
capacity. output.
Defining and Measuring Capacity
➢Employee motivation has a very - Evaluate existing capacity and
basic relationship to capacity, as do facilities and identify gaps.
absenteeism. - Identify alternatives for meeting
POLICY FACTORS requirements.
➢Management policy can affect - Conduct financial analyses of each
capacity by allowing or not allowing alternative.
capacity options such as overtime or - Assess key qualitative issues for
second ot third shifts. each alternative.
OPERATIONAL FACTORS - Select the alternative to pursue that
➢Inventory stocking decisions, late will be best in the long term.
deliveries, purchasing requirements, - Implement the selected alternative.
acceptability of purchased materials, - Monitor results.
quality inspection and control FORECASTING CAPACITY
procedures also have an impact on REQUIREMENTS
effective capacity. • Long-term vs short-term capacity
SUPPLY CHAIN FACTORS needs
➢It must be taken into account in • Long-term relates to overall level of
capacity planning if substantial capacity such as facility size, trends,
capacity changes are involved. and cycles.
EXTERNAL FACTORS • Shirt-term related to variations from
➢Product standards, especially seasonal, random, and irregular
minimum quality and performance fluctuation in demand
standards, can restrict management Calculating Process
options for increasing capacity REquirements • The task of
Strategy Formulation - An determining capacity requirements
organization typically base its should not be taken lightly.
capacity strategy on assumption and • Substantial losses can occur when
predictions about long-term demand there are misjudgments on capacity
patterns, technological changes, and needs.
the behavior of its competitors • Three Important Factors:
Key Decisions of Capacity ✓ The need to be near customers
Planning ✓ The inability to store service
❖The amount of capacity needed ✓ The degree of volatility
❖The timing of changes DO IT IN-HOUSE OR OUTSOURCE
❖The need to maintain balance IT?
throughout the system FACTORS
❖The extent of flexibility of facilities Available Capacity
and the workforce. • If the organization has available
Capacity Cushion - which is an equipment, necessary skills, and
amount capacity in excess of time, if often makes sense to
expected demand when there is produce an item or perform a service
some uncertainty about demand in-house.
- Deciding on the amount of capacity • The additional cost would be
involves consideration of expected relatively small compared with those
demand and capacity cost required to buy items or subcontract
Steps in the Capacity Planning services
Process Expertise - If a firm lacks the
- Estimate future capacity expertise to do the job satisfactory,
requirements buying might be a reasonable
alternative
Quality Considerations - Firm that • When developing capacity
specializes can usually offer higher alternatives, it is important to
quality than an organization that can consider how parts of the system
attain itself. interrelate.
- Conversely, unique quality • Evidence of an unbalanced system
requirements or the desire to closely is the existence of a bottleneck
monitor quality may cause an operation
organization to perform a job itself - Bottleneck Operation is an
The Nature of Demand - When operation in a sequence of
demand for an item is high and operations whose capacity is lower
steady, the organization is often than the capacities of other
better off doing the work itself. operations in the sequence. • The
Costs - Any cost savings achieved capacity of the bottleneck operation
from buying or making must weighed limits the system capacity.
against the preceding factors. 4. Prepare to deal with capacity
• Cost savings might come from the “chunks”
item itself or from transportation cost • No machine comes in continuous
savings. capacities
• If there are fixed cost associated 5. Attempt to smooth out capacity
with making an item that cannot be requirements
reallocated if the service or product • Unevenness in capacity
outsourced, that has to recognized in requirements also can create certain
the analysis. problems.
Risk - Outsourcing may involved 6. Identify the optimal operating
certain risks. level
• One is loss of control over • Production units typically have an
operations. ideal or optimal level of operation in
• Another is the need to disclosed terms of unit cost of output
proprietary information • Economies of Scale. If the output
DEVELOPING CAPACITY rate is less than the optimal level,
STRATEGIES increasing the output rate results in
1. Design flexibility into system decreasing average unit costs.
• The long-term nature of many • Diseconomies of Scale. If the
capacity decisions and the risks output rate is more than the optimal
inherent in long-term forecasts level, increasing the output rate
suggests potential benefits from results in increasing average unit
designing flexible systems. costs.
• Other considerations in flexible Reasons for Economies of Scale:
design involve the layout of 1. Fixed costs are spread over more
equipment, location, equipment units, reducing the fixed cost per
selection, production planning, unit.
scheduling, and inventory policies. 2. Construction costs increase at a
2. Take stage of life cycle into decreasing rate with respect to the
account size of the facility to be built.
- Capacity requirements are often 3.Processing costs decrease as
closely linked to the stage of the life output rates increase because
cycle operations become more
3. Take a “big picture” approach standardized, which reduces unit
to capacity changes. costs.
o Reasons for Disconomies of Fixed Cost
Scale: • Remain constant regardless of the
1. Distribution costs increase due to volume of output.
traffic congestion and shipping from Variable Cost
one large centralized facility instead • Vary directly with volume of output
of several smaller, decentralized Break-even Point
facilities. • The volume of output at which total
2. Complexity increases costs, cost and total revenue are equal
control and communication become Indifference Point
more problematic. • The quantity at which a decision
3. Inflexibility can be an issue. 4. maker would be indifferent between
Additional levels of bureaucracy two competing alternatives
exist, slowing decision making and FINANCIAL ANALYSIS - Use to
approvals for change rank investment proposals, taking
7. Choose a strategy if expansion into account the time value of money
is involved Cash Flow - The difference between
• Consider whether incremental cash received from sales and other
expansion or single step is more sources and the cash outflow for
appropriate. labor, materials, overhead, and
• Factors include competitive taxes
pressures, market opportunities, Present Value - Expresses in
costs and availability of funds, current value the sum of all future
disruption of operations, and training cash flows of an investment proposal
requirements Most commonly used methods of
Constraint - Something that limits financial analysis:
the performance of a process or Payback focuses on the length of
system in achieving its goals. time it will take for an investment to
Steps in Resolving Constraints return its original cost
Issues Present Value summarizes the
1. Identify the most pressing initial cost of an investment, its
constraint. estimated annual cash flows, any
2. Change the operation to achieve expected salvage value in a single
the maximum benefit, given the value called equivalent current
constraint. value.
3. Make sure other portions of the Internal Rate of Return
process are supportive of the summarizes the initial cost, expected
constraint annual cash flows, and estimated
4. Explore and evaluate ways to future salvage value of an
overcome the constraint. 5.Repeat investment proposal in an equivalent
the process until the level of interest rate
constraints may be an option Decision Theory
EVALUATING ALTERNATIVES -B helpful tool for financial
Cost-Volume Analysis comparison of alternatives under
• Focuses on relationship between conditions of risk or uncertainty
cost, revenue, and volume of output. • Involves identifying a set of
• The purpose is to estimate the possible future conditions that could
income of an organization under influence results, listing alternative
different operating conditions. courses of action, and developing a
• Useful tool for comparing capacity financial outcome for each
alternatives
alternative-future condition • Project: It is used when the work is
combination. nonroutine, with a unique set of
Waiting Line Analysis objectives to be accomplished in a
- Useful for designing or modifying limited time frame.
service systems.
• Useful in helping managers choose Product and service profiling be
a capacity level that will be cost- used to avoid any inconsistencies.
effective through balancing the cost • Sustainable production is the
of having customers wait with the creation of non-polluting, conserving,
cost of providing additional capacity economically efficient, safe and
Simulation - Useful tool in helpful for workers, and creatively
evaluating what-if scenarios rewarding goods and services.
Product and service choices, • Lean process design focuses on
capacity planning, process waste reduction and variance
selection, and layout facilities are reduction in workload which thereby
among the basic decisions improve process flow
managers make. Technological innovation - The
Process selection refers to discovery and development of new
deciding on the way production of or improved products, services, or
goods and services will be processes for producing or providing
organized. them.
Process selection has major Technology - The application of
implications for capacity planning, scientific discoveries to the
layout of facilities, equipment, and development and improvement of
design for work system. products and services and
Variety means either having operations processes.
separate operations for each product Process technology includes
or service with steady demand for methods, procedures, and
each equipment used to produce goods
- The lower the variety, the less the and provide services.
need for flexibility, while the higher Information technology (IT) is the
the variety, the greater the need for science and use of computers and
flexibility. other electronic equipment to store,
PROCESS SELECTION process, and send information
FIVE BASIC PROCESS TYPES Benefits of Technological
• Job Shop: Usually operates on a Innovation in Processing
relatively small scale. It is used when Technology to organizations
a low volume of high-variety goods • increasing quality
or services are needed. • lowering costs
• Batch: It is used when moderate • increasing productivity
volume of goods and services is • expanding processing capabilities.
desire, and it can handle a moderate
variety in products and services
• Repetitive: Used when higher
volume of standardized goods or Considerations in Technological
services are needed. Skills of Innovation in Processing
workers is generally low. Technology
• Continuous: Used when very high • Economic considerations (initial
volume of nondiscrete, highly cost, space, cash flow, maintenance,
standardized output is desired. consultants)
• Integration considerations - cost, SINTERING - USING HEAT OR
time, resources PRESSURE OR BOTH TO FORM A
• Human considerations - training, SOLID MATERIAL FROM POWDER
safety, job loss. WITHOUT CAUSING IT TO
AUTOMATION - Machinery that has LIQUEFY.
sensing and control devices that Applications:
enable it to operate automatically. Industrial Applications • Mass
THREE KINDS OF AUTOMATION customization: cell phone cases •
Fixed automation - the least Distributed manufacturing : Local
flexible. It uses high-cost, 3D printing centers that can produce
specialized equipment for a fixed goods on demand for pickup
sequence of operations. • Computers: Computers,
Programmable automation - motherboards, other parts
involves the use of high-cost, • Robots: Robots and robot parts
general-purpose equipment • Rapid prototyping: Rapid
controlled by a computer program fabrication of a scale model of a
that provides both the sequence of physical part or assembly
operations and specific details about • Rapid manufacturing:
each operation. Computer-aided Inexpensive production of one or a
manufacturing (CAM) The use of small number of items
computers in process control. • Medical devices: Prosthetics
Numerically controlled (N/C) • Dental: Crowns, implants
machines Machines that perform • Pharmaceutical: Pills and
operations by following mathematical medicines
processing instructions. • Food products: Candy, chocolate,
Flexible automation - evolved from crackers, and pasta
programmable automation. It uses • Apparel: Custom-designed
equipment that is more customized footwear, eyeglass frames
than that of programmable • Space exploration: Tools and
automation. Flexible parts can be made on the
manufacturing system (FMS) - a international space station as
group of machines that include needed instead of the cost and time
supervisory computer control, needed to transport them from earth
automatic material handling, and • Vehicles: Automotive parts, and
robots or other automated replacement parts at repair shops;
processing equipment. Computer- airplane parts and spare parts; also,
integrated manufacturing (CIM) - A combine multiple parts into a single
system for linking a broad range of part
manufacturing activities through an • Construction: Architectural scale
integrating computer system. models
3D PRINTING - A process that Consumer Applications
creates a three-dimensional object • Hobbyists: Models, parts, and
by adding successive layers of replacement parts (e.g., for drones)
material. Also known as additive • Appliances and tools:
manufacturing. TECHNIQUES: Replacement parts
EXTRUSION - THE DEFORMATION DRONES - Drones are remotely-
OF EITHER METAL OR PLASTIC controlled unmanned aircraft, usually
FORCED UNDER PRESSURE small. An important benefit is
THROUGH A DIE TO CREATE A providing an “eye-in-the sky” to
SHAPE. obtain visual detail in places that are
hazardous to humans or that are not • These lines may include multiple
readily accessible. stages, from raw material processing
PROCESS STRATEGY to final assembly.
• Flexibility does not always offer the ASSEMBLY LINE
best choice in processing decisions. • It follows a linear, sequential order
• Flexible system and equipment are where semi-finished goods move
often expensive and not as efficient through a series of workstations.
as less flexible alternatives. • Each workstation performs a
• Flexibility is sometimes specific task related to assembling or
unnecessary because product are in manufacturing the product.
mature stages, requiring few design • Components are added or
changes, and there is steady volume processes are completed as the
of output. product progresses along the line.
• Flexibility should be adopted with • Assembly lines are particularly
great care; its applications should be crucial in mass production scenarios,
matcHED with situations in which a streamlining operations and
need for flexibility clearly maximizing efficiency
REASONS FOR CHOOSING PROCESS LAYOUT
FLEXIBILTY • designed to process items or
- demand variety or uncertainty provide service that involve a variety
exists about demand can be of processing requirements.
overcome through improved • quite common in service
forecasting environment
STRATEGIC RESOURCE FIXED-POSITION LAYOUT
ORGANIZATION: FACILITIES • the item being worked on remains
LAYOUT stationary, and workers, and
• Layout Design equipment are moved as needed
• Classification of Layout • used in large construction projects
1. Product Layout (buildings, plants, dams)
2. Process Layout • widely used in farming, firefighting,
3. Fixed-position Layout road and home building.
4. Combination Layout COMBINATION LAYOUT -
5. Cellular Layout Combination of the three basic types
6. Group Technology of layout
7.Service Layout CELLULAR LAYOUT
PRODUCT LAYOUT • workstations are grouped into what
• used to achieve a smooth and is called cell
rapid flow of large volumes of goods • groupings are determined by the
or customers through a system. operations needed to perform work
• made possible by highly for a set of similar items that require
standardized goods or services that similar processing.
allow a highly standardized, • provides a smoot flow of work
repetitive processing through the process with minimal
PRODUCT LINE transport or delay
• encompasses the entire process of • enable companies to produce
manufacturing a product. variety of product with as little waste
• It involves various methods, such as possible
as manual labor, automation, or a • Combination of the three basic
combination of both. types of layout
SEVERAL TECHNIQUES • lessens the need of place office
FACILITATE EFFECTIVE workers in a layout that optimizes
CELLULAR LAYOUT DESIGN the physical transfer of paperwork
Single-minute exchange of die • used to easily communicate with
(SMED) relating departments and
• enables an organization t quickly workstations
convert a machine or process to Automation in Services
produce a different (but similar) • one way to improve productivity
product type. and reduce costs in services is to
Right-sized equipment remove the customer from the
• often smaller than equipment used process as much as possible
in traditional process layout, mobile, • examples: online banking, ATMs,
so that it can quickly be reconfigured shipping, communication
into a different cellular layout in a LINE BALANCING
different location. • A process of assigning task to
GROUP TECHNOLOGY - the workstations in such a way that the
grouping into parrt families of items work- station have approximately
with similar design or manufacturing equal time requirements.
processes CYCLE TIME
SERVICE LAYOUT • The maximum time allowed at each
• the degree of customer contact and work station to complete it's set of
the degree of customization are the tasks on a unit.
key factors in service layout design The design of process layouts
• in manufacturing, it can be requires the following
categorized as product, process or information:
fixed-position layout. 1. A list of departments or work
Warehouse and Storage Layouts centers to be arranged, their
• frequency of order is an important approximate dimensions, and the
consideration; items that are ordered dimensions of the building or
frequently should be placed near the buildings that will house the
entrance to the facility, and those departments.
ordered infrequently should be 2. A projection of future work flows
placed toward the rear of the facility. between the various work centers.
• Any correlations between items are 3. The distance between locations
also significant, suggesting that and the cost per unit of distance to
placing those two items close move loads between locations.
together would reduce the cost and 4. The amount of money to be
time of picking (retrieving) those invested in the layout.
items 5. A list of any special considerations
Retail Layouts (e.g., operations that must be close
• designers must take into account to each other or operations that must
the presence of customers and be separated).
opportunity to influence sales 6. The location of key utilities,
volume and customer attitudes access and exit points, loading
through carefully deigned layouts docks, and so on, in existing
• Important factors to consider: traffic buildings.
patterns and traffic flow KEY POINTS
Office Layouts 1. Process choice is demand driven.
2. Process type and layout are a
function of expecteddemand volume
and the degree of customiza-tion The forecast should be accurate,
thatwill be needed. and the degree of accuracy should
3. Each process type and layout type be stated.
has advantagesand limitations that The forecast should be reliable; it
should be clearly under-stood should work consistently.
whenmaking process selection and The forecast should be expressed in
layout decisions. meaningful units
4. Process design is critical in a The forecast should be in writing
product-focused system,whereas The forecasting technique should be
managing is critical in a process- simple to understand and use The
focused syst em. forecast should be cost-effective
To reduce the likelihood of
PRELIMS FORECAST shortages and overages:
Forecasting - Predicting the ➢ striving to develop the best
quantity and timing of customer possible forecasts.
demand ➢ collaborative planning
Forecast is an estimate about the ➢ forecasting with major supply
future value of a variable such as chain partners.
demand. ➢ information sharing among
Two aspects of forecasts are partners
important. One is the expected ➢ increasing supply chain visibility
level of demand; the other is the by allowing supply chain partners to
degree of accuracy that can be have real-time access to sales and
assigned to a forecast (i.e., the inventory information
potential size of forecast error). ➢ rapid communication about poor
Uses for forecasts forecasts, as well as about
- to help managers plan the system, unplanned events that disrupt
- to help them plan the use of the operations (e.g., flooding, work
system stoppages), and changes in plans.
- Imperfect Forecasts: Forecasts There are six basic steps in the
are not perfect due to randomness, forecasting process:
requiring allowances for errors. 1. Determine the purpose of the
- Group Accuracy: Forecasts for forecast.
groups of items are usually more 2. Establish a time horizon.
accurate than for individual items 3. Obtain, clean, and analyze
because errors tend to cancel out. appropriate data.
- Opportunity for Grouping: 4. Select a forecasting technique.
Grouping items with shared 5. Make the forecast.
characteristics can improve 6. Monitor the forecast errors.
forecasting accuracy. APPROACHES TO FORECASTING
- Time Horizon Impact: Forecast Qualitative methods consist mainly
accuracy generally decreases with a of subjective inputs, which often defy
longer time horizon; short-range precise numerical description
forecasts are typically more (executive options, sales person
accurate. opnios, consumer surverys, etc..)
ELEMENTS OF A GOOD Quantitative methods involve either
FORECAST the projection of historical data or the
The forecast should be timely. development of associative models
that attempt to utilize causal
(explanatory) variables to make a Focus Forecasting based on a
forecast “best recent performance” basis.
Judgmental forecasts Forecasts This approach, called focus
that use subjective inputs such as forecasting, was developed by
opinions from consumer surveys, Bernard T. Smith.
sales staff, managers, executives, Diffusion Models - When new
and experts. products or services are introduced,
Time-series forecasts: Forecasts historical data are not generally
that project patterns identified in available on which to base forecasts.
recent time-series observations. Instead, predictions are based on
Associative model : Forecasting rates of product adoption and usage
technique that uses explanatory spread from other established
variables to predict future demand. products, using mathematical
Time series - A time-ordered diffusion models
sequence of observations taken at Techniques for Trend Analysis of
regular intervals trend involves developing an
Behaviours affecting the time equation that will suitably describe
series: trend (assuming that trend is present
Trend - A long-term upward or in the data). The trend component
downward movement in data. may be linear, or it may not. A
Seasonality - Short-term regular simple plot of the data often can
variations related to the calendar or reveal the existence and nature of a
time of day. trend.
Cycle - Wavelike variations lasting Trend-adjusted exponential
more than one year. Irregular smoothing : Variation of exponential
variation Caused by unusual smoothing used when a time series
circumstances, not reflective of exhibits a linear trend.
typical behavior. orecasts are vital inputs for the
Random variations - Residual design and the operation of the
variations after all other behaviors productive systems because they
are accounted for. help managers anticipate the future.
Naive forecast - A forecast for any Forecasting techniques can be
period that equals the previous classified as qualitative or
period’s actual value quantitative.
Qualitative techniques rely on
Techniques for Averaging judgment, experience, and expertise
1) Moving average – Technique to formulate forecasts; quantitative
that averages a number of recent techniques rely on the use of
actual values, updated as new historical data or associations
values become available. among variables to develop
2) Weighted moving average - forecasts. Some of the techniques
similar to a moving average, except are simple. and others are complex.
that it typically assigns more weight Some work better than others, but
to the most recent values in a time no technique works all the time.
series. Moreover, all forecasts include a
3) Exponential smoothing - A certain degree of inaccuracy, and
weighted averaging method based allowance should be made for this.
on the previous forecast plus a The techniques generally assume
percentage of the forecast error. that the same underlying causal
Other Forecasting Methods
system that existed in the past will
continue to exist in the future.
The qualitative techniques include
consumer surveys, salesforce
estimates, executive opinions, and
manager and staff opinions.
Two major quantitative
approaches are described:
analysis of time-series data and
associative techniques. The time-
series techniques rely strictly on the
examination of historical data;
predictions are made by projecting
past movements of a variable into
the future without considering
specific factors that might influence
the variable.
Associative techniques attempt to
explicitly identify influencing factors
and to incorporate that information
into equations that can be used for
predictive purposes.
All forecasts tend to be inaccurate;
therefore, it is important to provide a
measure of accuracy. It is possible
to compute several measures of
forecast accuracy that help
managers to evaluate the
performance of a given technique
and to choose among alternative
forecasting techniques. Control of
forecasts involves deciding whether
a forecast is performing adequately,
typically using a control chart.
When selecting a forecasting
technique, a manager must choose
a technique that will serve the
intended purpose at an acceptable
level of cost and accuracy.