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Questions and Answers
Which of the following factors is NOT considered when evaluating alternatives in a capacity strategy?
What is the primary focus of cost-volume analysis?
How does flexibility benefit an organization in terms of forecasting?
Which strategy involves implementing capacity expansion before demand rises?
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What is one method organizations use to enhance their effective capacities?
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What is the primary goal of feasibility analysis in product design?
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What is a critical aspect of process specifications in product design?
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What does the term 'serviceability' refer to in the context of product design?
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Which phase follows prototype development in the product design and development process?
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What key question is primarily concerned with an organization's ability to produce an item profitably?
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What should occur if a product fails the market test phase?
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Which of the following is NOT a consideration in the product design and development process?
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Which factor often pressures designers during the design process?
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What is a key advantage of modular design?
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Which of the following describes robust design?
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What does concurrent engineering primarily aim to achieve?
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What type of product change involves cloning a competitor's product?
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Which factor is NOT related to manufacture and assembly in the context of manufacturability?
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What is a significant disadvantage of modular design?
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Design for Manufacturing (DFM) focuses on which aspect of product design?
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What does component commonality refer to in product design?
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What is a key characteristic that differentiates services from products?
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Which phase in the service design process involves idea generation and assessing customer needs?
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In service design, what does a service blueprint primarily describe?
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What is a significant impact of capacity decisions on an organization?
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Which one of the following options is a reason why service design systems can vary in customer contact?
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Which of these factors is NOT a determinant of effective capacity?
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What role does demand variability play in service delivery?
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Why is convenience important in service design?
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What is a key long-term consideration in forecasting capacity requirements?
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Which of the following factors should NOT be considered when deciding between in-house production and outsourcing?
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What is the main purpose of demand management strategies?
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What characterizes a bottleneck operation?
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Which of the following is NOT a category of constraint in an operation?
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What is a fundamental factor to consider when developing capacity alternatives?
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What does the degree of volatility of demand affect?
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Which strategy is commonly used to shift demand from peak to off-peak periods?
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Study Notes
Policy
- Laws and regulations can impact the evaluation of alternatives.
- It's important to consider various perspectives when evaluating options.
Economic Factors
- Assess economic feasibility.
- Determine cost, delivery time, operating and maintenance costs, useful life, compatibility with existing personnel and operations.
Non-Economic Factors
- Consider public opinion.
Cost-Volume Analysis
- Focuses on the relationship between cost, revenue, and production volume.
- Used to estimate an organization's income under different operational conditions.
Capacity Strategy
- Influences all areas of the organization.
- Determines the operational conditions.
- Flexibility allows organizations to be agile and reduce reliance on forecast accuracy.
- Capacity cushions are used to achieve flexibility.
- Bottleneck management optimizes effective capacity.
- Capacity expansion strategies include expand-early and wait-and-see approaches.
- Capacity contraction may be necessary, leading to capacity disposal strategies.
Product and Service Design
- Translates customer needs into requirements.
- Refines existing products and services.
- Develops new products and services.
- Defines quality goals and cost targets.
- Constructs and tests prototypes.
- Documents specifications.
- Translates product and service specifications into process specifications.
Key Questions in Product & Service Design
- Is there a demand? Assess potential market size and expected demand profile.
- Can we do it? Evaluate manufacturability (profit-making production capabilities) and serviceability (cost-effective service provision).
- Reverse Engineering: Analyse competitor's products to identify improvement opportunities.
Phases in Product Design and Development
- Feasibility Analysis: Includes market analysis, economic and technical analysis, and evaluation of alternatives.
- Product Specifications: Detailed descriptions of product requirements.
- Process Specifications: Specifications for the manufacturing process.
- Prototype Development: Building one or a few prototype units to test designs.
- Design Review: Evaluating designs and making necessary changes.
- Market Test: Assessing consumer acceptance of the product.
- Product Introduction: Launching the product to the market.
- Follow-up Evaluation: Monitoring product performance after launch.
Legal Considerations
- Product Liability: Manufacturers' responsibility for injuries caused by faulty products.
- Costs Associated with Product Liability: Litigation, legal and insurance costs, settlement costs, product recalls, and reputation damage.
Ethical Considerations
- Designers face pressure to speed up design processes and cut costs, leading to trade-off decisions.
- Examples include releasing software with bugs to avoid revenue loss or delaying release to improve quality and protect reputation.
Other Considerations
- Human Factors: Consider safety and liability in design.
- Cultural Factors: Account for color preferences, food preferences, and product labels.
- Global Design: Utilize design teams from different countries.
Modular Design
- Components are grouped into easily replaceable modules.
- Advantages: Facilitates diagnosis, repair, replacement, manufacturing, assembly, and training.
- Disadvantages: Limits product configuration options and restricts repair capabilities.
Robust Design
- Creates products and services resilient to varying conditions.
- Minimizes failure risk due to environmental changes.
- Applicable to both product and process design.
Degree of Newness
- Product or service design changes can range from modifications to existing products, expansions of existing product lines, clones of competitor products, or entirely new offerings.
- The degree of change influences the product's or service's novelty to the market and the organization.
Concurrent Engineering
- Integrates engineering, manufacturing, marketing, and purchasing personnel early in the design phase to ensure alignment with customer needs and manufacturing capabilities.
- Promotes cross-functional team collaboration and seeks input from suppliers and customers.
Manufacturability
- The ease of fabrication and assembly.
- Influences cost, productivity, and quality.
- Design for Manufacturing (DFM) and Design for Assembly (DFA) are applied to optimize production processes.
Component Commonality
- Using similar components across multiple products.
- Benefits: Reduces design time, standardizes training, enables bulk purchasing, and optimizes repair and inventory management.
Service Design
- Starts with defining the service strategy, determining the service focus and target market.
- Key Issues: Customer contact and involvement, variability in service requirements.
Differences between Service and Product Design
- Products are tangible; services are intangible.
- Services are created and delivered simultaneously.
- Services cannot be inventoried.
- Services are highly visible to consumers.
- Services have low barriers to entry and exit.
- Location is crucial for service design, with convenience as a major factor.
- Service systems range from no customer contact to high customer contact.
- Demand variability creates waiting lines or idle service resources.
Phases in Service Design Process
- Conceptualization: Generates ideas, assesses customer needs and demand potential.
- Identify Service Package Components: Determines necessary service elements.
- Determine Performance Specifications: Defines service performance standards.
- Translate Performance Specifications into Design Specifications: Converts performance standards into concrete design specifications.
- Translate Design Specifications into Delivery Specifications: Specifies how the service will be delivered.
Service Blueprint
- A visual tool for analyzing service processes.
- Depicts customer and service actions and interactions.
- Identifies potential failure points.
- Steps include: establishing boundaries, defining customer and service actions, developing time estimates, and identifying failure points.
Design Strategy
- Effective product and service design can achieve competitive advantage.
- Strategies include: packaging products and ancillary services, using multiple-use platforms, balancing high volume and product variety, implementing continuous improvement, and accelerating time-to-market.
Capacity Decisions
- Have a significant impact on an organization's ability to meet future demand.
- Influence operating costs, initial investment, long-term resource commitment, competitiveness, management ease, and global operations.
- Need to be planned in advance due to resource consumption.
Determinants of Effective Capacity
- Factors influencing effective capacity include: facilities, process factors, policy factors, supply chain factors, product and service factors, human factors, operational factors, and external factors.
Strategy Formulation
- Strategies typically rely on assumptions about: long-term demand patterns, technological changes, and competitor behavior.
- These assumptions address: demand growth rate and variability, building and operating costs, technological innovation, competitor behavior, and resource availability.
Forecasting Capacity Requirements
- Long-term considerations focus on overall capacity level, forecasting demand over a broad time horizon and converting it into capacity requirements.
- Short-term considerations address fluctuations in capacity requirements, emphasizing seasonal variations and other deviations from average demand.
Demand Management Strategies
- Minimize capacity limitations and align supply and demand.
- Strategies include: pricing, promotions, discounts, and demand shifting tactics to move demand from peak periods to slow periods.
In-House or Outsource?
- Organizations decide whether to produce goods or services internally or outsource.
- Factors influencing this decision include: available capacity, quality considerations, cost, expertise, demand characteristics, and risks.
Developing Capacity Alternatives
- Enhance capacity management by: designing flexibility into systems, considering the product lifecycle stage, adopting a holistic approach to capacity changes, managing capacity in manageable chunks, smoothing capacity requirements, identifying optimal operating levels, and choosing appropriate expansion strategies.
Bottleneck Operation
- An operation with lower capacity than others within a sequence, hindering overall production.
Constraint
- Anything limiting a process or system's performance in achieving goals.
- Categories: market (insufficient demand), resource (shortage of resources), material (material shortage), financial (insufficient funds), knowledge or competency (lack of required knowledge or skills).
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Description
Test your knowledge on capacity strategy principles, including evaluating alternatives, cost-volume analysis, and the impacts of flexibility on organizational forecasting. This quiz covers essential strategies such as proactive capacity expansion and methods for enhancing effective capacities.
