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An integrated knowledge-based model of innovative product and process development is dealt with at a business engineering stage of the order-handling manufacturing system. Mechanical products as solid design, also new kinds of products with plastics and sheet metal design have been considered. The developed model helps to systematize and acquire knowledge and experience for definition of customer requirements, configuration of innovative products, process alternatives and preliminary costs. It furnishes a possibility for the manufacturer to find and to estimate the product and process structure and the cost at an early stage of new business engineering. This integrated knowledge-based model has been tested and adopted in two Lithuanian manufacturing companies. The proposed model is being implemented both in industry and university education process.

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