Operations and supply chain management 14th edition solutions manual f robert jacobs

Operations and Supply Chain Management 14th Edition Solutions Manualby F.. Describe the generic product development process described in this chapter.. Discuss the product design philoso

Operations and Supply Chain Management 14th Edition Solutions Manual

by F Robert Jacobs

CHAPTER 3 DESIGN OF PRODUCTS AND SERVICES

Discussion Questions

1 Describe the generic product development process described in this chapter How does this process change for technology push products?

Products that are developed using the “technology push” would be more narrowly focused in phase 0 and phase 1 of Marketing The focus would be narrower because you would only look at market segments that could benefit from the application of your technology The rest of the generic process may be somewhat less complex as well since the technology of the product currently exists in your manufacturing facilities

2 How does the QFD approach help? What are some limitations of this approach?

QFD helps to get the voice of the customer into the design process using interfunctional teams The limitations of QFD relate to the culture of the organization In the United States,

we tend to be vertically oriented and try to promote breakthrough This can work against interfunctional teamwork, which is needed for QFD success If a breakthrough culture can be maintained with a continuous improvement mentality through interfunctional teams, this would lead to tremendous improvements in productivity

3 Discuss the product design philosophy behind industrial design and design for manufacture and assembly Which one do you think is more important in a customer-focused product development?

Industrial design is concerned with designing a product from the end-user’s point of view, such as aesthetics and user-friendliness of the product Design for manufacturability, on the

other hand, makes the product design less complicated and easier to manufacture Very often it results in fewer parts, smaller size, increased reliability, and lower cost

Both philosophies are equally important for a customer-focused product development In order to attract customers, the product must be aesthetically pleasing and user-friendly (industrial design) However, to sustain customer interests, it should also have a lower cost and higher reliability (design for manufacturability)

4 Discuss design-based incrementalism, which is frequent product redesign throughout the product’s life What are the pros and cons of this idea?

Pro: enhanced function, higher quality, and lower cost through continuously advancing technology

Con: time and money spent on frequent product and process redesigns, low priority given in servicing the existing and older products Consumer reaction to frequent changes may be negative

5 Do the concepts of complexity and divergence apply to an online sales company such as Dell Computer?

Due to the size of Dell and the number of market segments they serve, these concepts certainly apply Consider as one example the technical support process for an existing

customer Service can vary from very simple like an individual customer needing a particular driver for her new computer to very complex in troubleshooting a network load problem in a server farm for an Internet service provider In the first example there is a straightforward solution to the problem in emailing the customer a copy of the driver In the latter, the service process may be quite divergent, with the process being adapted based on the

symptoms of the problem and the skill of the customer’s technical workforce

For a pure sales company like Amazon, the complexity and divergence would be much less

6 What factors must be traded off in the product development process before introducing a new product?

The factors that need careful attention for new products are product performance,

development speed, product cost, and development program expense Smith and Reinertsen identify six pairs of trade-offs in their book These include all possible pairs among the four factors noted above

7 Coca-Cola is a well-established consumer products company with a strong position in the global market The sales of their core soda products have remained relatively stable for decades, yet the company has continued to grow and has remained extremely profitable Discuss Coca-Cola’s history in light of the statement that “generating a steady stream of new products to market is extremely important to competitiveness.” Does Coca-Cola’s success disprove that statement? Is the company an exception to the rule or an example of its application?

By growing into a global company, one could argue they have been introducing new products into markets they never served before, even though the products are not new to the company They have also grown by acquisition of other drink companies and

introduction of new drink products outside of their core soda business As the products are not subject to great innovation or technological advances, Coca-Cola has needed to expand their product lines and global reach to continue to grow

Objective Questions

1 Which phase of the generic development process involves construction and evaluation of

multiple preproduction versions of the product?

Testing and refinement

2 A process that emphasizes cross-functional integration and concurrent development of a

product and its associated processes is known as _

Concurrent engineering

3 Match the following product types to the appropriate product development description

B Technology-push products A:

Entail unusually large uncertainties about the technology or market The development process takes steps to address those uncertainties

E Platform products B:

A firm with a new proprietary technology seeks out a market where that technology can be applied

D Process-intensive products C:

Uses a repeated prototyping cycle Results from one cycle are used to modify priorities in the ensuing cycle

A High-risk products D:

The production process has an impact on the product properties Therefore, product design and process design cannot be separated

C Quick-build products E:

Products are designed and built around a preexisting technological subsystem

4 Designing products for aesthetics and with the user in mind is generally called what?

Industrial design

5 The first step in developing a house of quality is to develop a list of

customer requirements for the product

6 The purpose of value analysis/value engineering is to

_

simplify products and processes

7 What is it about service processes that makes their design and operation so different from manufacturing processes?

Direct customer involvement in the process

8 What are the three general factors that determine the fit of a new or revised service

process?

Service experience fit, operational fit, and financial impact

9 Measures of product development success can be organized in what three categories?

Time to market, productivity, quality

10 Tuff Wheels Kiddy Dozer

a Base case

Kiddy Dozer Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Development 333 333 333

Marketing and

Production

Unit Production

Production Costs 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500

Unit Price 170 170 170 170 170 170 170 170 170 170 170 170 Sales Revenue 2550 2550 2550 2550 2550 2550 2550 2550 2550 2550 2550 2550

Period Cash Flow -333 -333 -633 -338 1013 1013 1013 1013 1013 1013 1013 1013 1013 1013 1013 1013

PV Year 1 r = 8 -333 -327 -609 -318 935 917 899 881 864 847 831 814 798 783 767 752

Project NPV 8503

b The results are shown below for both scenarios If sales are only 50,000 then the project is

still worthwhile since the NPV decrease to $6,759,000 If Tuff Wheels has under estimated

the sales and it ends up being 70,000 per year then NPV will increase from $8,503,000 base

case to $10,247,000 with the higher sales rate

Sales Revised to 50,000 per Year

Kiddy Dozer Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Development 333 333 333

Marketing and

Production Volume 13 13 13 13 13 13 13 13 13 13 13 13 Unit Production

Production Costs 1250 1250 1250 1250 1250 1250 1250 1250 1250 1250 1250 1250

Unit Price 170 170 170 170 170 170 170 170 170 170 170 170 Sales Revenue 2125 2125 2125 2125 2125 2125 2125 2125 2125 2125 2125 2125

Period Cash Flow -333 -333 -633 -338 838 838 838 838 838 838 838 838 838 838 838 838

PV Year 1 r = 8 -333 -327 -609 -318 774 759 744 729 715 701 687 674 660 647 635 622

Project NPV 6759

Sales Revised to 70,000 per Year

Kiddy Dozer Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Development 333 333 333

Marketing and

Production

Unit Production

Production Costs 1750 1750 1750 1750 1750 1750 1750 1750 1750 1750 1750 1750

Unit Price 170 170 170 170 170 170 170 170 170 170 170 170 Sales Revenue 2975 2975 2975 2975 2975 2975 2975 2975 2975 2975 2975 2975

Period Cash Flow -333 -333 -633 -338 1188 1188 1188 1188 1188 1188 1188 1188 1188 1188 1188 1188

PV Year 1 r = 8 -333 -327 -609 -318 1097 1076 1054 1034 1014 994 974 955 936 918 900 882

Project NPV 10247

c The impact of changing the interest rate is shown below There is still a positive NPV but it shrinks the interest rate increases This would be expected since a higher the interest rate

reduces the present value of future cash flows

Base Case 8% $8,503,043

9% $8,283,241 10% $8,069,666 11% $7,862,116

11 Perot Corporation Patay2 Chip

a In the base case the Patay2 Chip Project has a very good NPV of $10,460,000, see below

Patay2 Chip 1st half 2nd half 1st half 2nd half 1st half 2nd half 1st half 2nd half Development Cost 5,000 5,000 5,000 5,000

Period Cash Flow -5,000 -5,000 -9,000 -17,000 20,125 20,125 7,375 7,375

PV Year 1 r = 12 -5,000 -4,762 -8,163 -14,685 16,557 15,768 5,503 5,241

Project NPV 10,460

b Additional 10 million for higher price is clearly worthwhile as it raises the NPV from $10.46 million to $16.654 million See results below

Project Schedule Year 1 Year 2 Year 3 Year 4 Patay2 Chip 1st half 2nd half 1st half 2nd half 1st half 2nd half 1st half 2nd half Development Cost 7,500 7,500 7,500 7,500

Period Cash Flow -7,500 -7,500 -11,500 -19,500 26,375 26,375 11,125 11,125

PV Year 1 r = 12 -7,500 -7,143 -10,431 -16,845 21,699 20,666 8,302 7,906

Project NPV 16,654

c Reduced sales estimates have a significant impact on the NPV It reduces the NPV all the way down to $10,000 The success of the Patay2 Chip is very dependent on the sales estimates It would be wise for Perot to make sure that there is sufficient demand for Patay2 Chips

Patay2 Chip 1st half 2nd half 1st half 2nd half 1st half 2nd half 1st half 2nd half Development Cost 5,000 5,000 5,000 5,000

Period Cash Flow -5,000 -5,000 -9,000 -17,000 16,000 16,000 4,750 4,750

PV Year 1 r = 12 -5,000 -4,762 -8,163 -14,685 13,163 12,536 3,545 3,376

Project NPV 10

12 Answers will vary based upon the product selected and the student Issues that should be considered in the design and manufacture of a product include design process (traditional

vs concurrent engineering), customer needs and expectations, legal considerations (EPA, OSHA, etc.), service life, reliability, appearance, standardization, any industry standards that should be considered (e.g., television set and the type of signal received from stations), method of shipment, material cost and availability, stage of the product life cycle, design for manufacturability, design for assembly, packaging, environmental, unit cost, pricing,

availability of purchased material, availability of capacity, availability of subcontractors, setup cost, manufacturing time, volume, and expected product life

13 Answers may vary Following is just one possible result

Grounds maintenance

Tournament Activities (per text)

Helpful service

attendants

Fair handicapping

system

CASE: IKEA: Design and Pricing

Questions:

1 What are IKEA”s competitive priorities?

Probably the key priority is maximizing value to the customer in each product offered through their stores Low cost is certainly a major priority as well

2 Describe IKEA’s process for developing a new product

This is described in the case: (1) Pick a price, (2) Choose a manufacturer, (3) Design the product, (5) Ship it The key here is to recognize that they pick a price point early in the product

development process and then work with a manufacturer to ensure they can meet this price point This is a very innovative approach to product design

3 What are additional features of the IKEA concept (beyond their design process) that contribute to creating exceptional value for the customer?

Customer can easily view the product in a setting similar to theirs (i.e apartments) in the IKEA store Also, the product can be easily brought home by the customer eliminating delivery and setup charges This creates more value in the product by eliminating these costs

4 What would be important criteria for selecting a site for an IKEA store?

Need to be located in a high density area where many people live in smaller apartments where space is a premium The IKEA products really appeal to young, affluent customers

CASE: Dental Spa

Questions:

1 Which one of the three new service requirements would a dental spa least likely pass: service experience fit, operational fit, or financial impact? Why?

The dental spa is least likely to have operational fit because new personnel must be hired and the layout of current operations must be changed in order to offer this new service Although service experience fit might seem logical, distracting the patient from possible pain would improve the service experience of the core service, dentistry Often the services are given away Dental Associates must “buy in” to the new services and see the obvious patient comfort

benefits to the dental business and experience

2 What are some of the main areas of complexity and divergence in this kind of operation relative to the standard dental clinic?

Complexity: By providing two services at once, the complexity is automatically increased For example, if cleaning teeth requires two steps and a hand massage requires one, then together

two services normally provided separately, timing or coordination issues could add extra steps

to this new process However some steps, such as billing, would be combined in comparison to two services and it might be simple addition (often these services are free and do not affect billing)

Divergence: Any customer service that can possibly inflict pain, such as a visit to a dentist, requires a large degree of judgment on the part of the service provider of how best to deal with

a painful situation For example, some patients need empathy Almost completely opposite, a visit to a spa can be like going to a psychiatrist as a customer tells their problems as they are getting their manicure This allows for divergence as a customer service provider must decide how to react to hearing all of the issues in someone’s life However, being at the dentist would limit this verbal interaction much like a dentist who only asks questions when he has

instruments in the patients mouth preventing a real answer

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