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Decision Making in Engineering Design

Editor
Kemper E. Lewis
Kemper E. Lewis
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Wei Chen
Wei Chen
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Linda C. Schmidt
Linda C. Schmidt
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ISBN-10:
0791802469
No. of Pages:
400
Publisher:
ASME Press
Publication date:
2006

The global economy has materialized into a double-edged sword for manufacturing firms because the economic opportunities offered by new markets have been offset by a large increase in the number of strong competitors. For example, the number of major automotive companies in the United States was three before globalization; now it is seven or more and growing. But it is not just automotive. Globalization has put acute pressure on firms across all industries to continuously reduce costs while simultaneously speeding up the development of innovative, new products.

The job of the product planner has become particularly challenging. Not only does the rate of product improvement have to be increased while driving costs down, but planners must discover how to use limited resources to select, develop and implement new technologies in a way that best serves the diverse needs and tastes of customers around the globe. Moreover, these are customers who can now choose from a wide array of strong, competing alternatives. Thus, there is a pressing need to make the product planning process more effective. The solution recommended here is to put product planning on a firmer, more scientific foundation. The major challenge is to have a practical methodology that balances rigor with simplicity and transparency so that it will have wide appeal and usage across the diverse disciplines within a manufacturing firm.

The goal of any product planning methodology should be to identify, in a timely manner, the technologies and attributes for new products that offer the best improvement in the firm's bottom line. A critical element in generating sound financial forecasts is having a trustworthy and insightful algorithm for forecasting demand, which is used in arriving at the price of the product and in forecasting cash flow. The overall planning methodology should be science-based, which means that the quantitative forecasts of demand and cash flow made during the product development process are compared with actual outcomes once the product is in production. Shortcomings found in the process and model must be identified and improved upon, if not eliminated. The purpose of this chapter is to explore the foundations of a product planning methodology based on a model for product demand that is simple yet rigorous in the limit of small departures in the values and prices of the products competing in a segment [1, 2]. Alternate approaches to the product planning∕design problem, wide ranging in assumptions and complexity, can be found in Chapters 16 through 20. The nature of the problem at hand and the experience of the user will dictate which approach is favored.

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