Design of Goods
2 and Services
PowerPoint presentation to accompany
Heizer and Render
Operations Management, 10e
Principles of Operations Management, 8e
© 2011 Pearson Education, Inc. publishing as Prentice Hall 5-1
Outline
Introduction to product design
Product development stages
Product life cycle (PLC)
Importance of R&D in product
design
Objectives of R&D
Types of research
5-2
Product Design
• Product design involves designing
a product that can be produces and
marketed profitably.
5-3
Product Decision
The good or service the organization
provides society
Top organizations typically focus on
core products
Customers buy satisfaction, not just
a physical good or particular service
Fundamental to an organization's
strategy with implications throughout
the operations function
© 2011 Pearson Education, Inc. publishing as Prentice Hall 5-4
Stages of Product Design
Conception of product ideas and
feasibilities studies
Prototype design and
performance testing
Market sensing and economic
evaluation
Pilot production run
Production process and
commercialization
5-5
Product Strategy Options
Differentiation
DELL
Low cost
GIANT
Rapid response
TOYOTA
5-6
Product Strategy Options
Differentiation
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Low cost
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Rapid response
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Product Life Cycles
May be any length from a few
hours to decades
The operations function must
be able to introduce new
products successfully
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Sales, cost, and cash flow
Product Life Cycles
Cost of development and production
Sales revenue
Net revenue (profit)
Cash
flow
Negative
cash flow Loss
Introduction Growth Maturity Decline
Figure 5.1
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Product Life Cycle
Introductory Phase
Fine tuning may warrant
unusual expenses for
1. Research
2. Product development
3. Process modification and
enhancement
4. Supplier development
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Product Life Cycle
Growth Phase
Product design begins to
stabilize
Effective forecasting of
capacity becomes necessary
Adding or enhancing capacity
may be necessary
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Product Life Cycle
Maturity Phase
Competitors now established
High volume, innovative
production may be needed
Improved cost control,
reduction in options, paring
down of product line
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Product Life Cycle
Decline Phase
Unless product makes a
special contribution to the
organization, must plan to
terminate offering
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Sales, cost, and cash flow
Product Life Cycles
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Introduction Growth Maturity Decline
5 - 14
Importance of R & D
Product have life cycle
Customer demand for better product & service
Helps to improve the standard of living in the
nation
Helps in improving market share & profitability
Can respond effectively in the global market
Increase technical capability in product design
5 - 15
Objectives of R & D
1. To create or design new products or
services
2. To find new uses to existing products
3. To redesign the existing products
4. To develop new processes that will
reduce capital and manufacturing costs
5. To improve the packaging of existing
products
5 - 16
Types of research
• Represents the original investigation for the
Basic / Pure advancement of scientific knowledge.
• Directed towards solving specific problems
Applied as well as developing certain product or
processes.
• Systematic study of every cost element in
Design & part, product or process that requires
engineering, with the aim of reaching the
Engineering lowest cost possible.
5 - 17