SMG OM 323 Midterm: OM323 midterm study guide
10 Feb 2017
School
Department
Course
Professor
OM323 Operations Management
Midterm Study Guide
OM1 – Introduction to OM and the New Product Development Process
The new product development funnel
Multi-site operation strategy – to be closet to customers
(customer contact)
• Small sites, widely scattered (franchising)
Product packages – combination of goofs and services
Value added – difference between the cost of input and the value/price of outputs
• In nonprofits, value of outputs is their value to society
• In for-profits, value of outputs measured by price customers pay
o Firms use this $ for R&D, investment in new facilities/equipment, salaries, profits
Production of goods vs. producing services:
Product
Service
Degree of customer contact
Lower
Higher
Labor content of jobs
Lower
Higher
Uniformity of inputs
Higher
Lower
Measurement of productivity
Easier
Harder
Quality assurance
Easier
Harder
Inventory
Greater use
Less use
Wages
Less variation
Greater variation
Ability to patent
Easier
Harder
Process management
• Process – One or more actions that transform input into outputs
1. Upper management processes – govern operation of the entire organization
2. Operational processes – core processes that make up the value stream
3. Supporting processes – support the core processes
• Business process management (BPM) activities include process design, process execution, and process monitoring
o Operations and supply chain management manage processes to meet demand and deal with process variability
• Process variation interferes with optimal functioning and can result in additional costs, delays/shortages, poor quality,
inefficient work systems
o Poo ualit ad podut shotages a lead to dissatisfied ustoes ad a daage ad ogaizatio’s
reputation and image
o Described using mean and standard deviation
o Sources of process variation
1. The variety of goods/services being offered
2. Structural variation in demand
3. Random variation
4. Assignable variation (can be eliminated by analysis and corrective action)
find more resources at oneclass.com
find more resources at oneclass.com
Operations management – aageet of sstes o poesses that eate goods ad/o poide seies the siee of gettig
thigs doe
• Scope: product and service design, process selection, selection and management of technology, design of work systems,
location plaig, failities plaig, ad ualit ipoeet of the ogaizatio’s poduts o seies
• System design involves decisions that relate to system capacity, geographic location of facilities, arrangement of
departments and placement of equipment within physical structures, product and service planning, and acquisition of
equipment
o Typically, strategic decisions that usually require long-term commitments
• System operation involves management of personnel, inventory planning and control, scheduling, project management,
and quality assurance
o Generally tactical and operational decisions
Product and service design
• New product development: project with a start and end date
• What it does
1. Translate customer wants and needs into product and service requirements
2. Refine existing products and services
3. Develop new products and/or services
4. Formulate quality goals
5. Formulate cost targets
6. Construct and test prototypes
7. Document specifications
8. Translate product and service specifications into process specifications
• Who does it
• Marketing (known who the customers are and what they want_
• Design
• Manufacturing/Operations
• A typical development team
• Key questions
1. Is there demand for it?
2. Can we do it?
▪ Manufacturability – ogaizatio’s apailit of poduig a ite at a aeptale pofit
▪ Serviceability – organizations capability to provide a service at an acceptable cost or profit
3. What level of quality is appropriate?
4. Does it make sense from an economic standpoint?
• How to assess NPD performance
• Product/service quality
• Product/service cost
• Development time
• Development
• Development capability (how good is the company at doing this?)
• NPD cost and duration are dependent on complexity of design
• People and money are the things you add to shorten development time
find more resources at oneclass.com
find more resources at oneclass.com
• Development is very expensive, usually same $ as production cost
• Development challenges
• Trade-offs
• Dynamics
• Details
• Time pressure
• Economics
Reason for product and service redesign
• Main forces that initiate design or redesign are market opportunities and threats
o Factors that give rise to these changes include:
▪ Economic (grow business, improve profitability)
▪ Social and demographic (target aging baby boomers)
▪ Political, liability, or legal (satisfy new regulations)
▪ Competitive (respond to new competitor product
▪ Cost or availability (reduce costs, improve availability)
▪ Technological (utilize new product or process technologies)
Idea generation
• Reverse engineering – disatlig ad ispetig a opetito’s podut to discover product improvements
• Research & Development (R&D) – organized efforts to increase scientific knowledge or product innovation
o Basic research – objective of advancing the state of knowledge about a subject, without any near-term expectation
of commercial applications
o Applied research – objective of achieving commercial applications
o Development – converts the results of applied research into useful commercial applications
o Benefits
▪ First organization to bring new product/service to market generally stands to profit from it before others
can catch up (temp monopoly)
Legal and ethical considerations
• Product liability – the responsibility of a manufacturer for any injuries or damages caused by a faulty product
• Uniform Commercial Code – a product must be suitable for its intended purpose
• Extremely important to design products that are reasonably free of hazards
o → Suits/potential suits → increased legal and insurance costs, expensive settlements with injured parties, and
costly recalls
• Organizations generally want designers to adhere to such guidelines:
o Produce designs that are consistent with goals of organization
o Give customers the value they expect
o Make health and safety a primary concern
Human factors
• Safety and liability are critical issues
• Adding new features to products/services can give companies a competitive edge but too many be a source of customer
dissatisfaction
Phases in product design and development
1. Feasibility analysis entails market analysis, economic analysis, and technical analysis
o Does it fit with the mission?
2. Product specifications involves detailed descriptions of what is needed to meet (or exceed) customer wants
3. Process specifications – alternatives must be weighed in terms of cost, availability of resources, profit potential, and quality
4. Prototype development – one (or a few) units are made to see if there are any problems with the product or process
specifications
5. Design review – any necessary changes are made or the project is abandoned
6. Market test – used to determine the extent of consumer acceptance (if unsuccessful, the product returns to the design
review stage)
7. Product introduction – the new product is promoted
8. Follow-up evaluation – based on user feedback, changes may be made or forecasts refined
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Om1 introduction to om and the new product development process. Multi-site operation strategy to be closet to customers (customer contact) Product packages combination of goofs and services. Value added difference between the cost of input and the value/price of outputs. In nonprofits, value of outputs is their value to society. In for-profits, value of outputs measured by price customers pay. Firms use this $ for r&d, investment in new facilities/equipment, salaries, profits. Sources of process variation: the variety of goods/services being offered, structural variation in demand, random variation, assignable variation (can be eliminated by analysis and corrective action) Operations management (cid:373)a(cid:374)age(cid:373)e(cid:374)t of s(cid:455)ste(cid:373)s o(cid:396) p(cid:396)o(cid:272)esses that (cid:272)(cid:396)eate goods a(cid:374)d/o(cid:396) p(cid:396)o(cid:448)ide se(cid:396)(cid:448)i(cid:272)es (cid:894)(cid:862)the s(cid:272)ie(cid:374)(cid:272)e of getti(cid:374)g thi(cid:374)gs do(cid:374)e(cid:863)(cid:895) Scope: product and service design, process selection, selection and management of technology, design of work systems, location pla(cid:374)(cid:374)i(cid:374)g, fa(cid:272)ilities pla(cid:374)(cid:374)i(cid:374)g, a(cid:374)d (cid:395)ualit(cid:455) i(cid:373)p(cid:396)o(cid:448)e(cid:373)e(cid:374)t of the o(cid:396)ga(cid:374)izatio(cid:374)"s p(cid:396)odu(cid:272)ts o(cid:396) se(cid:396)(cid:448)i(cid:272)es.
