PRODUCTION &

OPERATIONS
MANAGEMENT

MODULE 2
DESIGNING
PRODUCTS &
SERVICE

DR DHRITIMAN CHANDA
ASSISTANT PROFESSOR
ALLIANCE UNIVERSITY
TOPICS TO BE COVERED

• Value analysis

• Standardization

• Mass Customization

• Design Process

• Service Design

• Reliability

2
VALUE ANALYSIS
Value Analysis (VA) is a systematic approach to improving the value of a product or service by analyzing its
functions and identifying cost-saving opportunities without sacrificing quality or performance. It focuses on
maximizing the product's value by either reducing its cost or improving its functionality.

Case Example: Apple Inc.

Material Optimization: Apple used aluminum casings for the iPhone. With the release of the iPhone 6s, the
company transitioned to a custom aluminum alloy, which was both stronger and lighter.

Component Consolidation: Apple continually works on integrating multiple components into single chips or
modules. For example, combining various functions into the A-series processors (like the A15 Bionic) helps
reduce the number of parts, leading to lower assembly costs and improved device performance.

Packaging Efficiency: Apple also applied VA to its packaging. By reducing the size of the iPhone boxes, the
company could ship more units per shipment, cutting down on transportation costs and carbon footprint.

VA done by Apple helped in Cost Reduction, Quality Improvement and Sustainability.

STANDARDIZATION
Standardization in operations management refers to the process of establishing and implementing consistent
processes, practices, and specifications across an organization or industry. It aims to ensure uniformity, improve
efficiency, reduce variability, and enhance quality.

Case Example: Toyota Production System (TPS)

Assembly Line Processes: Every task is defined and timed to ensure uniformity across all production units. Workers
follow standard operating procedures (SOPs) to maintain product quality and process efficiency.

Error Reduction: By standardizing the assembly process, Toyota minimizes the risk of errors and defects. Any
deviation from the standard is immediately flagged for review and correction.

Training and Onboarding: New employees are trained using standardized work instructions, ensuring they perform
tasks accurately and consistently from day one.

Continuous Improvement: Standardization provides a baseline for identifying inefficiencies and implementing
improvements.
MASS CUSTOMIZATION
Mass customization is an operational strategy that aims to deliver products and services that meet
individual customer preferences with the efficiency of mass production. It involves producing goods
and services tailored to individual needs, while keeping costs low using flexible manufacturing
systems, modular design, and agile supply chains.

Case Example: Nike

Customization Options: Customers can select from a wide range of design options including shoe
models, colors for different parts of the shoe, types of materials, and custom text (e.g., initials or
numbers).
Technology and Process: Nike uses digital tools like online design software, allowing customers to
visualize their custom designs in real time.

Efficiency and Scalability: Despite the customization, Nike achieves cost efficiency by using a
modular approach, where standard components are combined in various ways to create unique
products. Automation and efficient workflows ensure that the production process remains cost-
effective and scalable.
DESIGN PROCESS
The design process in operations management involves a series of structured steps to
develop and implement efficient and effective systems for producing goods and
services. It encompasses the planning, development, and optimization of processes and
resources to meet organizational goals and customer demands.
Steps:
Concept Development
Product/Service Design
Process Design
Capacity Planning
Facility Layout and Location
Workforce Planning
Quality Management
Supply Chain Design
Implementation
Evaluation and Improvement
SERVICE DESIGN
Service design in operations management refers to the planning and organization of resources,
processes, and systems necessary to deliver a service that meets customer expectations and is efficient
for the organization to provide. It encompasses creating the structure, interactions, and delivery
mechanisms that allow a service to be offered seamlessly, ensuring high customer satisfaction and
operational efficiency.
Service Design addresses three key questions:
What do customers want?
What are customers' needs?
How do customers prefer to interact with the service?

Service Design Elements in Starbucks

Customer Needs
Service Conceptualization
Service Blueprinting
Capacity Planning
Employee Training
The "third place" concept
RELIABILITY

• Reliability is a measure of the ability of a product, service, part, or system to

perform its intended function under a prescribed set of conditions. In effect,
reliability is a probability
• Suppose that an item has a reliability of .90. This means that it has a 90 percent
probability of functioning as intended.
• The probability it will fail is 10 percent. Hence, it is expected that, on the average, 1
of every 10 such items will fail or, equivalently, that the item will fail, on the
average, once in every 10 trials.
• Determining that probability when the product or system consists of several
independent components requires the use of the rules of probability for independent
events. Independent events have no relation to the occurrence or nonoccurrence of
each other.
 TYPES
Series System Reliability
In a series system, all components are arranged in a sequence such that the failure of any one
component leads to the failure of the entire system.
The system functions correctly only if all components function correctly. Therefore, the overall
reliability of the system is the product of the reliabilities of its individual components.

Parallel System Reliability

In a parallel system, components are arranged such that the system continues to
function as long as at least one component is operational. This configuration
increases the overall system reliability since multiple components provide
redundancy. The system fails only when all components fail.

9
NUMERICALS
1. A system has three components in series. The reliability of each component is as
follows:
Component 1: R1=0.95
Component 2: R2=0.90
Component 3: R3=0.85
What is the overall system reliability?

2. A system has two components in parallel. The reliability of each component is:
Component 1: R1=0.80
Component 2: R2=0.85
What is the overall system reliability?

3. A system has three components: A, B, and C. Components A and B are in series, and
their combination is in parallel with component C. The reliabilities are:
Component A: RA=0.90
Component B: RB=0.95
Component C: RC=0.80
What is the overall system reliability?
4. A system consists of four components: A, B, C, and D. Components A and B are arranged in
series, and this series arrangement is in parallel with component C. The entire combination is then in
series with component D. The reliability of each component is as follows:
Component A: RA=0.90
Component B: RB=0.85
Component C: RC=0.80
Component D: RD=0.95
What is the overall system reliability?

5. A system has five components: P, Q, R, S, and T. Components P and Q are in parallel, and their
combination is in series with component R. The entire arrangement is then in parallel with
components S and T, which are in series. The reliability of each component is:
Component P: RP=0.85
Component Q: RQ=0.80
Component R: RR=0.90
Component S: RS=0.95
Component T: RT=0.92
What is the overall system reliability?
6. You have a system with 7 components connected in series. Each component has the
following reliability:
Component 1: R1=0.98
Component 2: R2=0.95
Component 3: R3=0.96
Component 4: R4=0.94
Component 5: R5=0.97
Component 6: R6=0.93
Component 7: R7=0.92

a. Calculate the overall system reliability for the series configuration.

b. Evaluate the reliability if a parallel configuration is applied to improve reliability for
components 6 and 7.
c. Evaluate the reliability if a parallel configuration is applied to improve reliability for
components 3, 4 and 5.
6. You have a system with 7 components connected in series. Each component has the
following reliability:
Component 1: R1=0.98
Component 2: R2=0.95
Component 3: R3=0.96
Component 4: R4=0.94
Component 5: R5=0.97
Component 6: R6=0.93
Component 7: R7=0.92

a. Calculate the overall system reliability for the series configuration.

b. Evaluate the reliability if a parallel configuration is applied to improve reliability for
components 6 and 7.
c. Evaluate the reliability if a parallel configuration is applied to improve reliability for
components 3, 4 and 5.