IE 3 Final Exam

I. Introduction to Industrial Engineering

Frederick Winslow Taylor Father of Industrial Engg
First innovations of IE
Assembly Line
Division of Labor
Motion Study
Six Pillars of the IE Way
1. Systems Thinking everything is connected to
everything else; knows how to define, find
relationship, and understand the subsystems of
any system
System an organized collection of
subsystems that are highly integrated
to accomplish an overall goal
2. Process Thinking a system is just a collection
of processes; an IE must evaluate if there are
redundant processes and must try to simplify
the whole system
3. Customer Centricity If the customer is
unhappy, something was poorly done; the goal
of an IE is to make everyone happy
4. Metric based measure everything that results
in customer satisfaction
5. Continuous Improvement there is always a
better way; always think of how to improve
what youre doing
6. Quality Orientation what makes the
customer unhappy is a defect that needs to be
solved completely
Quality the standard of something as
measured against other things of similar
kind
KISS as IE, do not forget to keep it short and simple
SIPOC Diagram a diagram of a system consisting of
Supplier, Input, Process, Output, and Customer

II. Industrial Organization and Management

Organization a deliberate arrangement of people to
accomplish some specific purpose

Management ensures that the distinct purpose of the

organization is achieved by the people through the
deliberate structure
Manager he/she works with other people by
coordinating their work activities in order to accomplish
organizational goals
Roles of Management
1. Plan define goals and establish strategies
2. Organize what is to be done, how it will be
done, and who is to do it
3. Lead motivate people and resolve conflicts
4. Control monitor activities
Goals of Management
1. Vision
Where you want to be
Values, philosophies, and beliefs
Vague suggestion of action
Emotional and inspiring through
flowery words
2. Mission
How you will get to where you want to
be
Purpose and objective to customers
Winning idea that makes you stand out
Objective and tangible through strict
words

III. Problem Identification and Problem-Solving Tools

Proper Problem Statement
- State the gap between IDEAL vs REAL
- State the METRICS-based symptom
- Ensure that its something that makes you cry.
Note: Do not address more than one problem. Do not
assign a cause. Do not offer a solution.
Five Problem-Solving Tools
1. Brainstorming flooded with multitude of ideas
but often disorganizes
2. Ishikawa Diagram/Fish Diagram list the causes
as divided into Man, Machine, Methods,
Material, Management, and Environment; no
metrics

Three components of an organization

1. Distinct Purpose
2. Deliberate Structure
3. People
Culture a system of shared meanings and common
beliefs; unwritten rules of the organization passed via
values, storied, rituals, and practices
Role of Culture in order to change the results, you
must change the culture; and in order to change the
culture, you must change the structure

3. Why-Why Analysis simplistically identifies the

root cause but tedious
Problem Why Reason Why Reason
4. Check Sheet records the frequency of events
but requires regular checking of pre-defined
causes
5. Pareto Chart detects patterns by arranging
the frequency of problems from biggest to

smallest; however, causes must be pre-defined

and frequency must be pre-collected

Product Life Cycle

IV. Ergonomics

VI. Facilities Planning

Ergonomics fitting the task to man; the scientific

study of human abilities, limitations, and characteristics
for the appropriate design of the living and working
environments to ensure that the work system is
conducive to good performance and compatible with
the health, safety, and comfort of the individual

Facility a place for doing something

Anthropometry measurement of body parts for the

design of materials, machine, and equipment to prevent
work related problems

Facilities Planning - determining WHERE (facilities

location) and HOW (facilities layout) the facility must
function so that it best supports achieving its objectives
Facilities planning is important because it involves high
capital, it is irreversible, and it affects the whole
organization.

Risk factors in the workplace

1. Force Exertion
2. Vibration
3. Repetitive Motion
4. Awkward Posture
a. Bending forward
b. Reaching above shoulder level
c. Reaching behind the body
d. Rotating the arms
e. Bending the wrist
f. Reaching forward

Two Layout Types

1. Product Layout for continuous processes that
is mass production of similar products
(following the same sequence of operations)
o Solution: Assembly line to ensure that
the sequence is intact in the layout
2. Process Layout for job shop processes that is
low-volume high-variety projects (therefore
varying sequence of operations)
o Solution: Muthers Systematic Layout
Planning (design multi-functional
facilities with interacting stations placed
adjacent to each other)

Environmental Factors in the workplace

1. Lighting
2. Noise
3. Thermal
4. Vibration

VII. Productivity and Methods Study

Productivity = Efficiency + Effectiveness
Efficiency Doing things right
Effectiveness Doing the right thing

V. Product Design
Product a tangible good that can be offered to a
market that might satisfy a want/need
Service an intangible good that can be offered to a
market that might satisfy a want/need
Product Design the process of creating a new
product/service to be sold by a business or enterprise to
its customers
Different Design Aspects
1. Design for Assembly/Manufacturing
2. Design for Quality/Utility
3. Design for Ergonomics
4. Design for Environment

Methods Study principal technique for reducing the

work involved by eliminating unnecessary movement
and substituting good methods for poor ones
Eight Classifications of Waste (DOWNTIME)
D Defect: Anything that does not conform

Input Process Defect Output

O Overproduction
W Waiting: Waste of time
N Non-value Adding: Anything that has nothing to do
with the objective

Value Adding activities that change the

product/service towards the goal or something
the customer wants
Business Non-value adding activities that are
waste but cannot be eliminated due to
compliance

Branches represents alternatives

Event Nodes represents probabilistic
events; multiply payoff of each event to
its probability then add all to get
expected payoff (circles)

T Transportation: Moving is a waste of time

I Inventory
M Motion
E Employee Talent

VIII. Time Study & Work Sampling

Time Study record how much time a task normally
takes; a work measurement technique for recording the
times of performing a certain job under specified
conditions, for analyzing the data to obtain the time
necessary for an operator to carry it out at a defined
rate of performance
Work Sampling record how much time is actually
utilized; a work measurement technique used to
investigate the proportions of total time devoted to the
various activities that constitute a job or workstation
For every random time, the worker is checked as to
what he is doing.
% =

3. Decision under uncertainty there is no

information about the probability of the future
states of nature
a. Minimax minimizing the maximum; get
the maximum per option, then get the
minimum; used if you are conservative in
making a decision

b. Regret minimizing the regret; subtract the

column minimum per each column, then
apply minimax; used if you dont want to
regret making a decision

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IX. Decision Theory and Money & Time Relationship

Decision Theory provides a framework for making
important decisions and choosing the best one
Decision Situations
1. Decision under certainty the future states are
known
List down the alternatives, the criteria (w/ %),
assign points for each alternative, get the
weighted score, and determine the best
alternative

2. Decision under risk there is information about

the probability of the future states of nature
Use decision tree which is a schematic model of
alternatives available to a decision maker, as
well as the corresponding risks/benefits
Decision Nodes represents decision
points; pick alternative that has the
best expected payoff (squares)

c. Laplace average; just get the average,

then get the lowest one; used if you are
averaging out a decision

Solutions/Tools for Engineering Economics

1. On Compound Interest dividing 72 by the
annual rate of return will allow an investor to
get a rough estimate of how many years it will
take for the initial investment to double (the
rule of 72)
Investment Option
Interest
Time for
Rate
2xMoney
Bank (Savings)
0.1%
720 years
Bank (Time Deposit)
4%
72/4 = 18
Stock market (Safe)
12%
72/12 = 6
Stock market
24%
72/24 = 3
(technique)

2. Simple Benefit-Cost Ratio to get B/C ratio, we

simply divide all benefits over all costs. If it is
greater than 1, the alternative is worth it.
Ex. In your computer shop, you decided to buy
5 more computers. Each computer will last 5
years. The computer rental fee is Php 15 per
hour and your shop is open 12 hours a day.
Each computer costs Php 200,000 and
maintenance is Php 20,000 per year. Assuming
there are always users, is the alternative worth
it?

3. Benefit-Cost Ratio (w/ inflation) If NPV is

positive, the alternative is worth it.

V. Operations Research
A systematic investigation to reach a conclusion on how
to best perform any significant activity/function.
A mathematical approach that deals with optimization.
Optimization getting the most out of anything;
determining how to perform a function in the most
productive way (most output from minimum input
while achieving a desired result)
Basic components of an operations research model:
1. Decision Variable factors that can be changed
and which we are trying to determine the right
value
2. Objective Function mathematical expression
of the measure being maximized and the
relationship of decision variables
3. Constraint the limitations to how much the
factors can be changed and the reason why we
need to compromise some factors
Game Theory study of strategic decision making;
study of mathematical models of games between
intelligent rational players who fully know what the
other may do

Six parameters of Kendall-Lee Notation

M / M / 1 / FCFS / /
1. INPUT/ARRIVAL PROCESS: the probability
distribution of arrival times of customers
a. M Markovian/Exponential
b. E Erlang
c. D Degenerate
d. G General
2. OUTPUT/SERVICE PROCESS: the probability
distribution of service times of servers
a. M Markovian/Exponential
b. E Erlang
c. D Degenerate
d. G General
3. SERVERS: the number of servers in a service
facility (any counting number)
4. QUEUING DISCIPLINE: the prioritization of
customers in the queuing system
a. FCFS First Come First Served
b. LCFS Last Come First Served
c. SIRO Strictly in Random Order
d. GD General Distribution
5. SYSTEM CAPACITY: the maximum number of
customers that are allowed inside the system
6. CALLING POPULATION: the maximum number
of customers that may enter the system
Contradiction in Queues
Optimize the system by minimizing total waiting cost +
service cost.
Ex. During peak hours in Janni Bee Restaurant,
customers flock in. The manager is deciding how many
counters to open. He collected the following data.
Opening a counter costs Php 3,000 (service cost per
counter).
The average waiting time of customers is indirectly
proportional to the number of counters. If there are n
counters, there is an average waiting time of 30/n
minutes.
Per minute of waiting time, there is a waiting cost
incurred equal to Php 800

Simulation - imitation of a real-world system and

creation of an artificial model in order to generate
inferences about the system
XI. Queueing Theory and Simulation
Queue any system wherein customers arrive looking
for service and depart once service is provided
Queuing Theory the mathematical study of waiting
lines

Simulation Methodology
1. Capture gather data; determine arrival rate,
service rate, no. of servers, etc.
2. Imitate generate random test data; create
model that has same parameters as real-life

3. Run & Replicate run model many times; try

proposed changes
4. Test & Evaluate evaluate data; determine if
changes are worth it to implement

XII. Project Management and Systems Design

Operations permanent system and repetitive set of
activities to serve customers
Project a temporary and unique set of activities to
accomplish a unique objective under a certain
timeframe
Project Management the application of knowledge,
skills, and techniques, to achieve all of the project goals
while considering the constraints (scope, time, quality,
and budget)
Five Phases of Project Management
1. Initiation
Feasibility involves data gathering, market
research, technical research, cost estimating,
surveying, analyzing, etc.
a. Market Analysis need or want,
competitors, strategy and position
b. Technical Analysis technology, design
machines and facilities/systems, raw
materials, equipment, methods
c. Financial Analysis fund, profit
d. Social Profitability Analysis beneficial to
society
2. Planning critical path method
3. Execution executing plans with the project
team
4. Control compare project status and progress
to the actual plan
5. Closure once project goals are achieved and
stakeholders approve the outcome, the project
is finished; success is highlighted and lessons
are recorded
Systems Design
Document Analyze Improve
Goal: To integrate everything such that the whole
system works efficiently and effectively without
compromising each subsystem.