CHAPTER 3

PRODUCT DESIGN AND

PROCESS SELECTION
 Product Design and Process Selection Product design
The Product Design
The Product Design Process

Product design – the process of defining all of the companies product

characteristics

•appearance, •tolerances, and

•materials, •performance standards.
•dimensions,

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 Product Design and Process Selection
The Product Design Design of Services versus Goods
The Product Design Process

Service design
The process of
establishing all SERVICES
the characteristics
• Intangible GOODS
of the service,
including physical, • both the service and the • Tangible
sensual, and entire service concept
• appearance
psychological are being designed
benefits. • materials
• adds the aesthetic and
• dimensions
psychological benefits of
the product
Product Design and Process Selection Idea Development
The Product Design Product Screening
Preliminary Design and Testing
The Product Design Process
Final Design

performance against theirs.

Reverse engineering the process of

disassembling a product to analyze its
design features.
Sources of Idea
• Suppliers
• Customers

• Competitors
Benchmarking the process of
studying the practices of companies
considered “best-in-class” and
comparing your company’s
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 Product Design and Process Selection Idea Development

The Product Design Product Screening

Preliminary Design and Testing
The Product Design Process
Final Design

Marketing
• What is the potential size of the market for
the proposed new product? How much
effort will be needed to develop a market
● Operations for the product, and what is the long-term
• What are the production needs of the product potential?
proposed new product, and how do they • Finance
match our existing resources? Will we
• The production of a new product is a
need new facilities and equipment? Do
financial investment like any other. What
we have the labor skills to make the
is the proposed new product’s financial
product? Can the material for production
potential, cost, and return on investment?
be readily obtained?
 Product Design and Process Selection Idea Development

The Product Design Product Screening Product Screening Tool – Break-Even Analysis
Preliminary Design and Testing
The Product Design Process
Final Design

Fred Boulder, owner of Sports Feet Manufacturing, is considering whether to produce a new line of
footwear. Fred has considered the processing needs for the new product as well as the market
potential. He has also estimated that the variable cost for each product manufactured and sold is $25
and the fixed cost is $1575.
(a) If Fred offers the footwear at a selling price of $60, how many pairs must he sell to break even?
QBE – Break even quantity
Q= F = $1575 F – Fixed costs
= 45 pairs SP – selling price/unit
SP – VC $60 - $25 VC – Variable cost

The break-even quantity is 45 pairs. This is how much Fred would have to sell to cover costs.
(b) If Fred sells 100 pairs at the $60 price, what will be the contribution to profit?
Profit = total revenue - total cost Profit =$60(100) - [$1575 + $25(100)]
where F = fixed cost
=(SP)Q - [F+(VC)Q] =$1925 VC = variable cost per unit
Q = number of units sold
The contribution to profit is $1925 if Fred can sell 100 pairs from his new line of footwear.
 Product Design and Process Selection Idea Development

The Product Design Product Screening

Preliminary Design and Testing
The Product Design Process
Final Design

Break-Even Analysis: Graphical Approach

TOTAL REVENUE
• Compute quantity of goods that
must be sold to break-even
• Compute total revenue at an SELLING PRICE 60
assumed selling price VARIABLE COST 25
• Compute fixed cost and FIXED COST 1575
variable cost for several
quantities TOTAL COST
BEP (UNITS) 45
• Plot the total revenue line and BEP ($) 27000 •
the total cost line
BEP ($) = 60 x 45 = 2700
• Intersection is break-even FIXED COST
• Sensitivity analysis can be
done to examine changes in all
of the assumptions made
 Product Design and Process Selection Idea Development
Product Screening
The Product Design
Preliminary Design and Testing
The Product Design Process
Final Design

process of revising, rebuilding a prototype,

and testing continues.

Product refinement can be time-consuming,

Design engineers translate general
and the company may want to hurry
performance specifications into technical
through this phase to rush the product to
specifications.
market. However, rushing creates the risk
Prototypes are built and tested. Changes that all the “bugs” have not been worked
are made based on test results, and the out, which can prove very costly.
 Product Design and Process Selection Idea Development
Product Screening
The Product Design
Preliminary Design and Testing
The Product Design Process
Final Design

• Final product specifications are drawn up.

• Final specifications are then translated into specific processing instructions to
• manufacture the product,
• Selecting equipment,
• Outlining jobs that need to be performed,
• Identifying specific materials needed and suppliers that will be used,
• And all the other aspects of organizing the process of product production.
THANK YOU!
GOD BLESS