CHAPTER 6

SCOPE

• Designing goods and services
• Robust Design and the Taguchi Loss Function
• Product and Process Design in Manufacturing
• Service Delivery System Design
• Service Encounter Design

In our daily life, we encounter goods and services. Can you give me at least one good or service? Now, in your own opinion, how important are design and style in your purchasing decisions?

i. Steps in designing

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Step 1 and 2 – Strategic Mission, Analysis, and Competitive Priorities
Strategic directions and competitive priorities should be consistent with and support the firm’s mission and vision.

Step 3 – Customer Benefit Package Design and Configuration
• Time: reduce waiting time; be more responsive to customer needs.
• Place: select location for customer convenience
• Information: provide product support, user manuals.
• Entertainment: enhance customer experience.
• Exchange: multiple channels used for purchases.
• Form: how well the physical characteristics of a good add. cust. needs.

Step 4

• Step 4a–physical characteristics–dimensions, materials, color, etc.
• Step 4b–configuration of machines and labor.
• Step 4c and Step 4d
For example, the steps that a desk clerk follows to check in a guest at a hotel represent the process by which the guest is served and (hopefully) experiences a sense of satisfaction.

Step 5 – Market Introduction/Development
The final bundle of goods and services–the customer benefit package–is advertised, marketed, and offered to customers.
• Manufactured goods: making the item in the factory and shipping it to warehouses or wholesale and retail stores.
• Services: hiring and training employees.
• Many services: means building sites such as branch banks and hotels.

Step 6 – Marketplace Evaluation
The final step in designing and delivering a customer benefit package is to constantly evaluate how well the goods and services are selling and what customers’ reactions to them are.

II. ROBUST DESIGN

• ROBUST Design or TAGUCHI Methods – Goods that are insensitive to external sources of variation.

• GENICHI TAGUCHI – A Japanese engineer who made numerous contributions to the field of quality management, explained the economic value of reducing variation in manufacturing or the so called “Goal Post Model".

• Manufactured goods, design blueprints specify a target dimension (called the nominal).

• Along with range of permissible variation (called the tolerance).

For example: 0.500cm ± 0.020cm. The nominal dimension is 0.500cm, but may vary anywhere in a range from 0.480 to 0.520cm.

• Which means this assumes that the customer, either the consumer or the next department in production process, would accept any value between the 0.480 to 0.520. Taguchi also measured the quality as the variation from the target value of design specification and then translated that variation into an economic “loss function” that express the cost of variation in monetary terms.

• Taguchi also assured that all the losses are can also be approximated by a quadratic function so that a larger deviations from the target can be cause increasingly larger losses.

Loss function represented by:
L(x) = k(x-T)^2
Where:
• L(x) is the monetary value of the loss associated with deviating from the target, T;
• x is the actual value of the dimension; and
• k is the constant that translates the deviation into dollars.

The constant, k, is estimated by determining the cost of repair or replacement if a certain deviation from the target occurs, as the ff. example illustrate

Solved problem

- Supposed that the specification on a part is 0.500 ± 0.020 cm. the target value T is 0.500. A detailed analysis of product returns and repairs has discovered that many failures occurs when the actual dimension is near the extreme of the tolerance range–that is, when the dimensions are approximately 0.48 or 0.52–and costs $50 for the repair. Thus, in equation 6.1, the deviation from the target, x – T is 0.02 and L(x) = $50. submitting these values, we have
50 = k (0.02)^2 or k=50/0.0004 = 125,000

- Therefore, the loss function for a single part is L(x) = 125,000 (x-T)^2. this mean, for example, if x = 0.51 so that the deviation (x – T) is 0.010, the firm can expect an average loss per unit of
L(0.51) = 125000(0.010)^2 = $12.50 per part.

• Reliability – the probability that a manufactured good, piece of equipment, or system performs its intended function for a stated period of time under specified operating conditions.
• Also defined as a probability that is, a value between 0 & 1.
• A 97% reliable part has a probability of 0.97 that it will perform its function for a given period of time under specified operating conditions.
• A system is a related group of components that work together to accomplish a task.

• Quality function development (QFD) – is both a philosophy and a set of planning and communication tools that focus on customer requirements in coordinating the design, manufacturing, and marketing of goods or services.

• QFD fosters improved communication and teamwork among all constituencies in the design process.

3.1 QUALITY ENGINEERING
- a process of designing quality into a manufactured goods based on a prediction of potential quality problems prior to produce.

a. Value Engineering – a cost avoidance or cost prevention before the good or service is created.
b. Value Analysis – cost reduction of manufactured good or service process.
c. Failure-mode-and-effects analysis (FMEA) – a technique in which each components of a product is listed along with the way.

For example, one of a table lamp is the socket; a typical FMEA for that component might be
= Failure: a cracked socket
= Causes: excessive heat, forcing the bulb too hard
= Effects: may cause shock
= Correction: use improved materials

3.2 Product and Process Simplification
- the process of trying to simplify designs to reduce complexity and costs and thus improve productivity, quality , flexibility and customer satisfaction.

3.3 Design for Environmental Quality

• Design for Environment (DFE)
– the explicit consideration of environmental concerns during the designs of goods, services and process.

• Green Manufacturing or Green Practices
- A focus on improving the environment by better good or service.

IV. SERVICE DELIVERY SYSTEM

what is a service?

4.1 Facility Location and Layout

4.2 SERVICESCAPE

tHREE pRINCIPAL dIMENSIONS:

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