Technology and information management

2. Product Development For a Virtual Reality Entertainment System

Step 1 - Define the problem

Acting as the manager of a new product development team, provide a written statement of a structured process to dissect a video game console, VR headset, and a video game motion tracking sensor. Implement the process and develop a product platform and line for serious gamers and for realistic VR experience and develop an FMEA for the serious gamer market.

Step 2 – Create a plan for solving each sub-problem

· SP1: Create a written statement for the structured process to dissect:

· Video game console

· VR headset

· Video game motion tracking sensor

· SP2: Develop the product platform and line for:

· Serious gamers

· Realistic VR experience

· SP3: Develop FMEA for the serious gamer

Step 3 - Execute the plan

· SP1: Create a written statement for the structured process to dissect:

· Video game console

· VR headset

· Video game motion tracking sensor

1. Conceptual Design Process

a. Establish customer needs and technical specifications using a House of Quality

b. Identify primary function of the product

c. Reverse engineer similar products

d. Create an abstract functional representation of the new product

e. Make a morphological matrix

f. Make a utility function

g. Select the concept with the highest cumulative utility

2. Product Platform and Product Line Strategy

a. Determine the underlying elements of the production platform

b. Segment the market based on competitive and market strategy, then prioritize each segment

c. Create a product platform strategy

d. Create a product line strategy

e. Create a product platform and line

3. FMEA

a. Rate the SOD functions and calculate the RPN

b. Create a table with subsystems and components

c. List actions to fix parts that have an RPN over the threshold

Conceptual Design Process

a. Establish customer needs and technical specifications using a House of Quality

Customer Needs for VR System

Technical Needs for VR System

VR System HOQ:

b. Identify primary function of the product

Primary Function: To provide a realistic VR experience for gamers to provide quality entertainment.

c. Reverse Engineer Similar Products

Video Game Console: Nintendo 64

Using notes from my midterm, I will dissect the Nintendo 64.

Important Subsystems and Components relevant to Nintendo 64

Analysis of Different Functions of Nintendo 64

FAST Diagram for Nintendo 64

VR Headset: Oculus Rift

I will dissect the Oculus Rift.

Important Subsystems and Components relevant to Oculus Rift

Analysis of Different Functions of Oculus Rift

FAST Diagram for Oculus Rift

d. Create an abstract functional representation of the new product

Create an abstract functional representation of the VR headset. Organize the main goals and purpose of the product with the appropriate components and sub functions.

Function Structure for VR Headset

e. Morphological Matrix

Using the information provided, I will create a Morphological Matrix

Function Structure for VR System

Alternative Concepts

I will now use the morphological matrix for analyzing design options

1. Concept 1: The first design option includes and LCD screen, separate speakers for audio output, and AMD graphics card, and use active markers for its motion tracking. This makes the headset fairly cheap and light, but lacks quality.

Concept 1 Flow Chart

2. Concept 2: The second design option includes an OLED screen, is designed to allow the user to wear headphones for audio, uses an NVDIA graphics card, and passive markers for motion tracking. This design provides a good mix of quality and affordability as well as good ergonomics.

Concept 2 Flow Chart

3. Concept 3: The third design option includes an CRT screen, includes attached headphones on the headset for audio, uses an Intel graphics card, and uses a motion sensing camera for motion tracking. This design would be expensive but doesn’t provide very high performance relative to its cost.

Concept 3 Flow Chart

4. Concept 4: The fourth design option uses an LCos screen, includes attached earphones on the headset for audio, uses an AMD graphics card, and uses wires to allow for a tethered system for motion tracking. This design provides a fair mix of quality and ergonomics but may be more expensive.

Concept 4 Flow Chart

f. Make a utility function

I will now create a Utility Function. I will use a set of criteria to analyze the results of the function including:

· Cost efficiency

· Functionality

· Quality

· User Friendliness

· Aesthetic Appeal

Weight Criteria for VR Helmet

Using this utility function, I can now begin the process for determining the best alternative for development.

Utility Analyses for VR Headset

g. Select the concept with the highest cumulative utility

From the Utility Analyses, the best alternative concept can be chosen for development is be Concept 2. This was determined through comparing the weighted scores of each concept’s fulfillments of the criteria. This has led to Concept 2 being found to be the best alternative concept for development.

Product Platform and Product Line Strategy

a. Determine the underlying elements of the production platform

Core Elements: Screen, Sensors

Supporting Elements: Power Supply, GPU, CPU

b. Segment the market based on competitive and market strategy, then prioritize each segment

VR Headset Market Segments

c. Create a product platform strategy

Product Platform Strategy

d. Create a product line Strategy

VR Headset Product Line Strategy

e. Create a product platform and line

Product Platform and Line

FMEA

Develop a Failure Modes and Effects Analyses for the serious gamer. The FMEA will help to find if there are any possible failures with the system and determine ways to prevent it.

S = Severity of failure mode ranging 1-8 with 8 being most severe

O = Frequency of failure occurrence ranging 1-8 with 8 being most frequent

D = Ease of failure detection ranging from 1-8 with 8 being most difficult to detect

RPN = S*O*D

a. Create a table with subsystems and components

FMEA Table for VR Headset

b. Rate the SOD functions and calculate the RPN

Subsystem RPN Ratings:

- Display: 42

- Sensors: 24

- CPU: 36

- GPU: 20

- Power Supply: 24

c. List actions to fix parts that have an RPN over the threshold

Critical Failure Modes:

1. The most notable critical failure is if the screen becomes broken as it is possible to break the screen if the headset is dropped or hit against something and doing so would ruin the VR experience that is intended by the headset. This can be avoided by making the screen out of durable materials and designing it to be easily replaceable.

2. The second most notable critical failure is the overheating of the CPU, as this both presents problems of causing rapid system degradation and safety issues. This problem can be alleviated by using durable components for the CPU and testing its rate of overheating through testing.

3. The third most notable critical failure is the sensors failing to detect the helmet movement, as failing to detect movement defeats the purpose of the system. This can be fixed through software updates to improve the helmet detection software.

Step 4 - Check your work (reflect on the results; discuss…)

1. Is your work correct in every detail?

Yes

2. Are my assumptions reasonable?

Yes

Step 5 – Learn and generalize

After working through this question and analyzing the various methods necessary to make a product successful in terms of meeting customer needs and technical specifications, I’ve improved my understanding of the detail and effort necessary to put into product design and launch execution. I have found it to be very important to match the needs and wants of the customer with the product’s technical specifications and how those specifications are able to stack up with those of competing products. There are different levels of detail and complication needed for designing products such as the VR headset which need to be clarified as much as possible, with the next step being to determine what the best option for development which provides the greatest value is. The entire process is strategic and should be well laid out to address various facets of design, development, and marketing.

3. Financial Modeling For the Virtual Reality Entertainment System

Step 1 - Define the problem

Model the impact of unit sales price on NPV by the end of year 4 of development, as well as

· The minimum value of the unit sales price for the product that will result in a positive NPV by the end of year 4

· The trade off law between NPV and unit sales price

· Make a recommendation for the software giant to charge to distributors per unit

· Expected NPV based on the recommendation

Step 2 – Create a plan for solving each sub-problem

· SP1: Perform a 4 year NPV analysis

· SP2: Find minimum value for the sales price that would result in a positive NPV

· SP3: Find the trade off law between NPV and unit sales price

· SP4: Make a recommendation for the software giant to charge to distributors per unit

· SP5: Find expected NPV based on the recommendation

Step 3 - Execute the plan

· SP1: Perform a 4 year NPV analysis

Input Parameters for Financial Model

· SP2: Find minimum value for the sales price that would result in a positive NPV

To find the minimum value of the unit sales price that will result in a positive NPV the NPV should be set to 0, with the value coming out to be roughly $42.55.

Base Case for 4 years

· SP3: Find the trade off law between NPV and unit sales price

Conduct Sensitivity Analyses on unit sales price:

-10% Sales Price

+10% Sales Price

-20% Sales Price

+20% Sales Price

-30% Sales Price

+30% Sales Price

Unit Sales Price Summary

NPV vs Change in Unit Price

· SP4: Make a recommendation for the software giant to charge to distributors per unit

I would recommend to the software giant that the unit price should be around $100. This is because the VR entertainment system is a new technology that is still in its early stages, and is an idea that people still are getting interested in. This product will likely appeal to serious users such as gamers and even professionals that are interested in purchasing high end technology, and since this market is not currently very big it is important to keep the price fairly low, but also not super low so that a good profit can be made.

· SP5: Find expected NPV based on the recommendation

Using these scenario input parameters, the expected NPV of 4 years for my professional recommendation is $74,288.

Step 4 - Check your work (reflect on the results; discuss…)

1. Is your work correct in every detail?

Yes

2. Are my assumptions reasonable?

Yes

Step 5 – Learn and generalize

Completing a detailed question having to do with financial analyses such as this further expands my knowledge of the planning necessary for successfully bringing a product to market. There is a significant amount of forethought that must be used when deciding unit prices, as a even a slight change can have a large effect on a company.

4. Information Technology For Product Design and Development

Step 1 - Define the problem

Develop an IT system to support the design and development of the proposed VR system using a modified MDC framework.

Step 2 – Create a plan for solving each sub-problem

· SP1: Use the MDC Framework to develop a Product Design and Development Framework

· SP2: Design an IT system to automate steps of the framework

Step 3 - Execute the plan

· SP1: Use the MDC Framework to develop a Product Design and Development Framework

Management (M)

Performed Concurrently

1. Firm-Level Strategy: Analyze the industry landscape and then establish marketing, competitive, and technological strategy.

2. Business Goals: Establish the business goals of the company in terms of ROI, market share, and growth

3. Development Goals: Align development goals with strategies

4. Functional Maps: Create functional maps to visualize the evolution of the company from different angles, including product releases and strategies.

5. High-Level HOQ: Develop a comprehensive House of Quality to translate customer needs into product technical requirements.

Development (D)

Engineer Concurrently

1. Reverse Engineering: Dissect existing products that are similar to the proposed design using FAST diagrams.

2. Conceptual Design: Create a function structure for the product and a morphological matrix to design alternative concepts, using these concepts to make a utility function, weighing each option and choosing the one that presents the most utility.

3. Prototyping Strategy: Produce a prototype for the products based on previously determined information.

4. Product Architecture/Product Strategy: Create a technology and product platform for the target market segments.

5. FMEA: Perform a failure modes and effects analyses of the detailed design to analyze the possible failure states and how they can be avoided.

Commercialization (C)

1. Financial Model: Create a base case NPV financial model to find the potential payoffs from the development project. Use this analyses to analyze what kind of cash flow may be achieved and perform sensitivity analyses.

2. Product Release Map: Design a product release roadmap.

· SP2: Design an IT system to automate steps of the framework

An IT system that would be able to integrate and automate the MDC steps listed would save a significant amount of time. This system would have the functionality to automate financial modeling to make it quick and simple as the user could just input the needed parameters and then be able to see the results of the model instantly. This automation can be achieved through using a program or software that uses code and algorithms to quickly analyze the data input into the system to provide the user with results in an efficient manner, rather than requiring the usage of manual data entry and manipulation.

Step 4 - Check your work (reflect on the results; discuss…)

1. Is your work correct in every detail?

Yes

1. Are my assumptions reasonable?

Yes

Step 5 – Learn and generalize

Using the MDC framework reinstates the lesson how much planning and effort are necessary for successfully producing a product. This framework only covers aspects of product development and design on a fairly low detailed level, but in reality it is much more detailed and much more effort is necessary to create products that are able to be successful and compete with technologies already out in the market.

5. Conclusion

Step 1 - Define the problem

Reflect on the quarter and list out key lessons that I’ve learned in my experiences.

Step 2 – Create a plan for solving each sub-problem

· SP1: Review previous lessons, project phases, and assignments to find key lessons.

· SP2: List and explain a few key lessons from the course.

Step 3 - Execute the plan

· SP1: Review previous lessons, project phases, and assignments to find key lessons.

Reviewed materials. Examples of three key lessons that I’ve learned are:

1. Structured Problem Solving

2. Development

3. Teamwork

· SP2: List and explain a few key lessons from the course.

1. Structured Problem Solving

This course introduced me to structured problem solving. Although I’m familiar with the concept of SPC, this class introduced me to it as a practical methodology for solving questions. With the experience provided to me in doing the work in this class, I’m now able to tackle complicated questions in an efficient fashion. This will aid me in my future school work, professional career, and even personal projects.

2. Development Framework

Most of the development portion of the MDC framework is extremely useful and proved to be great for the work that I did throughout the course. The tools and skills I’ve learned for analyzing customer and market needs and figuring out how to translate them into product or service specifications has already proven useful to me in creating a new email subscription service for the start up I currently work for, Technomite Corp. I will be able to use these tools in a variety of capacities no matter what career path I go down.

3. Teamwork

Another skill that I was able to learn about and develop in taking this course was that of teamwork and collaboration. In tackling the large challenge that was the course project, my team and I were able to learn a lot from working with each other. We were able to learn about how best to organize with each other to work in tandem on various parts of our project, making it so that we could reach success efficiently and effectively. I even had fun while working with my group.

Step 4 - Check your work (reflect on the results; discuss…)

1. Is your work correct in every detail?

Yes

1. Are my assumptions reasonable?

Yes

Step 5 – Learn and generalize

I was able to learn a lot this quarter, and it has ultimately shown me the necessity of being able to manage project planning and understanding how to better solve problems. It was very tedious at times as there was a lot of work involved, but that work served to reinforce the lessons taught in lecture. Being able to tackle complicated problems using a structured framework is very useful in doing not only school work, but also professional work and encountering other problems that need solving in life.

Change in NPV ($) vs. Change in Sales Price (%)

0.3 0.2 0.1 0 -0.1 -0.2 -0.3 16514.556000499731 11013.22170486128 5511.8874092228361 0 -5490.7811820540655 -10992.115477692509 -16493.449773330969

Change in Sales Price (%)

Change in NPV ($)

600000

40000000

?

150

400000

2000000

10

Marketing & Support Cost ($/year)

Annual Discount Factor (%)

SCENARIO INPUT PARAMETERS

Sales & Production (units/year)

Develoment Cost (total $/year)

Unit Price ($/unit)

Unit Productions Cost ($/unit)

Ramp-Up Cost (total $/qtr)

Base Case

Year 1Year 2Year 3Year 4

Period12345678910111213141516

($ values in thousands)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4

Develoment Cost-10000-10000-10000-10000

Ramp-Up Cost-200-200

Marketing & Support Cost-500-500-500-500-500-500-500-500-500-500-500-500

Production Cost-1313-1313-1313-1313-1313-1313-1313-1313-1313-1313-1313

Production Volume150000150000150000150000150000150000150000150000150000150000150000

Unit Production Cost-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875

Sales Revenue6382.56382.56382.56382.56382.56382.56382.56382.56382.56382.56382.5

Sales Volume150000150000150000150000150000150000150000150000150000150000150000

Unit Price0.042550.042550.042550.042550.042550.042550.042550.042550.042550.042550.04255

Period Cash Flow-10000-10000-10000-10200-70045704570457045704570457045704570457045704570

FV Year 1, r=10%-10000-9756-9518-9472-63440393941384537513659357034833398331532343155

Project NPV, $11

Base Case-10%

Year 1Year 2Year 3Year 4

Period12345678910111213141516

($ values in thousands)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4

Develoment Cost-10000-10000-10000-10000

Ramp-Up Cost-200-200

Marketing & Support Cost-500-500-500-500-500-500-500-500-500-500-500-500

Production Cost-1313-1313-1313-1313-1313-1313-1313-1313-1313-1313-1313

Production Volume150000150000150000150000150000150000150000150000150000150000150000

Unit Production Cost-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875

Sales Revenue5744.255744.255744.255744.255744.255744.255744.255744.255744.255744.255744.25

Sales Volume150000150000150000150000150000150000150000150000150000150000150000

Unit Price0.0382950.0382950.0382950.0382950.0382950.0382950.0382950.0382950.0382950.0382950.038295

Period Cash Flow-10000-10000-10000-10200-70039323932393239323932393239323932393239323932

FV Year 1, r=10%-10000-9756-9518-9472-63434753390330832273148307129972923285227832715

Project NPV, $-5491

Base Case10%

Year 1Year 2Year 3Year 4

Period12345678910111213141516

($ values in thousands)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4

Develoment Cost-10000-10000-10000-10000

Ramp-Up Cost-200-200

Marketing & Support Cost-500-500-500-500-500-500-500-500-500-500-500-500

Production Cost-1313-1313-1313-1313-1313-1313-1313-1313-1313-1313-1313

Production Volume150000150000150000150000150000150000150000150000150000150000150000

Unit Production Cost-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875

Sales Revenue7020.757020.757020.757020.757020.757020.757020.757020.757020.757020.757020.75

Sales Volume150000150000150000150000150000150000150000150000150000150000150000

Unit Price0.0468050.0468050.0468050.0468050.0468050.0468050.0468050.0468050.0468050.0468050.046805

Period Cash Flow-10000-10000-10000-10200-70052085208520852085208520852085208520852085208

FV Year 1, r=10%-10000-9756-9518-9472-63446034491438242754170406939693873377836863596

Project NPV, $5512

Base Case-20%

Year 1Year 2Year 3Year 4

Period12345678910111213141516

($ values in thousands)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4

Develoment Cost-10000-10000-10000-10000

Ramp-Up Cost-200-200

Marketing & Support Cost-500-500-500-500-500-500-500-500-500-500-500-500

Production Cost-1313-1313-1313-1313-1313-1313-1313-1313-1313-1313-1313

Production Volume150000150000150000150000150000150000150000150000150000150000150000

Unit Production Cost-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875

Sales Revenue51065106510651065106510651065106510651065106

Sales Volume150000150000150000150000150000150000150000150000150000150000150000

Unit Price0.034040.034040.034040.034040.034040.034040.034040.034040.034040.034040.03404

Period Cash Flow-10000-10000-10000-10200-70032943294329432943294329432943294329432943294

FV Year 1, r=10%-10000-9756-9518-9472-63429112840277127032637257325102449238923312274

Project NPV, $-10992

Base Case20%

Year 1Year 2Year 3Year 4

Period12345678910111213141516

($ values in thousands)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4

Develoment Cost-10000-10000-10000-10000

Ramp-Up Cost-200-200

Marketing & Support Cost-500-500-500-500-500-500-500-500-500-500-500-500

Production Cost-1313-1313-1313-1313-1313-1313-1313-1313-1313-1313-1313

Production Volume150000150000150000150000150000150000150000150000150000150000150000

Unit Production Cost-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875

Sales Revenue76597659765976597659765976597659765976597659

Sales Volume150000150000150000150000150000150000150000150000150000150000150000

Unit Price0.051060.051060.051060.051060.051060.051060.051060.051060.051060.051060.05106

Period Cash Flow-10000-10000-10000-10200-70058475847584758475847584758475847584758475847

FV Year 1, r=10%-10000-9756-9518-9472-63451675041491847984681456744564347424141384037

Project NPV, $11013

Base Case-30%

Year 1Year 2Year 3Year 4

Period12345678910111213141516

($ values in thousands)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4

Develoment Cost-10000-10000-10000-10000

Ramp-Up Cost-200-200

Marketing & Support Cost-500-500-500-500-500-500-500-500-500-500-500-500

Production Cost-1313-1313-1313-1313-1313-1313-1313-1313-1313-1313-1313

Production Volume150000150000150000150000150000150000150000150000150000150000150000

Unit Production Cost-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875

Sales Revenue4467.754467.754467.754467.754467.754467.754467.754467.754467.754467.754467.75

Sales Volume150000150000150000150000150000150000150000150000150000150000150000

Unit Price0.0297850.0297850.0297850.0297850.0297850.0297850.0297850.0297850.0297850.0297850.029785

Period Cash Flow-10000-10000-10000-10200-70026552655265526552655265526552655265526552655

FV Year 1, r=10%-10000-9756-9518-9472-63423472290223421792126207420241974192618791833

Project NPV, $-16493

Base Case30%

Year 1Year 2Year 3Year 4

Period12345678910111213141516

($ values in thousands)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4

Develoment Cost-10000-10000-10000-10000

Ramp-Up Cost-200-200

Marketing & Support Cost-500-500-500-500-500-500-500-500-500-500-500-500

Production Cost-1313-1313-1313-1313-1313-1313-1313-1313-1313-1313-1313

Production Volume150000150000150000150000150000150000150000150000150000150000150000

Unit Production Cost-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875-0.00875

Sales Revenue8297.258297.258297.258297.258297.258297.258297.258297.258297.258297.258297.25

Sales Volume150000150000150000150000150000150000150000150000150000150000150000

Unit Price0.0553150.0553150.0553150.0553150.0553150.0553150.0553150.0553150.0553150.0553150.055315

Period Cash Flow-10000-10000-10000-10200-70064856485648564856485648564856485648564856485

FV Year 1, r=10%-10000-9756-9518-9472-63457325592545553225193506649424822470445894477

Project NPV, $16515

600000

40000000

100

150

400000

2000000

10

Marketing & Support Cost ($/year)

Annual Discount Factor (%)

SCENARIO INPUT PARAMETERS

Sales & Production (units/year)

Develoment Cost (total $/year)

Unit Price ($/unit)

Unit Productions Cost ($/unit)

Ramp-Up Cost (total $/qtr)

Planning

A

B

Product

Development

C

D

E

F

G

H

I

J

Financial Modeling

K

L

M

N

O

IT for Product Design

& Development

P

Q

Conclusion

R

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