STATEMENT OF WORK

SPLASH BUDDY™ PRODUCT DESIGN AND DEVELOPMENT

WASBRO TOY COMPANY

1  System Overview

WasBro Toys, Inc. is a manufacturer of small plastic toys for children from birth to age 10. For the summer season of 2014, WasBro intends to launch a new bathtub/pool toy we will call “Splash Buddy™”. As described in the concept document, Splash Buddy™ will be a motorized floating toy that, when powered by 1 “AA” battery, will move through the water while flashing two LED “eyes” and emitting a pleasant beeping sound. It will initially be packaged in the configuration shown in the accompanying conceptual design document, but will be designed to be reconfigured by the child in a number of ways. Splash Buddy™ is WasBro’s first attempt at producing and selling a motorized toy.

Because of the aggressive schedule required to launch the product in time for the summer season, WasBro’s best designers and engineers have been formed into a focused product development team. The project, which will take product development from the initial concept through field testing prior to full production, is to be completed by May 1, 2014. Because the company is eager to compete for the prime summer market, the team will be offered incentives to ensure project completion earlier than this date. Successful completion of the project will be defined as the successful deployment of 500 units to selected consumer families in test markets throughout the US for a two week trial.

1.2 Document Overview

A.  The Statement of Work and each of the project charter documents are complementary, and they shall be interpreted so that what is called for on one shall be binding as if called for by all. Should the team observe any conflicts within the contract documents, the team shall bring them promptly to management’s attention for decision and revision.

B.  This document describes the scope of work for the project.

2 Applicable Documents

Splash Buddy™ Motorized Toy Supplemental Design Document. (attached.)

3 Requirements

This section outlines the requirements for successful completion of the project.

3.1 Assumptions

It is assumed that the project will take first priority for all project team members for the duration of the project. It is also assumed that all corporate resources (graphic design services; testing labs including but not limited to materials testing, usability testing, simulation; etc) required by the project will be available when needed. In addition, the corporation has committed to providing funding up to 10% above standard product development costs to accommodate the increased costs associated with the aggressive project schedule.

3.2 Project Scope

The project team is to take the project idea illustrated in the accompanying document, complete and refine the design, and produce 500 final prototype toys for field testing. In addition, the team will recommend whether WasBro should make a key component in house or buy it from an outside vendor. This decision must be made during the project planning stage so that the company can, if necessary, build up production capacity to make the part in house. The project will finish with a final presentation of the field test results and team recommendations.

Specific tasks to be accomplished in the product development process include:

A.  Develop a number of alternative forms (look and feel) based on the original concept design. Test these alternatives with consumers using rendered drawings and full scale models. (Note that a typical focus group consumer test will take about 1-1.5 weeks to complete and costs $1500-$2500, including the cost of the facility, moderator, and stipend for the participants. Models and drawings will typically cost $150-200 per alternative.)

B.  Develop and test alternative engineering designs for the function of the toy (note that this design effort is concurrent with the design of the form, but the final engineering design will depend in part on the selected form of the toy). Use the consumer testing timing and costs listed in part a. Use your own experience and outside expert opinion to estimate how long engineering design, analyses, and testing will take.

C.  Once the final design alternative is accepted and approved by management (note: a design briefing comparable to a Preliminary Design Review will be required to approve the final design), refine the final design and develop a number of working prototypes. Use the prototype for final “in-house” testing and UL laboratory testing before seeking approval (via a Critical Design Review) to produce 500 toys for field testing. (Assume a cost of $15,000 for UL listing.)

D.  Upon approval of the final prototype, produce 500 toys for field testing. You may use the ‘Detailed Parts List’ included in the Design Document as inputs for estimating the production costs. Assume parts and materials will account for about 25% of the overall cost of production, with the remainder coming from labor, overhead, and other miscellaneous costs.

E.  Field test the toys for 2 weeks. Compile the results and present these, along with the team’s recommendations, to Wasbro management. (Note: the costs for field testing will be approximately $150 per toy for shipping, participant stipends, and completion of surveys. Participants will be asked to return the toy under the assumption that these prototypes do not yet have UL listing.)

One area of concern that has been identified by the engineering group is the choice of speed reduction module in the final toy design. Due to the aggressive schedule, a decision must be made early regarding whether to make the module in-house or buy it from an outside vendor. WasBro has the capability to produce this part in-house, but the capacity requirements will necessitate expansion of an existing production line. The manufacturing engineering group estimates that the necessary expansion will cost the company $1.8 million. The cost per unit to produce the speed reduction module will be approximately $5.50 per unit, and the additional production is expected to increase yearly operation and maintenance costs by approximately $0.86 per unit produced. Alternatively, the company may purchase the speed reduction module from an outside vendor at a cost of $9.95 per unit. The company’s MARR for projects of this nature is generally around 9% per year, but may increase depending on the perceived risk. In addition, it is anticipated that the Splash Buddy™ will be marketed for a minimum of 5 years and, if the product is successful, it will continue to be sold as long as it is viable. Early marketing surveys indicate that a product like Splash Buddy™ will sell between 100,000 and 150,000 units per year. Regardless of product success, though, the company is not interested in a planning horizon longer than 10 years.

As part of the project plan, the team should recommend whether the speed reduction module should be produced in-house or purchased from the outside client. This recommendation should include any assumptions made in the analysis and a sensitivity analysis may be required to support the conclusions of the team.

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