Operations Management Design of Goods and Services Power

Operations Management Design of Goods and Services Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 1 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Humor in Product Design As the customer wanted it. As Marketing interpreted it. © 1984 -1994 T/Maker Co. As Operations made it. As Engineering designed it. © 1984 -1994 T/Maker Co. Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e © 1984 -1994 T/Maker Co. 2 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

What is a Product? ¨ Need-satisfying offering of an organization ¨ Example ¨ P&G does not sell laundry detergent ¨ P&G sells the benefit of clean clothes ¨ Customers buy satisfaction, not parts ¨ May be a good or a service Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 3 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Product Strategy Options ¨ Product differentiation ¨ Low cost ¨ Rapid response Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 4 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Generation of New Product Opportunities ¨ Economic change ¨ Sociological and demographic change ¨ Technological change ¨ Political/legal change ¨ Changes in ¨ market practice ¨ professional standards ¨ suppliers and distributors Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 5 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Product Components Product Brand (Name) Physical Good Product Idea Quality Level Features Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e Package 6 Service (Warranty) © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Product Life Cycle ¨ Introduction ¨ Growth ¨ Maturity ¨ Decline Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 7 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Product Life Cycle Introduction ¨ Fine tuning ¨ research ¨ product development ¨ process modification and enhancement ¨ supplier development Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 8 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Product Life Cycle Growth ¨ Product design begins to stabilize ¨ Effective forecasting of capacity becomes necessary ¨ Adding or enhancing capacity may be necessary Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 9 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Product Life Cycle Maturity ¨ Competitors now established ¨ High volume, innovative production may be needed ¨ Improved cost control, reduction in options, paring down of product line Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 10 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Product Life Cycle Decline ¨ Unless product makes a special contribution, must plan to terminate offering Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 11 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Sales, Cost & Profit. Product Life Cycle, Sales, Cost, and Profit Cost of Development & Manufacture Sales Revenue Profit Loss Cash flow Time Introduction Growth Maturity Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 12 Decline © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Products in Various Stages of Life Cycle Sales Introductio n Growth Maturity Roller Blades Jet Ski Decline Boeing 727 Virtual Reality Time Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 13 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Few Successes Number 2000 1500 1000 500 0 Ideas 1750 Design review, Market Testing, Introduction requiremen t 1000 Functional specification Product s 500 specificatio One n 100 25 succes s! Development Stage Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 14 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Product-by-Value Analysis ¨ Lists products in descending order of their individual dollar contribution to the firm. ¨ Helps management evaluate alternative strategies. Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 15 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Scope of product development team Product Development Stages ¨ Idea generation ¨ Assessment of firm’s ability to carry out ¨ Customer Requirements ¨ Functional Specification Scope of design for ¨ Product Specifications manufacturability ¨ Design Review and value ¨ Test Market engineering teams ¨ Introduction to Market ¨ Evaluation Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 16 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Quality Function Deployment ¨ Identify customer wants ¨ Identify how the good/service will satisfy customer wants ¨ Relate customer wants to product hows ¨ Identify relationships between the firm’s hows ¨ Develop importance ratings ¨ Evaluate competing products Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 17 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

QFD House of Quaoity Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 18 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

House of Quality Sequence Indicates How to Deploy Resources to Achieve Customer Requirements Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 19 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Idea Generation Stage ¨ Provides basis for entry into market ¨ Sources of ideas ¨ Market need (60 -80%); engineering & operations (20%); technology; competitors; inventions; employees ¨ Follows from marketing strategy ¨ Identifies, defines, & selects best market opportunities Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 20 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Customer Requirements Stage ¨ Identifies & positions key product benefits Stated in core benefits proposition (CBP) ¨ Example: Long lasting with more power (Sears’ Die Hard Battery) ¨ ¨ Identifies detailed list of product attributes desired by customer ¨ Focus groups or 1 -on-1 interviews Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e House of Quality Product Characteristics Customer Requirements 21 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Functional Specification Stage ¨ Defines product in terms of how the product would meet desired attributes ¨ Identifies product’s engineering characteristics ¨ Example: printer noise (d. B) ¨ Prioritizes engineering characteristics ¨ May rate product compared to competitors’ Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 22 House of Quality Product Characteristics Customer Requirements © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Product Specification Stage ¨ Determines how product will be made ¨ Gives product’s physical specifications ¨ Example: Dimensions, material etc. ¨ Defined by engineering drawing ¨ Done often on computer House of Quality Computer-Aided Design (CAD) ¨ Component Specifications Product Characteristics Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 23 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Quality Function Deployment ¨ Product design process using cross-functional teams ¨ Marketing, engineering, manufacturing ¨ Translates customer preferences into specific product characteristics ¨ Involves creating 4 tabular ‘Matrices’ or ‘Houses’ ¨ Breakdown product design into increasing levels of detail Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 24 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

House of Quality Example You’ve been assigned temporarily to a QFD team. The goal of the team is to develop a new camera design. Build a House of Quality. © 1984 -1994 T/Maker Co. Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 25 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

House of Quality Example Customer Requirements Importance Target Values High relationship� Medium relationship Low Relationsh Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 26 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

House of Quality Example What the customer desires (‘wall’) Customer Requirements Importance Aluminum Parts Auto Focus Auto Exposure Light weight Easy to use Reliable Target Values High relationship � Medium relationship Low Relationship Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 27 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

House of Quality Example Average customer importance rating Customer Requirements Importance Light weight Easy to use Reliable Aluminum Parts Auto Focus Auto Exposure 3 2 1 Target Values High relationship� Medium relationship Low Relationshi Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 28 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

House of Quality Example Relationship between customer attributes & engineering characteristics (‘rooms’) Customer Requirements Importance Light weight Easy to use Reliable 3 2 1 Aluminum Parts Auto Focus Auto Exposure High relationship � Medium relationship Low Relationship Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 29 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

House of Quality Example Target values for engineering characteristics (‘basement’); key output Customer Requirements Importance Light weight Easy to use Reliable 3 2 1 Target Values Aluminum Parts 5 Auto Focus Auto Exposure 1 1 High relationship � Medium relationship Low Relationship Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 30 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

House of Quality Example Customer Requirements Importance Light weight Easy to use Reliable 3 2 1 Target Values Aluminum Parts 5 Auto Focus Auto Exposure 1 1 High relationship� Medium relationship Low Relation Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 31 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Organizing for Product Development ¨ Historically – distinct departments ¨ Duties and responsibilities are defined ¨ Difficult to foster forward thinking ¨ Today – team approach ¨ Representatives from all disciplines or functions ¨ Concurrent engineering – cross functional team Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 32 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Manufacturability and Value Engineering ¨ Benefits: ¨ reduced complexity of products ¨ additional standardization of products ¨ improved functional aspects of product ¨ improved job design and job safety ¨ improved maintainability of the product ¨ robust design Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 33 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Cost Reduction of a Bracket via Value Engineering Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 34 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Issues for Product Development ¨ Robust design ¨ Time-based competition ¨ Modular design ¨ Computer-aided design ¨ Value analysis ¨ Environmentally friendly design Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 35 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Robust Design ¨ Product is designed so that small variations in production or assembly do not adversely affect the product Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 36 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Modular Design ¨ Products designed in easily segmented components. ¨ Adds flexibility to both production and marketing Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 37 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Computer Aided Design (CAD) ¨ Designing products at a computer terminal or work station Design engineer develops rough sketch of product ¨ Uses computer to draw product ¨ ¨ Often used with Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e © 1995 Corel Corp. 38 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Benefits of CAD/CAM ¨ Shorter design time ¨ Database availability ¨ New capabilities ¨ Example: Focus more on product ideas ¨ Improved product quality ¨ Reduced production costs Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 39 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Extensions of CAD ¨ Design for Manufacturing and Assembly (DFMA) ¨ 3 -D Object Modeling ¨ CAD/CAM – CAD info is translated into machine control instructions (CAM) © 1995 Corel Corp. Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 40 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Virtual Reality ¨ Computer technology used to develop an interactive, 3 -D model of a product. ¨ Especially helpful in design of layouts (factory, store, home, office) Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 41 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Value Analysis ¨ Focuses on design improvement during production ¨ Seeks improvements leading either to a better product or a product which can be more economically produced. Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 42 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Environmentally Friendly Designs ¨ Benefits ¨ Safe and environmentally sound products ¨ Minimum raw material and energy waste ¨ Product differentiation ¨ Environmental liability reduction ¨ Cost-effective compliance with environmental regulations ¨ Recognition as good corporate citizen Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 43 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

“Green” Manufacturing ¨ Make products recyclable ¨ Use recycled materials ¨ Use less harmful ingredients ¨ Use lighter components ¨ Use less energy ¨ Use less material Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 44 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Time-based Competition ¨ Product life cycles are becoming shorter. Faster developers of new products gain on slower developers and obtain a competitive advantage Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 45 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Product Development Continuum External Development Strategies Alliances Joint Ventures Purchase Technology or Expertise by Acquiring the Developer Internal Development Strategies Migrations of Existing Products Enhancement to Existing Products New Internally Developed Products Internal -----------Cost of Product Development ---------- Shared Lengthy ----------Speed of Product Development------- Rapid and/or Existing © 2004 by Prentice Hall, Inc. , Upper Saddle River, presentation to accompany High Power. Point ------------Risk of 46 Product Development ---------N. J. 07458 Heizer/Render - Principles of Operations 5 e, and Operations Management, 7 e ---- Management, Shared

Product Documents ¨ Engineering drawing Shows dimensions, tolerances, & materials ¨ Shows codes for Group Technology ¨ ¨ Bill of Material Lists components, quantities & where used ¨ Shows product structure ¨ © 1984 -1994 T/Make Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 47 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Bill of Material Example © 1995 Corel Corp. Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 48 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Make-or-Buy Decisions ¨ Decide whether or not you want (or need) to produce an item ¨ May be able to purchase the item as a “standard item” from another manufacturer Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 49 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Group Technology Characteristics ¨ Parts grouped into families ¨ Similar, more standardized parts ¨ Uses coding system ¨ Describes processing & physical characteristics ¨ Part families produced in manufacturing cells ¨ Mini-assembly lines Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 50 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 © 1984 -1994 T/Maker Co.

Group Technology Code Example 4 mm x 45° chamfer 80 mm 60 mm 112 mm Round Rod Product Code: 1 5 3 1 Part function (round rod) Material (steel) Max. length (50 < L < 150) Primary machine (lathe) Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 51 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Group Technology Schemes Enable Grouping of Parts Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 52 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Group Technology Benefits ¨ Improved product design ¨ Reduced purchases ¨ Reduced work-in-process inventory ¨ Improved routing & machine loading ¨ Reduced setup & production times ¨ Simplified production planning & control ¨ Simplified maintenance Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 53 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Production Documents ¨ Assembly Drawing ¨ Assembly chart ¨ Route sheet ¨ Work order Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 54 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Assembly Drawing ¨ Shows exploded view of product Head Neck End Cap Handle Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 55 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Assembly Chart for A Tuna Sandwich 1 Tuna Fish SA 1 2 3 Tuna Assy A 1 Sandwich Mayonnaise FG Bread Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e A 2 56 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Assembly Drawing and Assembly Chart Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 57 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Route Sheet ¨ Lists all operations Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 58 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Work Order Authorizes producing a given item, usually to a schedule g r Orde n. Wo i r u t c a f u Man Dakte r r e p O t p e D : d e v o r App JM © 1984 -1994 T/Maker Co. Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 59 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Engineering Change Notice (ECN) ¨ A correction or modification of an engineering drawing or bill of material Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 60 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Configuration Management ¨ A system by which a product’s planned and changing components are accurately identified and for which control and accountability of change are maintained Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 61 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Service Design Nature of Customer Participation Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 62 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Improving Customer Relations at a Drive-up Window ¨ Be especially discreet when talking with customer through the microphone ¨ Provide written instructions for customers who must fill out forms you provide ¨ Mark lines to be completed or attach a note with instructions ¨ Always say ”please” and “thank you” ¨ Establish eye contact with the customer if the distance allows it ¨ If the transaction requires that the customer park the car Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e and come into the lobby, 63 apologize © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458 for the inconvenience.

Moment-of-Truth at a Computer Company Experience Detractors Standard Expectations I had to call more than once to get through. Only one local number needs to be dialed A recording spoke to me rather than a person I never get a busy signal While on hold, I get silence, and wonder if I am disconnected. The operator sounded like he was reading a form of routine questions. The operator sounded uninterested I get a human being to answer my call quickly and he or she is pleasant and responsive to my problem A timely resolution to my problem is offered The operator is able to explain to me what I can expect to take place I felt the operator rushed me. Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 64 Experience Enhancers The operator was sincerely concerned and apologetic about my problem He asked intelligent questions that allowed me to feel confident in his abilities The operator offered various times to have work done, to suit my schedule Ways to avoid future problems were © 2004 by Prentice Hall, Inc. , Upper Saddle River, suggested N. J. 07458

Application of Decision Trees to Product Design ¨ Particularly useful when there a series of decisions and outcomes which lead to other decisions and outcomes. ¨ Considerations: Include all possible alternatives and states of nature - including “doing nothing” ¨ Enter payoffs at end of branch ¨ Approach determining expected values by “pruning” tree ¨ Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 65 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Transition to Production ¨ First issue: knowing when to move to production! ¨ Second: must view product development as evolutionary, not responsibility of single individual/department ¨ Third: expect to need a trial production period to work the bugs out ¨ Fourth: recognize that responsibility must also transition Power. Point presentation to accompany Heizer/Render - Principles of Operations Management, 5 e, and Operations Management, 7 e 66 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458