OPM Case Week 3 Paper (Essay Sample)

Instructions:

Required

Product Design Powerpoint Slides 1

Apply Decision Tree to Product Design Powerpoint Slides 2

Sample Problem:

Michael's Engineering, Inc. manufactures components for the ever-changing notebook computer business. He is considering moving from a small custom design facility to an operation capable of much more rapid design of components. This means that Michael must consider upgrading his CAD equipment. Option 1 is to purchase two new desktop CAD systems at $100,000 each. Option 2 is to purchase an integrated system and the related server at $500,000. Michael's sales manager has estimated that if the market for notebook computers continues to expand, sales over the life of either system will be $1,000,000. He places the odds of this happening at 40%. He thinks the likelihood of the market having already peaked to be 60% and future sales to be only $700,000. What do you suggest Michael do and what is the EMV of this decision?

purchase the desktop systems.

Optional

Heizer and Render's book provides a nice and comprehensive overview of Operations Management. It is highly recommended if you are serious in pursuing a concentration in Operations Management.

Heizer, J and Render B. (2001) Principles of Operations Management, ISBN 0-13-027147-0

Module 3 - Case

DESIGN OF GOODS AND SERVICES

Assignment Overview

Global firms like Regal Marine know that the basis for an organization's existence is the good or service it provides society. Great products are the keys to success. With hundreds of competitors in the boat business, Regal Marine must work to differentiate itself from the flock. Regal continuously introduces innovative, high-quality new boats. Its differentiation strategy is currently reflected in a product line consisting of 22 models. But why must Regal Marine constantly worry about designing new boats? The answer is that every product has a life cycle. Products are born. They live and they die. As Figure 5.1 shows, a product's life cycle can be divided into four phases: introduction, growth, maturity, and decline.

Figure 5.2 shows the four life cycle stages and the relationship of product sales, costs, and profit over the life cycle of a product. When Regal is developing a new model boat, it typically has a negative cash flow. If the boat is successful, those losses may be recovered and yield a profit prior to its decline. The life cycle for a successful Regal boat is three to five years.

To maintain this stream of innovative new products, Regal constantly seeks design input from customers, dealers, and consultants. Design ideas rapidly find themselves in Regal's styling studio, where Computer Aided Design (CAD) technology speeds the development process. A Regal design engineer can start with a rough sketch or even just an idea and use the graphic display power of CAD as a drafting board to construct the geometry of the new boat. The CAD system helps the designer determine engineering data such as the strength, dimensions, or weight. It also allows the designer to be sure all parts will fit together. Existing boat designs are always evolving as the company tries to stay stylish and competitive. Moreover, with life cycles so short, a steady stream of new products is required. A few years ago, the new product was the 3-passenger $11,000 Rush, a small, but powerful boat capable of pulling a water-skier. The next year, it was a 20-foot inboard-outboard performance boat with so many innovations that it won prize after prize in the industry. Then it was a redesigned 42-foot Commodore that sleeps six in luxury staterooms. With all these models and innovations, Regal designers and production personnel are under pressure to respond quickly.

By getting key suppliers on board early and urging them to participate at the design stage, Regal improves both innovations and quality while speeding product development. Regal finds that the sooner it brings suppliers on board, the faster it can bring new boats to the market. The first stage in actual production is the creation of the "plug," a foam-based carving used to make the molds for fiberglass hulls and decks. Specifications from the CAD system drive the carving process. Once the plug is carved, the permanent molds for each new hull and deck design are formed. Molds take about 4-8 weeks to make and are all handmade. Similar molds are made for many of the other features in Regal boats-from galley and stateroom components to lavatories and steps. Finished molds can be joined and used to make thousands of boats.

Case Assignment

Please turn in a paper of one to two pages (page counting does not include cover and reference list) discussing the following questions,

How does the concept of product life cycle apply to Regal Marine products?
What strategy does Regal use to stay competitive?
What kind of benefits are Regal achieving by using CAD technology rather than traditional drafting techniques?

Assignment Expectations

Answer questions with clarity.
Show depth and breadth in your paper to enhance the quality of your paper.
Try your best to search in our library to find some papers/articles to support your argument and show them in the reference list.

source..

Content:

OPM Case Week 3
Name
Institutional Affiliation
Product life cycle is a marketing concept thatâ€™s seeks to address the behavior of revenue from sales of a particular product over a period of time (Kotler, 2000). This period of time can be divide into introduction, growth, maturity and eventually decline depending on the return revenue a company gets from sale of the product. This concept applies to all products and its implications for a company cannot be overlooked.
For this case of Regal Marine, this product life cycle concept plays a major role in avoiding losses and maximizing profits for a particular product in the market. This is made possible by understanding the timeline for which a particular product will be in the market to avoid unnecessary costs that end up as losses. These losses may be incurred by overproduction of products which spills into the decline period of a product in the market (Wiersema & Marketing Science Institute, 1982). This is very critical to Regal Marine as production of boats is expensive and production into the decline period can result in major losses for the company.
Since every product has a life cycle in the market, it becomes very important for Regal Marine to release new products into the market to avoid becoming obsolete. However, this release of a new product must be correctly timed to coincide with the decline of a former product. This will provide the consumers a newer and better alternative not forgetting a contribution to a fast rise in sales of the new product. This in turn raises the return revenue of a product and enables the losses and cost incurred in production to be recovered and profits realized.
Regal Marine applies the differentiation strategy to remain competitive in the industry. This is where a business entity creates a product or service that is perceived to be unique in the industry and that customers can relate to (Porter, 1980). Also, it involves applying features that are unique to a particular manufacturer that are not easy to imitate. This has been achieved through creating a brand image and boats with unique and innovative designs that are of high quality. This strategy to some extent relies on customer loyalty to a particular brand and willingness to pay more for the additional features that differentiate it from the generic and non-differentiated products (Peter, Olson, & Peter, 1990). This strategy method eventually leads to a reduction in price elasticity which emanates from customer brand loyalty. It also eradicates the need to be a low cost producer which allows for production of high quality and classy boats. This strategy cuts out a niche for Regal Marine as a high quality manufacturer of boats in the industry (Paley, 2006).
Regal Marine has clearly ripped out a lot of benefits from the Computer Aided Design (CAD) technology and enhanced their production of boats. The CAD technology has greatly helped in reducing the time needed to design a new boat design. This is due to the speed at which CAD technology enables the design engineer to come up with new boa...

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OPM Case Week 3 Paper (Essay Sample)

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