Ever improve–a guide to managing production the TOC way by O. Cohen

Over the past decades, several companies have introduced product platforms in the design of their products in order to produce a large product variety in a cost-efficient way. However, for some companies, the introduction of platforms ended up being more costly than expected, leading them to reconsider their platform decisions. In this paper, we develop a model to support companies in determining (1) how many platforms to develop, (2) which platforms to develop and (3) which products to derive from which platforms. The model takes into account the impact of these product-platform decisions on a company’s relevant supply chain activities and costs. The model shows how the optimal product-platform decisions depend on the trade-off between the costs of platforms versus the costs of customising these platforms to final product variants. We propose a simulated annealing algorithm to solve large problem instances within reasonable time. The practical validity of our model is shown through its application in a global technology company specialised in the development and production of medical screens.     

Development of a production cost estimation framework to support product family design

The main task of a product family designer is to decide the right components/design variables to share among products to maintain economies of scale with minimum sacrifice in the performance of each product in the family. The decisions are usually based on several criteria, but production cost is of primary concern. Estimating the production cost of a family of products involves both estimating the production cost of each product in the family and the costs incurred by common and variant components/design variables in the family. To estimate these costs consistently and accurately, we propose a production cost estimation framework to support product family design based on activity-based costing (ABC), which consists of three stages: (1) allocation, (2) estimation, and (3) analysis. In the allocation stage, the production activities and resources needed to produce the entire products in a family are identified and classified with an activity table, a resource table, and a production flow. To help allocate product data for production, a product family structure is represented by a hierarchical classification of products that form the product family. In the estimation stage, production costs are estimated with cost estimation methods selected based on the type of information available. In the analysis stage, components/design variables possible for product family design are investigated with resource sharing methods through activity analysis. As an example, the proposed framework is applied to estimate the production cost of a family of cordless power screwdrivers that share different components within the family.     

Solving the multiple platforms configuration problem

The focus of manufacturing has been shifting from mass production to mass customization and producers are seeking ways to reduce production costs, still offering a competitive basket of products. One approach for implementing mass customization is to develop or produce products based on platform architecture. Variant products make use of the product platform as the starting point and then add or remove components to change features of the base product. This allows the manufacturer to offer the variety of products that meet market demands without developing each product independently. In this paper, we propose multiple platforms for the production of a given product family while minimizing the overall production cost. The methodology considers the demand for each product variant, with the decision variables as the optimal number of platforms, optimal configuration of each platform, and assignment of the products to the platforms. The problem is formulated as a mixed integer program, and both the optimal formulation and an evolutionary strategy based on Genetic Algorithm are presented. The approach is illustrated with an example from a family of cordless drills.     

Why do quality and reliability feedback loops not always work in practice: a case study

The increasing competition in the market of consumer electronics forces industry to simultaneously improve the functionability, reliability and costs of their products. Due to the strong dynamics of this field an important measure in improving product quality is the feedback of information on actual field behaviour of a product which is extremely relevant for product development. This information, usually gathered by the service department, can help development to learn from the failures of earlier products and to improve the next product generations. This feedback process, however, does not always bring the expected benefits. This paper presents a model, based on an actual case study, of the structure of the feedback process in terms of information flows. The information flow model describes the chain or network of activities in the feedback process as a function of (different) drivers such as cost, time or quality. Using this information flow model it is possible to explain how quality and reliability related information propagates through a business process and where and why communication problems lead to disruptions in the feedback of this information. With this model, it is easier to understand the function of different parties in the service or after sales process, so that management of the information in this process becomes more transparent and can be improved.     

An algorithm for optimising the servicing of products with constrained,multiple defects

The twin pillars of sustainable development are the conservation of natural resources and the management of waste. Waste is generated whenever a product is serviced or repaired, or when it is ultimately discarded at the end of its useful life. In order to manage such waste, the servicing options and costs must first be ascertained. This paper presents an algorithm for the generation of optimal disassembly and re-assembly sequences for the servicing of products with multiple defects, subject to constraints such as inaccessible components. The multiple service action (MSA) algorithm determines the minimum total servicing cost for a product network based on Floyd's Algorithm, a shortest path algorithm. Well-established shortest path algorithms, which compute the shortest route between any pair of nodes in a network, are unable to handle multiple defects. The product network is first constructed, depicting the components and subassemblies as nodes, and embodying in directed arcs, the labour, materials and tooling costs associated with disassembly and re-assembly, as well as the cost to repair, reuse, recycle or dispose the defective components. The MSA algorithm was tested on seven different product networks representing multiple defective components that can be serviced by different feasible routes. For each feasible service route, associated costs were computed. It was established that the algorithm was able to generate optimum disassembly and re-assembly routes for the servicing of products with multiple defects subject to constraints.     

Analyzing textual databases using data mining to enable fast product development processes

Currently, companies active in the design of high-tech products are confronted with a number of, often conflicting, challenges. Not only do they have to develop increasingly complex products in ever-shorter amounts of time but they also have to produce them cheaply for the local as well as global markets. In order to manage these conflicting trends adequately, as this paper will demonstrate, companies need to have high quality information at the right moment and at the right location. This serves as the motivation of this paper in which various databases within the product life cycle are examined. Due to the fact that unanticipated information plays a more and more dominant role, especially in highly innovative business processes, we focus our attention on textual databases since textual databases offer the best possibility to handle unanticipated free-formatted information. Also their treatment in the literature has thus far been scant. As will be demonstrated in this paper these databases have a huge potential for valuable information. Further, an analysis tool, data mining that could be used to analyse these textual databases so that we could extract information from them quickly and hence be able to access them at the right time when needed, is presented. We also highlight some of the difficulties faced when analyzing textual databases. Thus with the right information from the textual databases and the tools to deliver this information at the right time companies, would definitely be able to shorten development times and hence gain a competitive edge.     

Flexible product platforms: framework and case study

Customization and market uncertainty require increased functional and physical bandwidth in product platforms. This paper presents a platform design process in response to such future uncertainty. The process consists of seven iterative steps and is applied to an automotive body-in-white where 10 out of 21 components are identified as potential candidates for embedding flexibility. The paper shows how to systematically pinpoint and value flexible elements in platforms. This allows increased product family profit despite uncertain variant demand, and specification changes. We show how embedding flexibility suppresses change propagation and lowers switching costs, despite an increase of 34% in initial investment for equipment and tooling. Monte Carlo simulation results of 12 future scenarios reveal the value of embedding flexibility.

Supply chain equilibrium among companies with offline and online selling channels

This study proposes a supply chain system model containing Nash game companies that compete in a common market. Each company adopts a vertical integration strategy and runs offline and online selling channels. To maximise profits, the companies determine optimal production quantities and prices. Using theory of finite-dimensional variational inequality, we prove the existence and uniqueness of the equilibrium pattern and develop a converged algorithm. Numerically, we compute the equilibrium production quantities and prices, and subsequently generate three findings through sensitivity analyses. By changing the transportation cost, we demonstrate that the offline price is conditionally higher than the online price with different transportation and processing costs. All equilibrium prices and profits decrease when substitution intensity is increased, and thus companies should differentiate their products. Altering consumer preference for online purchasing shows that consumer preference significantly influences the production quantities and profits. Online selling is not positively affected by consumer preference for online purchasing but is affected by the complex relationship between consumer preference and its variable cost.     

Function-technology-based product platform formation

Product platforms have been effectively used by many successful companies for product family design. Technological advancements and changes in customer needs pose problems for robustly designing product platforms over a given planning horizon. To date, most product platform formation approaches are directed by structural (subassemblies and components) considerations and are seldom undertaken at the conceptual design stage. We argue that product platform design should commence at the conceptual design stage rather than the detailed design stage. It is noteworthy that physical structures are the end results of designs already frozen at higher level of functional abstraction. Hence, tackling the platform formation problem should start much before structures are materialized. We propose that the product platform formation approach should be considered at two different stages: (i) conceptual design stage; and (ii) detailed design stage. In reference to the Function?–?Behavior?–?Structure model proposed by Gero and Kannengiesser (Gero, J.S. and Kannengiesser, U., Function-behavior-structure: A model for social situated agents. Workshop on Cognitive Modeling of Agents and Multi-Agent Interactions, International Joint Conference on Artificial Intelligence 2003, Acapulco, Mexico, 2003, pp. 101–107), conceptual design would refer to the design of products at function and technology stage, whereas detailed design would refer to the design of products at the structure stage. This paper discusses a method to form product platforms at the Function-Technology stage which can be correspondingly mapped to the structural stages. Thus, forming product platforms at a higher level of abstraction would enable a better understanding of the complications met at structural level. The FT approach uses Function Technology Ant Colony Optimization (FTACO) method to determine product platform configuration(s). We demonstrate the proposed approach using the example of a computer mouse product family.     

The use of best design practices: An analysis of US navy contractors

Rapid and successful introduction of new products is a potentially significant source of competitive advantage for manufacturing firms. Organizations need to identify and manage those critical elements of the product development process (PDP) that have a positive influence on new product success. This research identifies the distinctive product development and design practices, policies and tools currently followed by companies (Navy contractors) that participated in an empirical research study known as the Best Manufacturing Practices Program. A summary of practices reported in the case studies is compiled using content analysis techniques, and the most interesting practices by individual companies are highlighted. We find numerous examples of sophisticated CAD techniques being used to enhance the development process, including expert system design advisers, computer simulation, and design databases. Companies are emphasizing the design policies of concurrent engineering and teamwork, and documenting design process knowledge into design manuals. Company effort still appear focused primarily on the phase of detailed design rather than the concept selection phase.     

Platform Design for Customizable Products as a Problem of Access in a Geometric Space

A product platform is a set of common components, modules or parts from which a stream of derivative products can be created. Product platform design is typically performed as redesign and consolidation of existing products to create more competitive product families by reducing part variety and standardizing components. The main disadvantage of such an approach is that the benefits of product platform design are achieved only after a number of parts have been designed and manufactured, with all the associated expenditure. A number of approaches, referred to as “top-down approaches”, have been proposed recently to design the platforms since the original design of the product families. However, current top-own approaches have two major limitations: (1) they do not enable multiple levels of commonality for different components and features, and (2) they have been applied to products that are variegated in one specification, whereas products are typically variegated in multiple specifications. This paper describes a rigorous top-down approach for synthesizing product platforms that facilitates the realization of a stream of customized product variants, and which accommodates naturally multiple levels of commonality and multiple customizable specifications. The proposed approach is based on the formulation of the platform design as a problem of access in a geometric space. The proposed approach is illustrated with a case example, namely, the design of a product platform for a line of customizable pressure vessels.     

Design for variety: developing standardized and modularized product platform architectures

Developing a robust, product platform architecture brings an important competitive advantage to a company. The major benefits are reduced design effort and time-to-market for future generations of the product. This paper describes a step-by-step method that aids companies in developing such product platform architectures. Using the concept of specification "flows" within a product development project, the design for variety (DFV) method develops two indices to measure a product's architecture. The first index is the generational variety index (GVI), a measure for the amount of redesign effort required for future designs of the product. The second index is the coupling index (CI), a measure of the coupling among the product components. The design team uses these two indices to develop a decoupled architecture that requires less design effort for follow-on products. This paper describes the DFV method and uses a water cooler example to illustrate the method. Electronic Publication     

A continuous-review model for dual intercontinental and domestic outsourcing

When making sourcing decisions, many firms consider only the direct and most visible supply-chain costs, such as unit production costs and ocean-shipping costs. Often ignored are the hidden direct and indirect costs in long supply chains, and their impact on profitability. As supply chains lengthen, supply-chain disruptions undercut the ability of manufacturers and retailers to satisfy market demands. Supply-chain disruptions add costs by forcing companies to increase inventories, to juggle production and shipping schedules, to incur excessive backordering, and to airfreight or discount the prices of goods that were not in the right place at the right time. The question is, can higher incidence of supply-chain disruptions in intercontinental supply chains justify keeping the domestic suppliers? To address the question, this paper presents a hybrid continuous-review inventory model for dual intercontinental and domestic outsourcing. The conditions for domestic outsourcing only, for intercontinental outsourcing, and for dual outsourcing were established. The problem of minimising the long-run average cost of outsourcing was investigated, and mathematical optimisation was used to illustrate the model. It is shown that if the cost of service failure outweighs the cost differential between domestic and intercontinental outsourcing, keeping domestic suppliers may be a good option.     

Active demand management for substitute products through price optimisation

This paper presents a systematic mathematical programming approach for active demand management in process industries. The proposed methodology aims to determine optimal pricing policies as well as output levels for substitute products, while taking into consideration manufacturing costs, resource availability, customer demand elasticity, outsourcing and market competition. First, profit maximisation analytical formulae are derived for determining Nash equilibrium in prices for a duopolistic market environment where each company produces only one product. An iterative algorithm is then proposed so as to determine the decision-making process by solving a series of non-linear mathematical programming (NLP) models before determining the Nash equilibrium in prices for the competing companies. The proposed algorithm is extended in order to accommodate the case of multi-product companies, each one selling a set of substitute products at different prices. The applicability of the proposed methodology is demonstrated by a number of illustrative examples.     

新产品质量对闭环供应链再制造模式选择的影响

研究了新产品质量对闭环供应链回收再制造模式选择的影响。借助博弈论,建立了原制造商外包再制造和授权再制造的Stackelberg博弈模型,利用逆向归纳法解得两个模型的均衡解和供应链利润,并对均衡结果进行了比较分析。研究发现：外包再制造模式的供应链利润、消费者剩余、社会福利均优于授权再制造模式。原制造商选择外包再制造模式的利润要高于授权再制造模式,而第三方制造商最优策略受再制品价值折扣与新产品质量的影响。当再制品价值折扣系数与回收规模满足一定条件,而且新产品质量较高时,原制造商采取外包模式对环境更加友好。     

Analysis of a product recovery system

The continuous growth in consumer waste in recent years has seriously threatened the environment. Environmentally conscious manufacturing and product recovery has become an obligation to the environment and to society. Many countries are contemplating regulations that force manufacturers to take back used products from consumers so that the components and materials retrieved from the products may be reused and/or recycled. We focus on a product recovery system in a remanufacturing system. Product recovery aims to minimize the amount of waste sent to landfills by recovering materials and parts from old or outdated products by means of recycling and remanufacturing. It should be considered when designing and managing the manufacturing systems. We propose a new analytical approach to evaluating the product recovery system with stochastic variability. This model applies the traditional inventory theory to the production/inventory management with consideration for disposal and return. The system is formulated by a discrete time Markov chain. It is composed of the states denoted by the number of the inventory, the transition probabilities between states and the costs associated with the transitions. Using the Markov analysis, we can calculate the total expected average cost per period exactly. Numerical examples are given to show the property of the management system and optimize the product recovery system.     

Multi-generation pricing and timing decisions in new product development

When planning for the introduction of a stream of new products into the marketplace, managers must consider both the timing and dynamic pricing decisions to determine an appropriate entry strategy into the marketplace. Literature in new product development (NPD) typically addresses optimal timing and pricing decisions independently. We develop an analytical model of coordinated product timing and pricing decisions when there are two generations of a new product under consideration. Factors driving the timing and pricing decisions include the unit sales and cost relationships for each generation as well as NPD costs for introducing the next generation of products. We derive analytic results that characterise the optimal timing and pricing strategies for a single product rollover scenario. We analyse several numerical examples to illustrate the interplay between optimal pricing and time-to-market strategies under more general settings.     

Product platforms design,selection and customisation in high-variety manufacturing

Product platforms represent an effective strategy implemented by manufacturers to cope with dynamic market demands, decrease lead-time and delay products differentiation. A decision support system (DSS) for product platforms design and selection in high-variety manufacturing is presented. It applies median-joining phylogenetic networks (MJPN) for the platforms design and phylogenetic tree decomposition for platforms selection by determining the product family phylogenetic network and defines the platforms at various levels of assembly corresponding to different trade-offs between number of platforms (variety) and number of assembly/disassembly tasks (customisation effort). Product platforms are reconfigured and customised to derive final product variants. The phylogenetic tree is decomposed in multiple levels, from the native platforms to the final variants. New Platforms Reconfiguration Index (PRI) and Platforms Customisation Index (PCI) were developed as metrics to evaluate the platforms customisation effort. A case study of a large family of plastic valves is used to demonstrate the DSS application. It shows reduction of 60% in platforms variety and increases in platform customisation assembly/disassembly tasks by only 20% leading to significant production and inventory efficiencies and cost savings. This methodology supports companies in the design and selection of best product platforms for high-variety to reduce cost and delivery time.     

Optimisation approach to target costing under uncertainty with application to ICT-service

Target costing is a modern approach applied during product development that defines cost targets for products and its components. These cost targets are driven by customer requirements and achievable revenues. The intention of this paper is the integration of target costing with modern concepts of modelling uncertainty and management of risk based on optimisation. Contrary to the traditional focus of target costing on cost targets, this paper prefers a strategy for achieving a target profit. Moreover, in this paper target costing is understood as a continuous process with incremental changes of cost drivers, product and component design as well as product prices. Therefore, the change in costs and profit with respect to aforementioned control parameters is modelled by linear approximations. Hence, improved decisions concerning design and prices are derived by linear programming models. In practice, information concerning product and component costs, demand or customer preferences are not given with certainty. Therefore, we apply a stochastic programming approach to manage the risk inherent in the target costing process. After a general presentation, we apply our approach to the provision of an information and communication technology service where the level of uncertainty is considerable.     

Uncapacitated production planning with multiple product types, returned product remanufacturing, and demand substitution

This paper investigates an uncapacitated multi-product production planning problem with returned product remanufacturing and demand substitution, where no backlog and no disposal are allowed. Both the production of new products and the remanufacturing of returned products are considered to meet time-varying demands in a finite time horizon. Setup costs are taken into account when a new product is manufactured or a returned product is remanufactured. The problem is to determine when and how many returned products are remanufactured and new products are manufactured so as to minimize the total cost, including manufacturing, remanufacturing, holding and substitution costs. We first develop an optimization model to formulate the problem. We then propose a dynamic programming approach to derive the optimal solution in the case with large quantities of returned products. We further propose an approximate approach for the general problem to compute a near-optimal solution. The proposed approaches are evaluated by computational experiments and the effectiveness of the approximate approach is verified. Some managerial insights regarding the effects of remanufacturing/substitution are also obtained from the computational studies. This work was partly supported by the National Science Foundation of China under Grant No. 70329001, 70321001, China Postdoctoral Science Foundation under Grant No. 2003034020, 70501014, SRF for ROCS, SEM (2004) and Hong Kong Research Grants Council under Earmarked Grant No. CUHK 4170/03E. We wish to express our sincere appreciation to the Special Issue Editor and the two referees for their constructive comments and suggestions to help improve our paper.