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Industrial Engineering

What is Industrial Engineering:


Discipline of utilizing and coordinating humans, machines, and materials to

attain a desired output rate with the optimum utilization of energy,
knowledge, money, and time. It employs certain techniques (such as floor
layouts, personnel organization, time standards, wage rates, incentive
payment plans etc.) to control the quantity and quality of goods and services


The branch of engineering that deals with the creation and management of
systems that integrate people, materials and energy in productive ways.

It is concerned with the development, improvement, implementation and

evaluation of integrated systems of people, money, knowledge, information,
equipment, energy, materials and/or processes

Industrial Engineering

Industrial Engineering often now supplemented as "Industrial & Systems

Engineering" or "Industrial & Operations Engineering".

Depending on the sub-speciality(ies) involved, industrial engineering may also be

known as operations management, management science, systems engineering, or
manufacturing engineering, usually depending on the viewpoint or motives of the
user. Like in health care, industrial engineers are more commonly known as health
management engineers or health systems engineers.

In general engineers are concerned with the analysis and design of systems.
Like, Electrical Engineers are concerned with electrical systems, Mechanical
Engineers are concerned with mechanical systems, Chemical Engineers are
concerned with chemical systems, and so forth.
Industrial Engineers are concerned with production systems.

History of Production studies


Adam Smith (1776): Division of Labor

Before: one man would perform all the activities required during the production
After: One operator for one operation


Charles Babbage (1832): The appropriate level of task (operation)



Frederick W. Taylor (1878): Considered by many as Father of Scientific

Time study


Gilbreths (1880): Motion study

There was strong criticism of Taylor and Gilbreths studies for ignoring the
human aspect. For example, can an operator work at the specified level for 8
hours each day?


The Hawthorne Studies (1924-50): Researchers from Western Electric

and Harvard University led the Hawthorne studies.
These studies were conducted to examine different factors which affect a worker. 6

Production system

Production system




Function of production system

Production system

Cycle of production functions

Production Planning and Control


Production Planning
Production Control
Sub-function of production planning and Control

Production Planning and Control- An introduction:

Production planning is a managerial function which is mainly concerned with the
following important issues:
What production facilities are required?
How these production facilities should be laid out in the space available for
How they should be used to produce the desired products at the desired
rate of production?

Production planning is dynamic in nature and always remains in fluid state

as plans may have to be changed according to the changes in

Production Planning
Production planning is usually done at the following three horizon levels:

Long Term (Capacity Planning)

Medium Term (Aggregate Planning)

Short Term (Operation Planning)

Long Term

Up to 5 years ahead or more

It deal with strategic/business issues

Reflected in process choice

Medium Term

Up to 2 years ahead

How can demand be met from existing facilities and resource inputs
Short term

Monitoring and correction of day-to-day activities versus plan


Production Planning
Requirements of Production Planning:

It should be based on accurate data.

It must be flexible.
It must satisfy a set of pre-defined objectives (economy, quality etc.).
It must be simple and straight forward.
It must have a reporting system, so that right information reaches at right
place and right time.
It should not have any week link.


Production Control
Production control is a mechanism to monitor the execution of the plans. It has
several important functions.

Making sure that production operations are started at planned places and
planned time.
Observing progress of the operations and recording it properly.
Analyzing the recorded data with the plans and measuring the deviations.
Taking immediate corrective actions to minimize the negative impact of
deviations from the plans.
Feeding back the recorded information to the planning section in order to
improve future plans.


Production Control
Control system use in manufacturing organization

Transformation process






Value addition
An open loop control system

A closed loop control system


Production Control

Many different forms of production control:

Quality control

Stock control

Order processing/chasing against schedules

Cost control

People and labor productivity


Functions of Production Planning and Control

The main functions of production planning and control are the
coordination of all the activities, which exist during production

Product planning: product engineering, product design and development,

functional and technological considerations, quality considerations.
Forecast planning: quantity forecast, demand pattern forecast.
Process planning: technology selection, process selection, machine
selection, tool selection, process parameter selection, operation sequencing
Equipment planning: types of equipments, number of equipments, machine
capacity analysis, maintenance planning.
Materials planning: materials specifications, material volumes, economical
lot sizing, inventory planning, store planning.
Loading, Scheduling and Sequencing: machine loading, operations
scheduling, job sequencing etc.

Aggregate production planning

Aggregate production planning is concerned with planning overall production

of all products combined (i.e., in tones of steel, liters of paint etc.) over a
planning horizon (generally next 3 to 6 months or max 1 year) for a given
(forecast) demand schedule.
An aggregate plan will determine workforce levels, Machining time, overtime, allocation over planning horizon, and inventory levels with the objective
of minimizing cost. These results help in the development of operating
budgets. Like, workforce levels will be translated into the labor budge, and
inventory levels can be used to determine requirements of storage space.
Management options to meet fluctuation demand
Many aggregate planning strategies are available to the manager. These
strategies involve the manipulation of inventory, production rate, manpower
needs, capacity, and other controllable variables. When we very any one of
the variables at a time to cope with changes in product output rates, we call it
as pure strategies. Mixed strategies, in contrast, involve the use of two or
more pure strategies to arrive at a feasible production plane.

Aggregate production planning



Management options to meet fluctuation demand

Pure strategies
Changing inventory levels: Build inventories in slack periods in anticipation
of higher demands later in planning horizon. If we accumulate inventories
during slack periods of demands, working capital and cost associated with
obsolescence, storage, insurance, and handling will increase. Conversely,
during periods of increase demand, changes in inventory levels or backlogs
might lead to poorer customer service, longer lead times, possible lost sales,
and potential entry of new competitors in the market.
Changing workforce size: The manager may change the size of the workforce
by hiring and firing of employees to match the production rate so as to meet
the demand exactly. In many instances new employees require training and
the average productivity is temporarily lowered. A layoff frequently results in
lower worker morale and lower productivity, and the remaining employees
may retard output to protect themselves against a similar fate.


Aggregate production planning



Management options to meet fluctuation demand

Pure strategies
Varying working hours: Use over time in peak periods, and under time in
slack periods to very output, while holding work force and facilities constant.
However, there is a limit on how much over time is practical. Excessive
overtime may weak workers and their productivity may go down. The
incremental costs associated with shift premium, supervision, and overhead
may be significant. In period of slack demand, the firm also faces the difficult
task of absorbing the workers idle time.
Subcontracting: As an alternative to changing workforce or inventory,
perhaps the company could subcontract some work during the peak demand
periods and increase the capacity to satisfy the demand. Again, a potential
danger exists of opening doors to competition.
Influencing demand: Because changing demand is a chief source of aggregate
planning problems, management may decide to influence the demand pattern
itself. For example, telephone companies level their loads by offering lower
evening rates. The airline industry offers weekend discounts and winter fares.
But it is not always possible.

Aggregate production planning


Management options to meet fluctuation demand

Pure strategies
Very capacity through changes in plant and equipment: But it is generally
long term option.
Mixed strategies
Every pure strategy has a countervailing cost associated with it, and pure
strategies are often infeasible. Therefore, a combination of strategies, or
mixed strategy, is often used. Mixed strategies involve the use of two or more
controllable variables to arrive at a feasible production plan.


Aggregate production planning

Example #1:
ABC Corporation has developed a forecast for a group of items that has the
following seasonal demand pattern.


Cumulative Demand

















Suppose that the firm estimates that it costs $100 per unit to increase the production rate, $150
to decrease the production rate, $50 per quarter to carry the items on inventory, and an
incremental cost of $80 per unit if subcontracted. Compare the cost incurred if pure strategies
are used.

Aggregate production planning

Cumulative requirements graph

Cumulative and average forecast graph.


Product design and development

Factors for PDD
Product analysis

Product design and development is basic need of every manufacturing

company, but why?
Consumers want and expect new and better products
Not-to-innovate approach is becoming increasingly risky. If you unable to fulfill
the customer requirements than customer may drive your company out of the
Innovating new product is expensive and risky. It is risky because developed
product may not successful in the market.

Product design and development

When we go for product design and development procedure we can
see three scenarios or factors.
1. Most product ideas, which go to development stage, never reach the market
(lack of money, technology, manpower, change in demand etc.)
2. Many products that do reach the market are not successful (inferior quality,
high cost, change in customers taste, poor in functionality, lacking in marketing
skills etc.)
3. Product is successful but has shorter life cycle than expected (change in
customers taste, change in technology, competition in market etc.)
Factors to study for PDD
1. Product identification related factors
Gap in demand demand>supply
Under-utilized resources contract manufacturing, lending of facilities
New product ideas friend, co-workers, environment

Product design and development

Factors to study for PDD
2. Market related factors
Prestige of the company
Technologically sound product
Customers requirements
Market potential
Product life
3. Legal factors
Environment pollution
Import restrictions on capital goods
Restrictions on finance

Product design and development

Factors to study for PDD
4. Finance related factors
Capital investment manufacturing resources, plant and machinery
Cash generation
Government support
Fixed deposits
Market borrowings
5. Organization related factors
Skill requirements workers and managers both
Availability of workers, managers etc.
Salary and wages of workers cost implications


Product design and development

Factors to study for PDD
6. Manufacturing related factors
Availability of technological know-how its cost, related equipments
Cost of manufacturing facilities
Quality of manufactured product quality of the product must meet the
customer requirements (it is government by the customer)
Rate of production must meet the market demand
7. Distribution related factors
Availability of distributors they should have good reputation in the
market, facilities, manpower
Availability of ware houses (storage house of in transportation product)
space requirements, facilities, cost
After sale service maintenance, repair, spares, cost
Sales personal (they are the interface between the customer and the
product) marketing skills, implementation of sale promotional schemes
(they should be able to implement of sale promotional schemes) etc.

Product analysis

It is performed before actual design starts

It is based on the information collected about the customers
requirements and the level of competition

The first task in product analysis is to become familiar with the product!
What does it do? How does it do it? What does it look like? All these
questions, and more, need to be asked before a product can be
Why product analysis is so important?
Design modifications are more expensive at a later stage of product life
Design modifications are unwelcome, once the product is launched
Design modifications at later stage also delay the launch of a new
Factors of product analysis
Its objective should be to satisfy as many functions as possible
Its objective should be keep product cost as low as possible
It is a trade-off between product functionality and product cost
It focuses on development of multiple product concepts
Additional considerations


Product analysis
Additional considerations
It has to be manufactured and assembled minimum cost and easily
Product has to work
It has to sell
It must be profitable
Several aspects are considered
Functionality aspect
Operational aspect
Quality aspect
Reliability aspect
Durability aspect
Maintainability aspect
Aesthetic aspect: i.e., how that product look, how is the texture of that
product, what is the shape and size of that product, what are the surface
finish of that product, picketing of that product etc.
Product analysis is not just as to evaluate some product idea but it converts
the idea into useful product.

Product analysis

Information flow
during product

Value analysis and value engineering

Lawrence D. Miles is the pioneer of this technique.

Value analysis is a technique applied to identify unnecessary features or

components that can be eliminated in order to reduce the cost, without
any reduction in the performance quality of the finished product. It
focuses the attention of engineering, manufacturing, and purchasing on
one objective equivalent performance for lower cost. It results in the
orderly utilization of low cost alternative materials, low cost alternative
processes including new processes, and abilities of specialized
suppliers to procure items at lower costs.

Or we can say that the value analysis is used to identify efficiently the
unnecessary cost,

Value analysis refers to the analysis of an existing product, service or

administrative process while Value engineering refers to the same
analysis applied to the product, services or administrative processes that
are under design and have not been finalised.

Value analysis and value engineering

Techniques of Value Analysis and Engineering that identifying and
removing unnecessary cost, and thus improving the value, must be done
without reducing in the slightest degree quality, safety, life, reliability,
Maintainability, and the features and attractiveness that the customer
What is Value?
Value is the relationship between the defined function the customer
requires and the costs incurred to provide that function.
Miles described four types of value.
1. Use value: The properties and qualities which accomplish a use, work, or
2. Esteem value: The properties, features, or attractiveness which cause us
to want to own it.
3. Cost value: The sum of labor, material, and various other costs required
to produce it.
4. Exchange value: Its properties or qualities which enable us to exchange
it for something else we want.

Value analysis and value engineering

When is VA/VE used?

Existing part/product cost is high

Existing technology is complex/old though simpler means are available
There is a need to release a cheaper product by cutting down some of
the existing feature
The existing customer demands a minimal increment in product features
that are in use
There is a need to cut down the manufacturing cycle time/cost
To determine the best design alternatives for Projects, Processes,
Products, or Services
To improve quality, increase reliability and availability, and customer


Value analysis and value engineering

Benefits of VE
Decreasing costs
Increasing profits
Improving quality
Expanding market share
Saving time
Using resources more effectively


Value analysis and value engineering

Six Step Value Engineering Job Plan
Value engineering is often done by systematically following a multi-stage
job plan. Miles' original system was a six-step procedure which he called
the "value analysis job plan." Depending on the application, there may be
four, five, six, or more stages.
Phase 1. Orientation: Understand the customers needs and wants.
Understand the functions performed by the product and the
contribution of each part and each feature of the part and the
complete product to the functions to be performed by the product.
Phase 2. Information: Collection of information on quantities, vendors,
drawings, materials, manufacturing methods, and costs.
Phase 3. Speculation: Using all the techniques of value analysis to come
out with alternative low cost materials and methods to produce
components and the product. Creativity is to be employed here.
Value engineer has to involve experts from various disciplines to
help with ideas.

Six Step Value Engineering Job Plan




Techniques to be used:
Blast: In this stage alternative products, materials, process, or ideas
are generated. These alternatives should, first of all, qualify for
accomplishing some important part of the function in a very
economical manner or, at least, serve as an economical base for
modifications that are likely to accomplish an important part of
Create: In create phase, the technique of "Use real creativity" needs
to be employed to come out with ways by which the low cost
alternatives identified during the blast stage can be modified to
accomplish the specified function to a much greater extent with
pertinent increase in cost.
Refine: In this step, much more creativity is used and also the
techniques "Use industry experts to extend specialized knowledge"
and "Utilize and pay for vendors skills and knowledge" are used to
refine the ideas developed during the create step to come out with a
refined alternative that fully accomplishes the specified function at a
lower cost. During refine step, some more functionality is added36as
well as some additional cost.

Value analysis and value engineering

Phase 4. Analysis: Refines and combines ideas, establish costs on all

ideas, and ranks the ideas generated in the creativity phase. The two
most common Value Method techniques used for ranking are "criteria
weighting matrix and evaluation analysis ranking" .

Phase 5. Program planning: Approach the specialists to further refine

the selected alternatives. Inform the specialists the accepted
suggestions and give mandate to them to take steps to implement the

Phase 6. Program execution: Pursue regularly the specialists and

vendors to get their inputs on various tasks assigned to them. The
output of this phase is a detailed design,

Phase 7. Status summary and conclusion. The results of the value

engineering study are to be presented to decision makers. The reports
needs to have a summary sheet as well as the full supporting
documentation. The value engineering project is concluded when the
product is manufactured and distributed at the lowered cost as per the
value engineering study.


Types of Production Systems

Production systems are usually classified on the basis of the following:
Type of product,
Type of production line,
Rate of production,
Equipments used etc.
They are broadly classified into three categories:
Job shop production
Batch production
Mass production
Job shop production
This is a method of production where companies use all their facilities of
production to complete one job at a time. This will usually happen where
products are all unique or they are being produced on a very small scale.
Job production involves producing a one-off product for a specific customer.

Job shop production

The following are the important characteristics of job shop type production
Machines and methods employed should be general purpose as product
changes are quite frequent.
Planning and control system should be flexible enough to deal with the
frequent changes in product requirements.
Man power should be skilled enough to deal with changing work
Schedules are actually non existent in this system as no definite data is
available on the product.
In process inventory will usually be high as accurate plans and schedules
do not exist.
Product cost is normally high because of high material and labor costs.
Grouping of machines is done on functional basis (i.e. as lathe section,
milling section etc.)
This system is very flexible as management has to manufacture varying
product types.
Material handling systems are also flexible to meet changing product

Job shop production

Key benefits of job production

a high level of customisation is possible to meet the customer's

exact requirements
significant flexibility is possible, especially when compared to mass
workers can be easily motivated due to the skilled nature of the work
they are performing

Disadvantages include

higher cost of production

requires the use of specialist labour (compare with the repetitive,
low-skilled jobs in mass production)
slow compared to other methods (batch production and mass

Batch Production
Batch production is the manufacture of a number of identical articles either
to meet a specific order or to meet a continuous demand. Batch can be
manufactured either only once
or repeatedly at irregular time intervals as and when demand arise
or repeatedly at regular time intervals to satisfy a continuous demand

The following are the important characteristics of batch type production

As final product is somewhat standard and manufactured in batches,
economy of scale can be availed to some extent.
Machines are grouped on functional basis similar to the job shop
Semi automatic, special purpose automatic machines are generally used
to take advantage of the similarity among the products.

Batch Production
Labor should be skilled enough to work upon different product batches.
In process inventory is usually high owing to the type of layout and
material handling policies adopted.
Semi automatic material handling systems are most appropriate in
conjunction with the semi automatic machines.
Normally production planning and control is difficult due to the odd size
and non repetitive nature of order.


Batch Production
Advantages of batch production are :
It can reduce initial capital outlay because a single production line can be
used to produce several products.
Batch production is also useful for a factory that makes seasonal items,
products for which it is difficult to forecast demand, a trial run for
production, or products that have a high profit margin.
Labour costs are reduced so the final price is lower.
Production rate is faster
Batch production also has disadvantages.
There are inefficiencies associated with batch production as equipment
must be stopped, re-configured, and its output tested before the next
batch can be produced.
Larger stocks of raw materials must be kept.

Mass Production
In mass production, same type of product is manufactured to meet the
continuous demand of the product. Usually demand of the product is very
high and market is going to sustain same demand for sufficiently long

The following are the important characteristics of mass production system:

As same product is manufactured for sufficiently long time, machines can
be laid down in order of processing sequence. Product type layout is most
appropriate for mass production system.
Standard methods and machines are used during part manufacture.
Most of the equipments are semi automatic or automatic in nature.
Material handling is also automatic (such as conveyors).
Semi skilled workers are normally employed as most of the facilities are

Mass Production
As product flows along a pre defined line, planning and control of the
system is much easier.
Cost of production is low owing to the high rate of production.
In process inventories are low as production scheduling is simple and can
be implemented with ease.