5: CHAPTER DESIGN OF GOODS AND SERVICES
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2. A product strategy may focus on differentiation, low-cost, or rapid response. True (Introduction, easy) The goal of the product decision is to develop and implement a product strategy that meets the needs of the marketplace with a competitive advantage. True (Introduction, moderate) Political/legal change and economic change are both factors influencing market opportunities for new products. True (Goods and services selection, easy) The four phases of the product life cycle are incubation, introduction, growth, and decline. False (Goods and services selection, moderate) In the maturity stage of the product life cycle, operations managers will be concerned with keeping sufficient capacity available for the product. False (Goods and services selection, moderate) Relatively few new product ideas, perhaps only 1 in 250, become successfully marketed products. True (Goods and services selection, moderate) 3Ms goal is to produce 30% of its profit from products introduced in the last 4 years. True (Introduction, difficult) Computer-aided design (CAD) refers to the use of specialized computer programs to direct and control manufacturing equipment. False (Generating new products, moderate) {AACSB: Use of IT} Virtual reality technology can improve designs less expensively than the use of physical models or prototypes. True (Generating new products, moderate) {AACSB: Use of IT} Quality function deployment refers to first, determining what will satisfy the customer, and second, translating the customers desires into a target design. True (Product development, moderate) Robust design is a method that ensures that small variation in production or assembly does not adversely affect the product. True (Issues for product design, moderate)
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Modular design exists only in tangible products; it makes no sense in services. False (Issues for product design, moderate) One environmentally friendly approach to product design is to use lighter components. True (Issues for product design, moderate) {AACSB: Ethical Reasoning} An operations manager's most ethical activity is to enhance productivity while delivering desired goods and services. Unfortunately, this activity is not environmentally sound. False (Issues for product design, moderate) {AACSB: Ethical Reasoning} Two issuesviewing a product in terms of its impact on the entire economy and considering the life cycle of a productcombine to increase the likelihood of ethical decisions by managers. True (Issues for product design, moderate) {AACSB: Ethical Reasoning} Rapidly developing products and moving them to the market is part of time-based competition. True (Time-based competition, moderate) The enhancement of existing products is an external product development strategy. False (Time-based competition, easy) The "make-or-buy" decision distinguishes between what an organization chooses to produce and what it chooses to purchase from suppliers. True (Defining the product, moderate) Group technology enables the grouping of parts into families based on similar processing requirements. True (Defining the product, easy) A work order is a listing of the components, their description, and the quantity of each required to make one unit of the product. False (Documents for production, moderate) An assembly drawing lists the operations necessary to produce the component. False (Documents for production, moderate) An assembly chart shows an exploded view of the product, usually via a three-dimensional or isometric drawing. False (Documents for production, moderate) The customer may participate in the design of, and in the delivery of, services. True (Service design, moderate) The moment-of-truth is the crucial moment between the service provider and the customer that exemplifies, enhances, or detracts from the customer's expectation. True (Service design, moderate) The expected value of each course of action in a decision tree is determined by starting at the beginning of the tree (the left-hand side) and working toward the end of the tree (the right). False (Application of decision trees to product design, moderate)
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MULTIPLE CHOICE
26. The three major subdivisions of the product decision are a. selection, definition, and design b. goods, services, and hybrids c. strategy, tactics, and operations d. cost, differentiation, and speed of response e. legislative, judicial, and executive a (Goods and services selection, moderate) Operations managers must be able to anticipate changes in which of the following? a. product mix b. product opportunities c. the products themselves d. product volume e. all of the above e (Goods and services selection, moderate) In which stage of the product life cycle should product strategy focus on process modifications? a. introduction b. growth c. maturity d. decline e. none of the above a (Goods and services selection, moderate) Which of the following would likely cause a change in market opportunities based upon levels of income and wealth? a. economic change b. sociological and demographic change c. technological change d. political change e. legal change a (Goods and services selection, moderate) A product's life cycle is divided into four stages, which are a. introduction, growth, saturation, and maturity b. introduction, growth, stability, and decline c. introduction, maturity, saturation, and decline d. introduction, growth, maturity, and decline e. none of the above d (Goods and services selection, easy) When should product strategy focus on forecasting capacity requirements? a. at the introduction stage of the product life cycle b. at the growth stage of the product life cycle c. at the maturity stage of the product life cycle d. at the decline stage of the product life cycle e. none of the above b (Goods and services selection, easy)
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Which of the following statements regarding product life cycle and profitability is true? a. Profit is highest in the growth life cycle phase because the product is new and unique. b. Profit is lowest in the growth stage of the life cycle because costs are so high. c. Profit is at its greatest in the decline stage of the product life cycle. d. Breakeven is attained in the growth stage of the product life cycle. e. Cash flow turns positive in the maturity phase. c (Goods and services selection, moderate) The analysis tool that helps determine what products to develop, and by what strategy, by listing products in descending order of their individual dollar contribution to the firm is a. decision tree analysis b. Pareto analysis c. breakeven analysis d. product-by-value analysis e. product life cycle analysis d (Goods and services selection, moderate) In which stage of the product life cycle should product strategy focus on improved cost control? a. introduction b. growth c. maturity d. decline e. none of the above c (Goods and services selection, moderate) ______________ is used to rank a company's products to determine which products represent the best use of the firm's resources, or, perhaps, to determine which products are to be eliminated. a. Value analysis b. Value engineering c. Financial analysis d. Product-by-value analysis e. Product cost justification d (Goods and services selection, easy) Which of the following represent an opportunity for generating a new product? a. understanding the customer b. demographic change, such as decreasing family size c. changes in professional standards d. economic change, such as rising household incomes e. All of the above are such opportunities. e (Generating new products, moderate) Which of the following is true regarding value engineering? a. Value engineering occurs only after the product is selected and designed. b. Value engineering is the same as value analysis. c. Value engineering is oriented toward improvement of design. d. Value engineering occurs during production when it is clear the product is a success. e. Value engineering can save substantial amounts of product cost, but quality suffers. c (Product development, moderate)
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Reducing the complexity of a product and improving a product's maintainability for use are activities of a. Product Lifecycle Management (PLM) b. product-by-value-analysis c. manufacturability and value engineering d. organizing for product development e. design for destruction (DFD) c (Product development, moderate) Quality function deployment (QFD) a. determines what will satisfy the customer b. translates customer desires into the target design c. is used early in the design process d. is used to determine where to deploy quality efforts e. all of the above e (Product development, moderate) A graphic technique for defining the relationship between customer desires and product/service is a. Product Lifecycle Management b. the House of Quality c. the moment of truth d. the assembly drawing e. the product development team b (Product development, moderate) Which of the following is true regarding computer-aided design? a. It is too expensive to use in most manufacturing and design settings. b. It is an old technology, no longer in significant use. c. It results in longer development cycles for virtually all products. d. It is the use of computers to interactively design products and prepare engineering documentation. e. All of the above are true. d (Issues for product design, moderate) {AACSB: Use of IT} Which of the following is true concerning CAD? a. Accurate information flows to other departments. b. Most product costs are determined at the design stage. c. Design options are easier to review before final commitments are made. d. Virtually all products have their development cycle shortened. e. All of the above are true. e (Issues for product design, moderate) {AACSB: Use of IT} Black & Deckers hand-powered tools and Hewlett-Packards printer business are examples of using enhancements and migrations of existing products to build on a what? a. product template b. product pulpit c. product platform d. product dais e. product foundation c (Time-based competition, moderate)
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An operations manager's most ethical activity is a. to enhance productivity while delivering desired goods and services b. to use less energy c. to use more recycled ingredients d. to use less harmful ingredients e. to follow appropriate OSHA and EPA regulations a (Issues for product design, moderate) {AACSB: Ethical Reasoning} Value analysis takes place a. when the product is selected and designed b. during the initial stages of production when something needs to be done to assure product success c. when the product is first conceived d. during the production process when it is clear the new product is a success e. when the product cost is very low d (Issues for product design, moderate) Which of the following makes products that are friendlier to the environment? a. using less materials b. more recycled materials c. using less energy d. using less harmful ingredients e. all of the above e (Issues for product design, moderate) {AACSB: Ethical Reasoning} Products are more "environmentally friendly" when they are made a. using cheaper materials b. using less energy c. according to OSHA standards d. where environmental regulations are lax e. more difficult to disassemble b (Issues for product design, easy) {AACSB: Ethical Reasoning} An operations manager's ethical responsibilities a. are limited to the production phase of product life cycle b. are limited to following published laws and regulations c. extend from design, to production, to final destruction/disposition of a product d. do not include being efficient with the firm's resources e. need not consider a product design's impact on the entire economy c (Issues for product design, moderate) {AACSB: Ethical Reasoning} Which of the following is an example of an external product development strategy? a. new internally developed products b. enhancements to existing products c. alliances d. migrations of existing products e. All of the above are examples of internal product development strategy. c (Time-based competition, moderate) Which of the following product development strategies has the highest risk?
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a. acquiring the developer b. alliances c. joint ventures d. new internally developed products e. purchasing technology d (Time-based competition, moderate) 51. An engineering drawing shows the a. dimensions, tolerances, materials, and finishes of a component b. dimensions, tolerances, cost, and sales or use volume of a component c. materials, finishes, machining operations, and dimensions of a component d. cost, materials, tolerances, and lead-time for a component e. cost, dimensions, and machining operations for a component a (Defining the product, moderate) The dimensions, tolerances, materials, and finishes of a component are typically shown on a(n) a. assembly chart b. engineering drawing c. bill of material d. assembly drawing e. route sheet b (Defining product, the moderate) Which of the following does not result from the effective use of group technology? a. reduced tooling setup time b. simplified training c. reduced raw materials and purchases d. simplified production planning and control e. improved layout, routing, and machine loading b (Defining the product, moderate) Group technology requires that a. each component be identified by a coding scheme that specifies the type of processing and the parameters of the processing b. a specific series of engineering drawings be prepared c. all bills of material be prepared using the same format d. engineering change notices be linked to each of the bills of material and engineering notices e. the final products be standardized a (Defining the product, moderate) An assembly drawing a. shows, in schematic form, how the product is assembled b. shows an exploded view of the product c. lists the operations, including assembly and inspection, necessary to produce the component with the material specified in the bill of material d. provides detailed instructions on how to perform a given task e. describes the dimensions and finish of each component b (Documents for production, easy)
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An assembly chart a. shows graphically how the product is assembled b. shows an exploded view of the product c. lists the operations, including assembly and inspection, necessary to produce the component with the material specified in the bill of material d. provides detailed instructions on how to perform a given task e. describes the dimensions and finish of each component a (Documents for production, easy) Modern ATM machines are an automated example of a service design that a. reduces customer interaction b. modularizes the service c. delays service customization d. has no moment of truth e. has insufficient quality function deployment a (Service design, moderate) For a full-time college student, which of the following moments of truth exemplifies the customer's standard expectations? a. Your advisor made you wait, even though you had an appointment. b. You had to visit more than once to reach your academic advisor. c. Your advisor was competent, helpful, and understanding. d. Your advisor failed to keep her appointment with you. e. Your advisor offered to work with you after regular work hours. c (Service design, difficult) Which service design technique(s) would ordinarily not be appropriate for full-service restaurant meals? a. modularizing the product b. customization as late in the process as possible c. reducing customer interaction d. the moment of truth e. All of the above are appropriate. c (Service design, moderate) Which of the following scenarios illustrates a moment that exceeds the customer's expectations? a. an express mail service that guarantees overnight delivery b. a flight attendant that responds shortly after being called c. a hairdresser that cuts your hair at the right length d. a professor that contacts people in several companies to find you a job e. a bank that sends you monthly account statements d (Service design, difficult) Which of the following scenarios illustrates a moment that meets the customer's expectations? a. a sales clerk that called you by your name on your second visit to the store b. an express mail service that guarantees same day delivery c. a flight attendant that responds shortly after being called d. a professor that contacts people in several companies to find you a job e. a sales clerk at the clothing store that asked you to wait for a minute as soon as a wealthylooking customer entered the store c (Service design, difficult)
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The role of decision trees in product design is a. to rank products in descending order of their dollar contribution to the firm b. to better understand the customers' wants c. to calculate the expected value of each course of action d. to calculate the value of quality function deployment e. to calculate the value of the moment of truth c (Application of decision trees to product design, easy) Payoffs, alternatives, and expected monetary values are terms associated with a. virtual reality b. Product Lifecycle Management c. Quality Function Deployment d. decision trees e. make-or-buy analysis d (Application of decision trees to product design, easy)
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SHORT ANSWER
64. What is the objective of the product decision? Develop and implement a product strategy that meets the demands of the marketplace with a competitive advantage. (Goods and services selection, moderate) What is a product-by-value analysis, and what type of decision does it help managers make? A product-by-value analysis lists products in descending order of their individual dollar contribution to the firm, as well as the total annual dollar contribution of the product. It helps managers evaluate possible strategies for each product. The product-by-value report focuses management's attention on the strategic direction for each product. (Goods and services selection, moderate) Identify the factors that influence new product opportunities. Factors that influence new product opportunities include economic change, sociological and demographic change, technological change, political change, and other changes brought about through market practice, professional standards, suppliers, and distributors. (Goods and services selection, moderate) "With respect to the product decision, managers must be able to accept risk and tolerate failure." Comment on why this is a necessary hazard in making new product decisions, given all the powerful tools and carefully built systems that support that decision. The vast majority of new product ideas do not become marketable products, and most marketable products are failures. Perhaps 500 designs accompany each success. (Goods and services selection, moderate) Identify the general benefits derived from CAD. Product quality (better adherence to standards); shorter design time; production cost reductions (from better design); database availability (for new products); and new range of capabilities (ease programming of CNC machines). (Generating new products, moderate) {AACSB: Use of IT}
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Is it possible for a product's life cycle stage to affect its product strategy? In particular, describe how one product in growth and another in maturity might have different product strategies. There is no reason for the strategy to be static through the life cycle stages. Organizations often treat new products differently than older ones, in terms of support for changes, aggressiveness in pursuit of market, etc. In particular, growth is associated with stabilization of design, and with ensuring that sufficient capacity exists. Maturity is a time for high-volume operations and cost control. (Goods and services selection, moderate) Desribe the benefits associated with value engineering. Benefits include immediate cost reductions; reduced product complexity; additional standardization of components; improvement of functional aspects of the products; improved job design and job safety; improved maintainability (serviceability) of the product; and robust design. (Product development, moderate) Provide some examples of recent product changes, i.e. new products that are replacing older ones. Answers will vary. The list in the text includes: TV to HDTV, radio to satellite radio, coffee shops to Starbucks lifestyle coffee, traveling circuses to Cirque du Soleil, land lines to cell phones, cell phone to Blackberry, Walkman to iPod, and mops to Swiffers. (Generating new products, moderate) {AACSB: Reflective Thinking} Explain the difference between value analysis and value engineering. Value engineering is concerned with reducing cost and improving function in a preproduction setting; value analysis, with similar aims, takes place during production, when the product has shown that it will succeed. Techniques are similar. (Product development and Issues for product design, moderate) Aggressive new product development requires that organizations build structures internally that contain what features? They should have open communication with customers, innovative organizational cultures, aggressive R&D, strong leadership, formal incentives, and training. (Generating new products, difficult) {AACSB: Communication} What two issues should be considered in combination in order to enhance the likelihood of ethical decision in the realm of product design? Why is each important? The two issues are (1) view product design from a "systems" perspective, and (2) consider the life cycle of the product. The first issue causes managers to go beyond "what is best or cheapest for the firm?" The second causes managers to address environmental concerns over the life of the product, not just at time of manufacture. (Issues for product design, moderate) {AACSB: Ethical Reasoning} Identify the specific guidelines that can help an operations manager achieve environmentally friendly designs. Specifically, the following ideas are presented in the text: make products recyclable, use recycled material, use less harmful ingredients, use lighter components, use less energy, and use less material. (Issues for product design, moderate) {AACSB: Ethical Reasoning} What are some of the benefits from using environmental teams for product design? Environmental teams help develop safe and more environmentally sound products, minimize the waste of raw materials and energy, differentiate products from competition, reduce
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environmental liabilities, increase cost-effectiveness of complying with environmental regulations, and help the organization be recognized as a good corporate citizen. (Issues for product design, moderate) {AACSB: Ethical Reasoning} 77. Discuss the advisability of using modular assemblies in manufacturing. (What are the advantages and disadvantages?) To what extent can these arguments be utilized in service products? Modules are easily segmented components; they add flexibility to production and marketing; allows mix-and-match of components (customization at point of customer contact). Use of modules usually means fewer parts, less design and tooling expense. Disadvantages include using a module in a product for which a more specific component would have been better. Modules exist in services, as in fast-food meals built to customer specification. (Issues for product design, difficult) What is time-based competition? Time-based competition is competition that is based on time. It involves rapid development of products, fast introduction to the marketplace. Often, the first company into production may have its product adopted as the "standard." (Time-based competition, moderate) State the benefits of implementing group technology. Benefits include improved design; reduced raw materials and purchases; simplified production planning and control; improved routing and machine loading; reduced tooling setup time, work-in-process, and production time; and development of work cells. (Defining the product, moderate) Identify the external product development strategies; describe each in a sentence or two. The external product development strategies include alliances, joint ventures, and purchase of technology or expertise by acquiring the developer. Alliances are cooperative agreements that allow firms to remain independent, but use complementing strengths to pursue strategies consistent with their individual missions. Joint ventures are combined ownership to pursue new products or markets. Purchasing technology or expertise is usually accomplished by acquiring entrepreneurial firms that have already developed the technology that fits the mission. The issue then becomes fitting the purchased organization, its technology, and its product line into the buying firm, rather than a product development issue. (Time-based competition, moderate) How does configuration management manifest itself when you ask for service on your automobile? Configuration management is used by every automobile manufacturer to track all of the changes between and during a model year. To be specific about the part that is needed, the VIN (vehicle identification number) is often used. (Documents for production, moderate) Briefly explain how Product Lifecycle Management (PLM) impacts product design. PLM is an umbrella of software programs that attempts to bring together many phases of product design and manufacture. PLM products often start with product design (CAD/CAM); move on to design for manufacture and assembly (DFMA); and then into product routing, materials, layout, assembly, maintenance and even environmental issues. (Documents for production, moderate) Identify the four methods of service design that can reduce costs and enhance the product. Customizing as late in the process as possible; modularizing the product; identifying the service parts that lend themselves to automation or reduced customer interaction; and
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focusing design on the moment of truth. (Service design, moderate)
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