Chapter 5 PRODUCT

DESIGN
FT18 Team
Production and Operation Management
Instructor: Nguyen Nhu Ty
 MEMBER LIST

Tien Gia Linh Do Duy Hung Le Thuy Linh

BTFTIU18234 BTFTIU18190 BTFTIU18061

Vo Duy Thong Nguyen D. X. An Le B. K. Ngoc

BTFTIU18119 BTFTIU18222 BTFTIU18074

Truong T. M. Anh Truong N. P. Phuong

BTFTIU18224 BTFTIU18215
 OUTLINE OF CONTENT

1. Goods and Services Selection

2. Generating New Products
3. Product Development
ON 4. Issues for Product Design
5. Product Development Continuum
6. Defining a Product
7. Document for Production
8. Service Design
9. Application of Decision Trees to Product
Design
10.Transition to Production
 01
GOOD AND SERVICES
SELECTION
• Product Strategy
• Product Life Cycles
• Life Cycle & Strategy
• Product - by- Value Analysis
To maximize the potential for
success, some companies focus on
only a few products and then
concentrate on those products
Most products have a limited and
predictable life cycle ->
companies must look for new
products
 50% –
Percent of sales from new

40% –
products

30% –

Leading companies generate a

20% – substantial portion of their sales
from products less than 5 years old
10% –

0% –Industry Top Middle Bottom

leader third third third

Position of firm in its industry

 PRODUCT DECISION

WHEN OBJECTIVE

Product decision occur The objective of the product decision is

frequently—perhaps to develop and implement a product
hundreds of times for each strategy that meets the demands of the
financially successful marketplace with a competitive
product. advantage. 
Product Strategy Options
Support Competitive
Advantage
An effective product strategy links
product decisions with investment,
market share, and product life cycle,
and defines the breadth of the product
line
3 types of strategy:
○ Differentiation
○ Low-cost
○ Rapid response
 a.
DIFFERENTIATION
o Product design: The iconic,
elegant and minimalist design
-> stand out from its
competitors
o Pricing strategy: significantly
higher than those of
competitors
 b.
LOW- COST
Selling branded products at low costs
 Attracting the largest number of
customers
 c.
RAPID-
RESPONSE
- In the pandemic of COVID-19,
LIFEBOUY’s strategy is to rapidly
response to the consumer demand.
 Lifebuoy has released the product of
dry hand gel which is qualified by
ministry of health.
Sales, cost, and cash flow Cost of development and production
Sales revenue
Net revenue (profit)

Cash
flow

Negative
cash flow Loss

Introduction Growth Maturity Decline

Figure 5.2
 Introduction phase
LIFE CYCLE
Fine tuning may warrant unusual expenses
for:
AND
1 1. Research STRATERGY
2. Product development
3. Process modification and
enhancement
4. Supplier development
Growth phase
o Product design begins to stabilize
o Effective forecasting of capacity
2 becomes necessary
o Adding or enhancing capacity may
be necessary
 Maturity phase
o Competitors now established
o High volume, innovative production may be
3 needed
o Improved cost control, reduction in options, paring
down of product line => may be effective for
profitability and market share

Decline phase
o A company experiences a decline in its sales
volume followed by a decline in its profit
margin.
o
LIFE CYCLE
Dying products are typically poor products in
4 which to invest resources and managerial AND
talent.
STRATERGY
o Unless product makes a special contribution to
the organization, must plan to terminate
offering.
 NOKIA LIFE CYCLE
Decline phase
Intro phase
Nokia’s bad product layout and
Nokia is a Finland-based having its main center of
multinational company. The attention on Windows as its OS,
company launched Nokia 1011 lead to its decline. Nokia's
in 1992. decline accelerates by 2011 and
is acquired by Microsoft in
2013.
Nokia launched phones with
better features like games,
alarm, etc. Nokia launched Launched a lot of touch
models like N95 to compete screen models. Launched
with Apple’s iPhone product. QWERTY touch model N-
97 most profit gained.

Growth phase Maturity phase

PRODUCT-BY-VALUE
ANALYSIS
Pareto principle applied to product mix: 
Resources are to be invested in the critical few
and not the trivial many. 
Purpose of Product-by-value analysis lists:
o Lists products in descending order of their
individual dollar contribution to the firm.
o Lists the total annual dollar contribution of
the product. 
o Help the manager evaluate alternative
strategies
 PRODUCT-BY-VALUE
ANALYSIS
A product-by-value analysis allows to:
o Evaluate possible strategies for each product
o Increasing cash flow 
o Increase market penetration
o Reducing costs (improving the production
process). 
o Know product offerings should be eliminated
o Know product fail to justify further
investment in research and development or
capital equipment.
o Attention on the strategic direction for each
product.
02 GENERATING
NEW PRODUCT
Aggressive new product development requires that
organizations build structures internally that have
open communication with customers, innovative
product development cultures, aggressive R&D,
strong leadership, formal incentives, and training.
 OPPORTUNITIES TO GENERATE
NEW PRODUCT
01 02 03
Understanding the Sociological and
Economic change
customers demographic change

04 05 06
Technological Political and legal
Other changes
change change
7 BỮA SÁNG
CHINSU
MASAN
 PRODUCT
DEVELOPMENT
• Product development system
03
• Quality function deployment
• Organizing for Product
Development
• Manufacturability and Value
Engineering
 Figure 5.3 Product PRODUCT
Development Stages
DEVELOPMENT
Scope for design and SYSTEM
engineering team
Functional
Feasibility Specifications Design Review Introduction

Production
Concept Customer Test Market Evaluation
Specifications
requirement

Scope for product development team

 Interrelationships
QFD House of Customer
importance
Quality ratings How to satisfy
customer wants
o The Product Development System
(PDS) is an organizational system that
manages both the product portfolio and
each individual product development. 

Competitive
assessment
o Quality function deployment (QFD) What the Relationship
refers to both  customer matrix
wants
1) Determining what will satisfy the
customer
2) Translating those customer desires
into the target design.
o Tools of QFD is the house of quality.
o House of quality: a graphic technique
Target values
for defining the relationship between Weighted
customer desires and product (or rating
service). Technical
evaluation
7 steps to build a House of quality:

1. Identify customer wants

2. Identify how the good/service will satisfy customer wants
3. Relate customer wants to product hows
4. Identify relationships between the firm’s hows
5. Develop customer importance ratings
6. Evaluate competing products
7. Compare performance to desirable technical attributes
HOUSE

Low electricity requirements

High number of pixels

OF QUALITY:

Plastic composition

Ergonomic design
Auto exposure
GREAT CAMERAS

Auto focus

Company A

B
Company
High relationship Lightweight 2 G P
Easy to use 3 G P
Medium relationship Long operation time 1 F G
Comfortable to hold 5 G P
Low relationship High resolution 4 P P
Our importance ratings 9 9 18 15 15 25

Our important rating

Failure 1 per 10,000

Target values

Panel ranking
(Technical
9

2 circuits
attributes)

2’ to ∞
0.5 A
75%
6 Company A 0.7 60% yes 1 ok G
Technical Company B 0.6 50% yes 2 ok F
3 evaluation
Us 0.5 75% yes 2 ok G
 HOUSE OF QUALITY SEQUENCE
The sequence of houses is a very effective way of
identifying, communicating, and deploying
production resources. 

Quality
plan
Production
process

Production
Specific components House 4

process
components
House 3

Specific
Design
characteristics

characteristics
House 2
Design
requirements
Customer

House 1

Figure 5.4. House of Quality Sequence Indicates

How to Deploy Resources to Achieve Customer
Requirements 
 ORGANIZING FOR PRODUCT DEVELOPMENT

TRADITIONAL CHAMPION
o Product development of Product manager drives the
U.S product through the
o Distinct departments product development system and
o Cross functional related organizations 

TEAM APPROACH JAPANESE “WHOLE

ORGANIZATION”
o Best product approach
used in U.S APPROACH
o Use of teams: product
development teams, design for Not divide the organization into
manufacturability teams, and value small teams
engineering teams.
MANUFACTURABILITY and VALUE ENGINEERING 
Definition: Activities that help improve a Benefits:
product’s design, production, ○ Reduced complexity of the product
maintainability, and use. ○ Reduction of environmental impact
○ Additional standardization of
components
○ Improvement of functional aspects of
the product
○ Improved job design and job safety
○ Improved maintainability
(serviceability) of the product
○ Robust design
COST REDUCTION via VALUE
ENGINEERING

Figure 5.5 Cost Reduction of a Bracket via

Value Engineering
 ISSUES FOR
PRODUCT DESIGN

04
 ROBUST DESIGN
The product is designed so that small variations in production or assembly do
not adversely affect the product

Robust products Products are NOT robust

 A food product that have long  Food has short shelf-life and is
shelf-life spoiled when it is used
 A pen that wrote until the ink is  Pen that stop writing after a few
empty months
 A vacuum cleaner that maintains  A vacuum cleaner that loses
suction level suction level
MODULAR DESIGN

Definition: A design in which parts or components

of a product are subdivided into modules that are
easily interchanged or replaced.
This method is about taking a design and breaking
it down into small parts (these are the modules).
Then these small parts are created independently
which later will be combined into a larger system.
EX: IKEA

Modularity of the design 

o In the shape of their storage furniture which
allows it to be set in different directions,
o The parts that make up the piece itself, which
are rectangles of different sizes.
 Cost-efficient from a manufacturing
perspective. 
Building small parts that can be put together later is
much easier than building one complex piece. 
 COMPUTER-AIDED
DESIGN (CAD)
o CAD is the use of computers to
interactively design products and
prepare engineering documentation.
o CAD uses three-dimensional drawing
to save time and money by shortening
development cycles for virtually all
products 

DFMA allows Ford to build new vehicles in a virtual

factory where designers examine how to put a
transmission in a car on the production line, even while
both the transmission and the car are still in the design
stage.
COMPUTER-AIDED
MANUFACTURING CAD SYSTEM
o CAM refers to the use of o Allows people to “see” the
specialized computer programs to finished design before a physical
direct and control manufacturing model is built
equipment. o Very effective in large-scale
o When CAD information is designs such as plant layout
translated into instructions for
CAM, the result of these two
technologies is CAD/CAM
 Virtual reality is a visual form of
communication in which images substitute
for the real thing but still allow the user to
respond interactively

VIRTUAL REALITY
VINFAST
VALUE ANALYSIS

Value analysis seeks improvements that

lead to either a better product, or a product
made more economically, or a product with
less environmental impact.

The production process of a lead pencil

 The production cost of each pencil was
reduced by 25%.
 SUSTAINABILITY
AND
LIFE CYCLE
ASSESSMENT (LCA)
 SUSTAINABILITY
Sustainability indicates meeting the needs of the present without
compromising the ability of future generations to meet their needs.

PROS CONS

o Less waste o Time-consuming

o Healthier workplace o High initial costs
o Good PR o Complex business models
o Tax credits and grants o Commitment
o CSR
 LIFE CYCLE ASSESSMENT (LCA)
An LCA refers to a formal evaluation of the environmental
impact of a product.

PROS CONS

o Detailed and flexible o Expensive

o Directly accounts for o Time-consuming
environmental impacts o Lack of Social effects
including scarcity and
toxicity
Ex: Eco friendly products

● Reusable Bulk Food Bags

● Recycled Plastic Backpack
 Stop Plastic Pollution
 PRODUCT

05 DEVELOPMENT
CONTINUUM
Time-based competition: competition based on
time; rapidly developing products and moving
them to market.
 Instead of developing new products from
scratch, several other strategies can be used.
 External Development Strategies
Alliances
Joint ventures
Purchase technology or expertise
by acquiring the developer

Internal Development Strategies

Migrations of existing products
Enhancements to existing products
New internally developed products

Internal Cost of product development Shared

Lengthy Speed of product development Rapid and/
or Existing
High Risk of product development Shared
 INTERNAL
DEVELOPMENT
STRATEGIES
Migrations of existing products
 INTERNAL
DEVELOPMENT
STRATEGIES
Enhancements to existing
products
Enhancements may be
changes in color, size or
weight
 INTERNAL
DEVELOPMENT
STRATEGIES
Joint ventures
A partnership in which two or more
companies join to undertake a major
project
 INTERNAL
DEVELOPMENT
STRATEGIES
Alliances
A long-term partnership between
two or more companies established
to help each company build
competitive market advantages
 INTERNAL
DEVELOPMENT
STRATEGIES
Purchasing Technology by
Acquiring a Firm
DEFINING
PRODUCT 06
DEFINING PRODUCT
o Once new goods or services are selected for
introduction, they must be defined.
o First, a good or service is defined in terms of
its functions.
o Next, the product is designed.
o Management typically has a variety of
options as to how a product should achieve its
functional purpose.

When an alarm clock is produced, aspects of

design that management can be concerned about
such as the color, size, or location of buttons
DEFINING PRODUCT
o Rigorous specifications of a product are necessary to assure efficient
production. Rigorous specifications are developed during the design phase
o Equipment, layout, and human resources cannot be determined until the
product is defined, designed, and documented.
o Written specifications or standard grades exist and provide the definition for
many products
DEFINING PRODUCT
U.S. Extra Grade. U.S. Extra Grade dry whole milk shall conform
to the following requirements:
(1) Flavor. Reconstituted dry whole milk shall possess a sweet,
pleasing and desirable flavor, free from
undesirable flavors but may possess a slight feed
flavor and a definite cooked flavor.
(2) Physical Appearance. Dry whole milk shall
possess a uniform white to light cream color. It shall
be free from lumps, except those that readily break
up with slight pressure, and be practically free from
visible dark particles. The reconstituted product shall be free from
graininess.
(3) Bacterial estimate. Not more than 10,000 per gram standard
plate count.
(4) Milkfat content. Not less than 26.0%, but less than 40.0%.
(5) Moisture content. Not more than 4.5% (as determined by
weight of moisture on a milk solids not fat basis).
 ENGINEER
DRAWING
o An engineering drawing shows the
dimensions, tolerances, materials,
and finishes of a component.
o Engineering drawings may also
include codes to facilitate group
technology.
 BILL OF
MARTERIAL
o The bill of material (BOM) lists the
components, their description, and the
quantity of each required to make one
unit of a product and where it is used.
o Show product structure
 The engineering drawing will be an
item on a bill of material
o In a more complex product, a bill of
material is referenced on other bills of
material of which they are a part. 
 MAKE OR BUY
DECISION
o The choice between producing a
component or a service and
purchasing it from an outside
source
o Many items can be purchased as a
“standard item” produced by
someone else
 GROUP
TECHNOLOGY
o A product and component coding
system that specifies the size,
shape, and type of processing; it
allows similar products to be
grouped.
o Group technology provides a
systematic way to review a family
of components to see if an
existing component might suffice
on a new project.
 DOCUMENTS
FOR PRODUCTS
Usually follow some documents below
07
oAssembly drawing
oAssembly chart
oRoute sheet
oWork order
oEngineering change notice (ECN)
oConfiguration management
oProduct life-cycle management (PLM)
 DOCUMENTS FOR
PRODUCTS
Assembly drawing

o An exploded view of the product

o Isometric drawing
o Relative locations of components
 DOCUMENTS FOR
PRODUCTS
Assembly chart

A graphic means of identifying how

components flow into subassemblies
and final products
 DOCUMENTS FOR
PRODUCTS
Route Sheet
A listing of the operations necessary
to produce a component with the
material specified in the bill of
material.
Work order
An instruction to make a given
quantity of a particular item.
DOCUMENTS FOR
PRODUCTS
Engineering change notice (ECN)
A correction or modification of an engineering
drawing or bill of material.
Quite common with long product life cycles,
long manufacturing lead times, or rapidly
changing technologies
Configuration management
A system by which a product’s planned and
changing components are accurately identified.
PRODUCT LIFE-CYCLE
MANAGEMENT (PLM)
o Software programs that tie together many phases of product design
and manufacture.
o Start with product design after that moving to DFMA then into
product routing, materials, layout, assembly, maintenance, and even
environmental issues
o PLM software is now a tool of many large organizations
 Help to perform more creatively, faster, and more economically
o Short life cycles
o More regulations
o More environmental issues
 SERVICE DESIGN

08
The products offered by service firms range from a medical
procedure that leaves only the tiniest scar after an
appendectomy, to shampoo and cut at a hair salon, to a great
sandwich. Designing services is challenging because they
have a unique characteristic—customer interaction.
PROCESS–CHAIN–NETWORK (PCN)
ANALYSIS
 3 PROCESS REGIONS

The direct The surrogate The independent

interaction region interaction region processing region
includes process steps includes process steps in includes steps in which the
that involve interaction which one participant is sandwich supplier and/or
between participants acting on another the sandwich customer is acting
participant’s resources, on resources where each has
maximum control
ADDING SERVICE
EFFICIENCY
o Limit the Options
o Delay Customization
o Modularization
o Automation
o Moment of Truth
DOCUMENT FOR
SERVICES
Because of the high customer interaction of
most services, the documents for moving
the product to production often take the
form of explicit job instructions or scripts
DOCUMENT FOR
SERVICES
For instance, regardless of how good a
bank’s products may be in terms of
checking, savings, trusts, loans, mortgages,
and so forth if the interaction between
participants is not done well, the product
may be poorly received. 
 Application of
Decision Trees to
Product Design 09
 DECISION TREE
o Decision tree is the most powerful and
popular tool for classification and
prediction. 
o A decision tree is a flowchart like tree
structure, where each internal node denotes a
test on an attribute, each branch represents
an outcome of the test, and each leaf node
(terminal node) holds a class label. 
o Decision trees can be used for new-product
decisions as well as for a wide variety of
other
o Management problems when uncertainty is
present
 PROCEDURE OF DECISION TREE

1 2 3
All possible alternatives and Payoffs are entered at the end The objective is to determine
states of nature (beginning on of the appropriate branch. the expected value of each
the left and moving right) are This is the place to develop course of action. Calculating
included in the tree. This the payoff of achieving this values at each step and
includes an alternative of branch. “pruning” alternatives that
“doing nothing.” are not as good as others
from the same node
DECISION TREE
APPLIED TO
PRODUCT DESIGN
o High sale: 25,000 processors for $100 each,
p= 0.4
o Low sale: 8,000 processors for $100 each,
p = 0.6
o CAD cost $500,000 =>  manufacturing
costs: 50$
o Hiring engineer:: $375,000 =>
manufacturing costs: 40$
 DECISION TREE
APPLIED TO
PRODUCT DESIGN
o High sale: 25,000 processors for $100 each,
p= 0.4
o Low sale: 8,000 processors for $100 each,
p = 0.6
o CAD cost $500,000 =>  manufacturing
costs: 50$
o Hiring engineer:: $375,000 =>
manufacturing costs: 40$
EMV (Purchase CAD system) =(.4)
(+1,000,000) + (.6)(9+20,000)
= +388,000
DECISION TREE
APPLIED TO
PRODUCT DESIGN
o High sale: 25,000 processors for $100 each,
p= 0.4
o Low sale: 8,000 processors for $100 each,
p = 0.6
o CAD cost $500,000 =>  manufacturing
costs: 50$
o Hiring engineer:: $375,000 =>
manufacturing costs: 40$
DECISION TREE
APPLIED TO
PRODUCT DESIGN
o EMV (Purchase CAD system) =(.4)(+1,000,000)
+ (.6)(9+20,000)= +388,000
o EMV (Hire / Train engineers) =(.4)(+875,000) +
(.6)(9+25,000)= +365,000
o Because the top branch has the highest expected
monetary value (an EMV of $388,000 vs.
$365,000 vs. $0), it represents the best decision.
Management should purchase the CAD system
 TRANSITION TO
PRODUCTION

o
10
A decision as to further development and production or termination of
the product idea
o When to move a product from development to production
 Have a period of trial production to ensure that the design is indeed
producible
o To ensure that the transition from development to production is
successful some companies appoint a project manager; others use
product development teams.
 REFERENCE

o Operations Management, 11th edition 2014 Global E - Jay Heizer

o Dr. Nguyen Nhu Ty Slide: Chapter 5: Product design
THANK YOU VERY MUCH FOR YOUR
ATTENTION!!!