Deciding on the Number of Models
Prior management elected to have a product line-up consisting of 3 entry-level models and 3
multi-featured models. You can have as few as 1 model or as many as 5 models.
While there’s merit in trying to expand sales by adding more models, the addition of more
models introduces quality control difficulties in assembly and temporarily reduces the number
of cameras that production assembly teams (PATs) can assemble quarterly. PATs cannot
assemble 8 models as proficiently and as problem-free as they can assemble the current 6
models.
• Increasing the number of models tends to raise warranty costs because of faulty camera
assembly and consequent problems that buyers will encounter during the warranty period.
Decreasing the number of models tends to lower warranty costs—see the on-screen
calculations for the projected warranty costs associated with changing the numbers of
models.
• Increasing the number of models in a given year will reduce PAT productivity by 4% for
each additional model for a period of 1 year—until team proficiency in assembling the new
model builds (the 4% per model productivity penalty disappears after 1 year). Reducing the
number of models tends to boost productivity by 2% for each model dropped because
teams have fewer assembly procedures to master and less model change-over time.
You can see the effects of adding/reducing the number of models by making “what-if” entries
for the numbers of models and checking out changes in the on-screen calculations of warranty