Lecture

in

engineering management

Prepared by:

EDILBERTO F. MOLAS, PIE

 Course outline
Topics

Prelims:
Introduction to engineering management
1. Decision making process
2. Functions of management
- Planning/Coordinating
- Organizing
- Staffing
- Communicating
- Directing
 Motivating
 Leading
 Controlling
Midterm
2. Managing Product & Services Operations
3. Managing the Marketing Functions
4. Managing the Finance Functions

Finals
5. Quality control and Project Management
 Scope of qc, Organization for qc
 Pert/CPM
6. Principles of Industrial Relations
 Office management
 Leadership/Skills/Roles
References :
Franco, Ernesto A. , Management in the Philippine Setting,
National Book Store, Mandaluyong City, Reprint 2011

Zulieta, Francisco M. , et.al Management Theories & Prac-

Tices, Academic Publishing Corporation, QC. C 1999

Riggs, James L. Bethel, Lawrence , et al Industrial

Organization and Management, Int’l Student Edition.
Reprint 2011.

Balachandran, V. & Chandrasekaran V. , Office Management

McGraw – Hill International Edition, c 2010

PRELIM LECTURE
Introduction to Engineering management
1. Definition/Decision making process
* Engineering – The application of science and
mathematics by which the properties of matter and the
sources of energy in nature are made useful to people
in structures, machines, products, systems, and
processes

INDUSTRIAL ENGINEERING - concerned with the

design, improvement and installation of integrated system
of people , materials, equipment and energy. It draws upon
specialized knowledge and skill in the mathematical,
physical and social sciences together with the principles
and methods of engineering , analysis and design to specify
, predict and evaluate the results to be obtained from such
systems.

 Bachelor of Science in Electronics and

Communications Engineering (BS-ECE), also known
as Bachelor of Science in Electronics Engineering, is a
program which focuses on the conceptualization,
design and development of electronic, computer and
communication products, systems, services and
processes. 

In comparison with BS Electrical Engineering, which

deals with the general aspect of design and
development of electrical equipments, such as power
generators and electric motors, BS Electronics and
Communication Engineering is a branch of Electrical
 Engineering which focuses on the study of design
and development of Electronic equipments such as
semiconductors and transmitters to be use in distant
communications.

Computer engineering is a discipline that

integrates several fields of electrical
engineering and computer science required to
develop computer hardware and software.[1] Computer
engineers usually have training in electronic
engineering (or electrical engineering),software
design, and hardware-software integration instead of
only software engineering or electronic engineering.
Computer engineers are involved in many hardware
and software aspects of computing, from the design
of individual microcontrollers, microprocessors,
personal computers, and supercomputers, to circuit
design. This field of engineering not only focuses on
how computer systems themselves work, but also
how they integrate into the larger picture.[2]

Civil engineering is a professional

engineering discipline that deals with the design,
construction, and maintenance of the physical
and naturally built environment, including works
like roads, bridges, canals, dams, and buildings.[1]
[2][3]
 Civil engineering is traditionally broken into a
number of sub-disciplines. It is the second-oldest
engineering discipline after military engineering,
[4]
 and it is defined to distinguish non-military
engineering from military engineering.[5] Civil
engineering takes place in the public sector from
municipal through to national governments, and
in the private sector from individual homeowners
through to international companies.

* Management - is the process of designing and

maintaining an environment in which individuals, working
together in groups, efficiently accomplish selected aims
(Weihrich)

* management - Drucker views management as a

discipline and a field of study that denotes a social position
and authority involving people and their functions.

* Management - Terry defined management as a

distinct process consisting of planning, organizing,
actuating, and controlling performed to determine and
accomplish the objectives by the use of people and
resources.

* Decision Making Process

Decision Making – is the process whereby a
course of action is selected on the basis of two or more
possible alternatives. It is also defined as premising,
identifying alternatives, evaluation of alternatives in
terms of the goal sought, and choosing of an alternative,
that is making a decision

The formal decision process involves the following:

 1. Recognition and definition of the problem
2. Development of an explanation of the relationship
between the factors relevant to the problem
3. Construction of hypothesis or building a model
4. Testing the hypothesis or model
5. Manipulation and stipulation and application of the
model

Basis for decision – making:

1. None quantitative:
- Intuition
- Facts
- Experiences
- Opinions
- Effective management decisions
2. Quantitative basis:
- Linear programming
- Monte Carlo
- Gaming

2. Functions of management
People who made major contributions in the field of
management:
1. Frederick W. Taylor - the acknowledge “father
of
Of scientific management” . His major concern
is to increase efficiency in production. He
believed that application of scientific methods
could yield productivity without the expenditure
of human energy.
 2. Henry Gantt – development of graphic
methods of describing plans and making
possible better managerial control. He is known
for his famous Gantt chart and today the
forerunner of the Program Evaluation and
Review Technique (PERT).

3. Henri Fayol referred to as the father of modern

management theory is a French industrialist. He
found out that industrial undertaking could be
divided into six groups:

1. Technical (Production)

2. commercial (buying, selling, and exchanging)

3. Financial (search for capital, and optimum use

of capital)

4. security (protection of property and persons)

5. Accounting (including statistics) and

6. Managerial (planning, organizing, command,

coordination and control).

Fayol listed 14 principles of

management
1. Division of work – specialization that
Economists consider necessary for
efficiency in the use of labor.

2. Authority & responsibility – Fayol finds

authority and responsibility to be related,
the latter arising from the former
3. Discipline – He sees discipline as respect
for agreements which are directed at
achieving obedience, application and
energy
4. Unity of command – This means that
subordinates should received orders
from one superior only
5. Unity of direction – in each group of
activities, the same objective must have
one head and one plan
6. Subordination of individual to general
interest – when the interest of
management and the workers differs,
management must reconcile them
7. Remuneration – the remuneration and
methods of payment should be fair. It
should afford the maximum satisfaction
to employer and employees.
8. Centralization – refers to the extent to
which authority is concentrated.
9. Scalar chain – This is the “chain of
superior” from the highest to the lowest
rank
 10. Order – breaking this into material and
social order, he believes that there should
be an agreement of things and people in
the organization.
11. Equity – loyalty and commitment
should be elicited from personnel by a
combination of kindness and justice on
the part of managers when dealing with
subordinates.
12. Stability and Tenure – He pointed out
the unnecessary turnover to be both the
cause and the effect of poor management
and stressed its dangers and costs.
13. Initiative – is conceived to be the
thinking out and execution of a plan and
one of the satisfactions for an intelligent
individual to experience. He exhorts
managers to sacrifice personal vanity in
order to permit sub ordinates to exercise
it.
14. Esprit de corps – this is the principle
that in unity there strength . This in effect
is the extension of the principle of unity
of command which emphasizes the need
for teamwork and the importance of
communication in obtaining it.

a. Planning/Coordinating
Planning – is the process which begins with
objectives, and defines strategies, policies, and
 detailed plans to achieve them. Deciding in
advance what to do, how to do it, when to do it,
who is to do it, and how to measure performance.

Kinds of plans, plans are varied and classified

as follows:
1. Purpose or mission – identifies the basic
function of the organization
2. Goals and objectives – are the results or
achievements toward which effort is directed

3. Strategies – involves a plan or a series of

maneuvers for obtaining a specific goal

4. Policies – general statements that guide or

channel the thinking of managers in decision
making
5. Procedures – are plans spelled out in a detailed
manner in which activities must be
accomplished

6. Rules - are usually the simplest type of plan

which spell out specific required action or
non-action
7. Programs – are plans or schedules to be
followed
8. Budgets – is an itemized estimate of expected
income and expenses, a statement of expected
results expressed in numerical terms.

Kinds of Planning:
1. Strategic planning – Process of deciding on
the
Objectives of the organization, the resource
necessary to accomplish the objectives, the
policies that should govern the acquisition,
use and disposition of the same. Includes
choosing company objectives, planning the
organization, setting personnel policies,
setting financial policies, and setting
marketing policies and strategies.

2. Management control – process by which

managers are certain that resources are
obtained and utilized effectively and
efficiently in accordance with the attainment
of objectives of the organization. Covers
activities like formulating budgets, planning
staff levels, formulating personnel policies,
working capital expenditure, deciding on
plant rearrangement and deciding routing
expenditure.

Board presentation will be done on this

aspect
To illustrate planning

3. Operational planning – process of assuring

that specific projects are carried out
effectively and efficiently. Covers such
activities like controlling of hiring personnel,
monitoring the implementation policies,
 controlling credit extension and scheduling of
production.

Steps in the planning process:

1. Be aware of opportunities
2. Establish objectives
3. Develop premises
4. Determine alternatives
5. Evaluate alternative courses of action
6. Select a course of action
7. Implement the plan
8. Evaluation
b. Organizing – to create a structure with fully
integrated parts that are related to each other
and is governed by their relationship to the
whole

Organizing is concerned with:

1. Determining specific activities needed to

achieved a set of defined goals and
objectives
2. Grouping the different activities into a
logical pattern or into common areas so as
to avoid duplication or conflicts and ensure
smooth flow of work
3. Assigning the activities to specific persons,
departments or groups

Theories of organizing:

1. The classical theory – put emphasis on

Rationale, efficiency, work
accomplishment, and balance in the size of
the department. Structure of organization
is given importance, division of labor
provides the basis for advances in human
skills in mastery of the environment.

2. The neoclassical theory - considers the

contributions of the behavioral science by
paying too much attention to human
relations individual and group behavior,
 recognition of the informal groups within
the formal organization, and improvements
of relationship.

3. The Fusion Theory - stresses the

importance of the individual to improve the
organizational climate by way of
socializing process

4. The System Theory – views organizing as

a system of variables that are dependent
upon one another.

5. The Quantitative Theory - the theory

covers only a portion of what aspects of
management should be considered that will
directly affect organizing work.

Organizational Strategy - There are major

strategies
and policies that give an overall
direction to
operations as follows:

1. Growth – growth strategies need answers

to
Their questions, How much growth should
occur? How fast, and where?
2. Finance – which every business enterprise
must have, should have a clear strategy for
Financing its operations

3. Organization – Organizational Strategy has

to do with the types of organizational
pattern an organization will adapt.
Questions like how centralized or
decentralized should the decision making
authority be? What kind of department
patterns are most suitable.

4. Personnel – deal with topics like unionism,

compensation, selection, hiring, training,
and development, and appraisal.

5. Public Relations – Strategies in this area

cannot be independent for they must
support other strategies and efforts. This
must be designed in the light of the
organization’s philosophy and type of
business, its acceptance to public, and its
susceptibility to regulation by government
agencies

6. Products and Services – Business

enterprise exists to provide some products
or goods to satisfy peoples need.
 7. Marketing – Marketing strategies are
designed to provide managers with new
ideas and approaches on how customers
will patronize products and services.

Characteristics of an effective
organization

1. The entire organization, the important sub-

parts, and individuals manage their work
against the stated goals and objectives
2. Communication laterally and vertically are
very clear and definitive. They share the
relevant facts and necessary information
3. The reward system is such that managers
and supervisors are rewarded for short-
term profit and production performance,
growth and development of their
subordinates; and for harmonious and
viable working groups
4. The organization which is an open system
relates itself with every member of the
system and with the larger environment.
5. There is shared value and a management
strategy to support it and try to help each
member in the organization to maintain his
integrity and develop his loyalty to the
enterprise.
 6. The organization and its members operate
in an “action –research” way. The general
practice is to build in feedback
mechanisms so that individuals and groups
can learn from their own experience

Tool and Techniques of Organization

1. Records
2. Reports
3. Organizational Charts
4. Manuals of Operations
Illustrate organizational

charts:

Assignment - Make research on

Staffing &
Communicating

C Staffing
c. Communicating
d. Directing
Directing – means encouraging subordinates to
work toward achieving company objectives. It is
the human-people- to- people aspect of managing
by which subordinates are motivated, persuaded,
and led to effectively and efficiently contribute
towards realizing the very reason for which the
enterprise or company has been established.

The management function is sometimes referred

to as: Influencing, Actuating, Guiding , or
simply Leading or Motivating.

The company exist with responsibilities to :

1. Help solve problems of the society
2. Satisfy its internal needs to attain company
Goals/objectives
3. Respond adequately to the human needs of
its
People
How these responsibilities will be achieved has
much to do with how well directing is exercise by
Those who are given this function:
e.g. The executives, Managers, administrators,
coordinators, supervisors, foremen.

Scientific Management
 Interest of human factor of an organization
was
Triggered in 1911 by Frederick Winslow Taylor ,
an engineer, He published the principles of
scientific management.
Principles of scientific management
1. Develop a science for each work element of a
man’s work which replaces the old rule – of
the thumb.
2. scientifically select and then train, teach and
develop the workman. Whereas in the past he
chose his own work and trained himself as best
he could.
3. Heartily cooperate with the men so as to ensure
that all work being done is in accordance with
the principles of the science which has been
developed.

4. There is an almost equal division of the work

and the responsibilities between management
and the workmen. The management takes
overall work for which it is better fitted than
the workmen. Whereas in the past almost all
work and greater part of the responsibilities
where thrown upon the workmen.

Professionalizing management
Henri Fayol a French industrialist, drew up
14 principles of administration:
1. Division of work – Economists have a word
for
this specialization. Each member of the
organization has his own assigned job
requiring special skills and knowledge.
2. Authority and responsibility – the right to
command and the power to make oneself
obeyed.
This must be balanced by responsibility, i.e,
the reward or penalty for the use of this
power.
3. Discipline – This is seen in terms of
“obedience, diligence, energy, correct
attitude, and outward marks of respect, within
the limits fixed by agreement between a
concern and its employees”.
4. Unity of command – Every subordinates must
take orders only from one boss, Fayol
claimed that if this principle is violated ,
“authority is undermined, discipline is in
jeopardy, order disturbed and stability
threatened”.
5. Unity of management or Unity of direction –
each organizational objective must have only
one plan and one manager to carry it out.
6. Subordination of individual interests to the
common good – the organizational interest
must come before the interest of the
individual
7. Remuneration of personnel – work pay
should be fair. It should afford maximum
satisfaction authority with employer and
employee.
8. Centralization – Centralization of authority
is a natural tendency of organizations since
most of the major decision are exercise by
few people at the top of the hierarchy.

9. Hierarchy or “Scalar Chain” – is an unbroken

order of supervision, flow of authority from
top level executives to the bottom rank of the
organization.

i. Motivating

Motivating – the intrinsic inducement to

propel someone to perform to think, feel
and perform in certain ways.

Theories of motivation

1. The economic man – The belief that

Persuaded the early 1900 that man
worked to fulfill his economic needs.
With long and hard work comes high pay
 to take care of his material and
physiological needs
2. The social Man – Experiments by Mayo
at the Hawthorne plant of Western
Electric Co. showed that man is largely
gratified in a social milieu. He craves for
affiliation and communion with his fellow
workers. It is in and with a group that he
develops himself and performs more
3. The Motivated man – Herzberg found out
that individual workers have two different
categories of needs that are essentially
independent of each other but affect
behavior in different ways
The two Factors are:
Hygiene factor Satisfying factors
Relating to envi- relating to job
Ronment around itself
The job
- Policies & admin. - Achievement
- Supervision - Recognition of
Accomplishment
- Working condition - Challenging job
- Interpersonal relation - increased res-
Ponsibility
- Money - growth & deve-
Lopment
- Security

4. The complex man – Maslow averred that

man’s needs fall into a hierarchy of
relative prepotency. Needs ranges from
most basic physiological to the most
 intricate psychological state of self-
realization.

5. The Three-Tiered Satisfied man –

Alderfer postulate a three tiered model of
needs progressing from existence to
relatedness and last to growth (ERG)
6. The Achiever – McClelland postulated
that people with high need to achieve
more than those with low need and with
no need at all. They want to get concrete
feedback on how they performed since
they are concerned with personal
accomplishment

7. The expectant man – The theory of

expectancy was develop by Vroom in
1964.
The model was based of four assumptions
as laid out by Lawler
1. Individuals have preferences for
various outcomes (goals that are
desirable to them)
2. Individuals have expectancies about
the likelihood that an action on their
part will lead to satisfactory
performance
3. People have certain instrumentalities
(probabilities) about performance
that will lead to attainment of
desirable outcomes
 4. The action a person chooses to take
is determined by the expectancies,
instrumentalities and preference that
he has at that time

8. The Managed man – The managers

assumptions about people and their
consequent operationalization largely
define his style of managing them. A
managers effectiveness is a function of
such assumptions about human nature.
Categories of these assumptions are
explained in Theory X and Theory Y
9. The learning reinforced man – man learns
from his environment and greater control
of this environment improves his
development.

Theory X
- The typical man dislikes work and will avoid it if
he can
- In managing people , this is the process of
directing their efforts and controlling their
behavior to fit the needs of organization
- Without this active intervention by mgt., people
would be passive, even resistant to organizational
needs. They must therefore be persuaded ,
controlled, and threatened with punishment.
Their activities must be DIRECTED.

Theory Y
 - Work is as natural as play
- People are not by nature passive or resistant to
organizational needs. They have become so as a
result of experience
- The motivation, the potential for development,
the capacity for assuming responsibility, and the
readiness to direct behavior toward
organizational goals are all present in people.
Management does not put them there. It is the
responsibility of mgt to make it possible for
people to recognize and develop these human
characteristics for themselves.

ii. Leading

Management by values
Values – comprise the things that are most
important
To us, they are deep-seated pervasive
standards
That influence almost every aspect of our
lives.
Values in company settings are group into
a system
with following components.
1. Personal
2. Professional/managerial
3. Organizational
4. Societal
 Values of business owners
1. Economic values –
2. Political Values
3. Social values
4. Theoretical values
5. Aesthetic values
6. Religious values

Predominant Philippine Values

1. Social acceptance
2. Economic security
3. Social Mobility

Management Filipino Style

1. Manager “by Kayod” – kayod is a Filipino term Which

means to sweat it out or to give oneself to hard work.
Manager is action hungry, highly but his manner is formal
and that of an introvert A serious worker and will not give
in to bribing or any anomalous deal.

2. Manager “by Lusot” – lusot is another Filipino word

which capitalizes on a loophole. Manager is always on
lookout for loopholes of anything and will use it to avoid
too much work, or an excuse for failure.
3. Manager “By Libro” – Libro is a book. This type of
Manager operates by dictates of book- what the manuals
and other formal documents say. He is systematic though
analytical , has adequate formal training in management.

4. Manager “by Oido” – Learns his managerial skills by

oido or by ear. He has vast field of practical experience for
his lack of formal mnmgt. education. Opposite of libro

5.Manager ‘By Ugnayan”- He is a hybrid of all types Of

manager now, and different in another time depending on
the situation. A gifted reconciler of all philosophies and
beliefs held by various types of manager. He is
participatory, and coordinative.

LEADERSHIP
LEADERSHIP - refers to those who
provide direction and guidance. The relationship in w/c
one person influence the others to work together willingly
on related task to attain goals desired by the leader and or
group.

Leadership styles based on the use of

authority
1. Autocratic Leader Commands and expects
Compliance, is dogmatic and positive, and leads By ability
to withhold or give rewards and punishment.
 2. Democratic/Participative Leader –
consults With subordinates on proposed actions and
Decisions and encourages participation from Them.
Consult with subordinates and make actions

3. Benevolent-Autocrat Leader – The

leader is a Father figure who wants everyone to feel good.
The emphasis is keeping everyone happy and satisfied. He
listens to his subordinates opinion before making a
decision, ultimately, the decision is his own. effectiveness
are sacrificed in order not to “rock the boat”

4. Liberal Leader or Free-rein Leader –

Uses his power very rarely, if at all giving his subordinates
a high degree of independence. Depends on subordinates to
set their goals and the means of achieving them.

5. Laissez-Faire – Let people do as they

choose. practically no leader at all.

5. Manipulative-Inspirational – This style of

leadership is hard to find.

Ten Power Tools of Leadership:

1. Persuasion
2. Patience
3. Gentleness
4. Teachable
5. Acceptance
6. Kindness
 7. Openness
8. Compassionate
confrontation
9. Consistency
10. Integrity

The big difference between a Boss and a

Leader
1. The boss drives his men, the leader inspire them
2. The boss depends on authority, the leader depends on
goodwill
3. The boss evokes fear, the leader radiates love
4. The boss says “I”, the Leader says “We” 5. The boss
shows who is wrong, The leader shows what is wrong
6. The boss knows how it is done, The leader shows how to
do it
7. The boss demands respect, The leader
Commands respect

Assignment: Write 20 traits of a leader:

 Topics below for Midterm

III - Controlling – The managerial function and

correcting performance in order to make sure that
organizational objectives and plans that were deliberately
devised to be attained are being accomplished.

Management Control by Predetermined policies

Management Control by Predetermined Standards

Management Control by Responsible Personnel

 Midterm lecture,

3. Managing Product and Services:

Introduction :

Meaning of Productivity - The relationship of the

volume of Goods and services produced to the physical
input In its production. Can be measured in terms of the
ratio of output to input Labor, capital, energy, materials, or
a combination of both.

Factors Affecting Productivity Gains

 1. Tangible capital per worker – increases in
productivity and the higher income thus produced help
generate
Capital formation. The process is mutually reinforcing
since capital formation help increase productivity

2. Improvement in quality of labor also form

investment – Not in tangible goods, but in human beings
made
through education, on the job training, and provision of
better health facilities is a crucial factor in the equation of
productivity improvement.
3. More efficient use of capital and labor – Of the
factors that improve the efficiency with which capital &
labor are used, the most prominent is technological
advancement which includes:

iii. Improvement in managerial techniques as

well as modification in tools and equipment
iv. Higher efficiency may also result from a
reduction in the length of workday or week,
etc.

Product Simplification and Diversification

Product simplification - means essentially the
elimination Of extraneous or marginal lines, types, and
models of products. It includes reduction in range of
materials and components used in manufacturing these
products
Product Diversification - is the direct opposite of
simplification . It involves the addition of product lines,
types and models.

Product diversification approaches:

v. Horizontal diversification – diversify

horizontally into new products without
significantly affecting the existing products,
do utilize the manufacturing, marketing, or
financial know-how and facilities of the
enterprise. These are known as
complementary products produce by like
processes, or equipment .,e.g. printing plants
which published books, magazines, and
newspaper and do job printing or sold in
common markets, (e.g. refrigerators, ranges,
washing machines, and window air
conditioner)
vi. Vertical Diversification – diversify
vertically by integration into materials,
components or subsequent or satellite
products. Example metal working plant may
decide to pickle , roll, and slit its own flat ,
strip-steel coils rather than buy the material
from steel rolling mill. Satellite product
spin off from the principal product as in the
case of by-products.

Benefits derived from :

Product simplification
 vii. It eases problems of supervision
viii. Production planning simplification may also
be extended to individual operations to the
end that a greater degree of specialization of
work task.
ix. Fewer product and less complex to
manufacture
x. Fewer type and sizes of raw materials to
managed
xi. Lower manufacturing costs, etc.

Product Diversification
xii. Can increase manufacturing and distribution
headaches
xiii. Larger and more varied inventories
xiv. Greater investments in manufacturing
equipment and tooling
xv. Difficulties in planning production

Product Engineering

Product design – Research team carries the product to

Point where it will perform satisfactorily the function
Intended. Engineering data commonly developed by the
product - Engineering include stress calculations for highly
stressed parts together with the redesigning of such parts if
necessary
 Industrial Standardization:

Standards – is essentially a criterion of measurement,

Quality, performance, or practice established by Custom,
consent, or authority and used as basis for Comparison over
a period of time.

Range of Industrial Standards

1. Product standards – established the ingredients,

formulas, physical characteristics, quality, and
performance of a particular product or line of
products for the purpose of reproduction. Generally
protect the consumer by assuring them of articles
that are interchangeable.

2. Engineering design standards – are concerned

directly with the components parts that make up the
product. A company making several similar products
may standardize on certain sizes of bolts, screws,
fittings, etc. which are to be used in the design of its
product . Drawings and specifications for these parts
are usually catalogued by number so that a designer
confronted with need for some such parts has only to
look in the catalogued by number.
3. Design standards – play a major role in world trade
with interchangeability, one of the principal benefits
derived from their universal application. Today some
products can hardly compete internationally by not
meeting international standards on grooved pulleys,
V- belts , cast iron pipe, & electrical fittings

4. Material Standards – those which concern with the

composition, form, size, and finish as well as type of
materials used

5. Quantity standards – deals with the control of

materials, production and costs, relate to the quantity
of the finished product to be completed within a
given period of time, the amount of raw materials,
in-process and supply materials required, the
production rate per person or per machine, the
overhead per machine hour, and any number of other
similar standards that are in constant use in industry
today in operations of productive facilities

6. Process Standards - standardization of operating

methods and operational performance or work effort.
Deals with the efficiency of the equipment and plant
operating practices and efficiency of the employees.

7. Equipment standards – covers the rating,

capabilities, installation, and servicing requirements,
etc. of processing and materials handling
equipment , tools, jigs, and fixtures. Electrical and
dimensional characteristics for machine tools
 8. Safety standards – are rules and regulations, and
practices which assures the safety of employees
while on company premises

9. Administrative-practice standards – are those dealing

with clerical and operating procedures, systems, and
records in the realm of administering company
policies. Ex. Purchasing procedures, inventory
routine, production control records, etc.

Agencies for establishments of standards:

1. bureau of product standards (BPS)

2. Food and drug administration (FDA)
3. American national standards institute (ANSI)
4. International organization for standards (ISO)

Reliability engineering:
Product Reliability is the time span that a product
would perform its intended function in its operating
environment . Reliability of a product is only as good as its
design. Fine manufacturing workmanship and control of
quality, while important can do no more than preserve the
reliability engineered into the product. Design standards,
and engineering – design standard often assist here as
proven parts, new parts have been systematically evaluated.

Value Engineering
VE – is an organized effort to attain optimum value in a
product, system, or service by providing the necessary
functions at the lowest cost.

CASE PROBLEM:

WONDERFUL WASHING MACHINE COMPANY

In 2010 the Wonderful Washing Machine Company

experience a slump in sales of its laundry appliances,
contrary to sales trends in the rest of the industry.
Investigation revealed that public confidence in the
company’s line of washers and washers dryers had been
shaken as the
Result of generally poor experience with the line models
produced and sold during the preceding 3 years . These
machines, the investigation revealed were causing their
owners, on the average six repair calls per year compared
with two or three such call per year for competing makes of
this machines. These annoying and costly repair had won
for the wonderful machine the general reputation that they
were “lemons”.
 A survey of service centers and spare-part depots showed
that the largest number of failures centered about clutches,
Filters, and transmission. The problems with these items is
varied but were found to include materials, workmanship,
and design.

The company decided to offer each owner of one model

of washing machine a brand new , and hopefully more
trouble free, model machine at a cost to the customer of
P1000. It furthered offered to exchange a combination
model washer dryer on which severe problems had been
encountered with new, individual washer and dryer units
delivered , installed, and initially serviced free of charge.
On other models the company offered to replaced the
transmission free of charge. The total cost of these
replacement program was estimated to exceed P
7,500,000.00. Yet this expenditure was deemed essential if
the company ever wished to regain public confidence in its
line of laundry appliances.

Question:

Detail comprehensive measures that might be taken as a

reliability program to prevent difficulties of the sort
encountered by Wonderful Washing Machine Company.
4. Managing the Marketing Functions

Functions of the Marketing Division:

Market Research – to find out from potential

users the Extent of the demand for a product. This is
done Through the preliminary survey. As plans
materialize, An intensive Market Study is conducted
to discover The location of the market and the steps
required to Sell the product in the face of
competition. Many new products and enterprise fail
because they Are launched on a “guesstimate” of the
potential
Market which is never realized. The cost in time and
Money of a careful market study is relatively cheap
Insurance for the larger failures it helps to avoid.

In many instances, it maybe desirable to

Have an outside Agency do the work. Many
professional organizations- Marketing specialist,
advertising agencies, business –
Engineering firms – perform this service.
Newspapers, Magazines, radio and TV network, and
other advertising media make surveys of markets
tapped by their circulation coverage. Such surveys
maybe of great help if adapted to the needs of
manufacturers.

Sales Forecast –The market research conducted

by a firm
Plus the analyses of current sales experience an
Trends form the basis for the construction of a sales
Forecast. This forecast estimates sales volume for
Each product line by sales territory and for specific
Periods. This forecast will be the basis for planning
By the company.
Advertising

Maybe divided into two principal types : 1.

Advertising intended to promote the sale of a
particular product and advertising intended for the
promotion of an idea.

1. The first type is the one most commonly used

over a period of years. It conveys information
regarding quality, price, and general desirability
of a named product. It is a direct approach to the
buyer in an attempt to induce him to buy.

2. The second type of advertising which proposes

to promote an idea is a more indirect approach to
the customer. In many instances it may be
intended as a means of keeping the name of the
company before the public. Some have termed it
as institutional advertising, or “Goodwill” , while
more severe critic called it propaganda, others
termed it “publicity”, but publicity now is
considered as one of the marketing strategy.

Sales Promotion
SP - is a specialized function and can be established
as a separate department or it may become a part of
the advertising department .The scope of the function
itself may vary greatly between companies.

Publicity
Publicity – is a form of advertising indirectly by
way of Engaging in programs or projects which will
publicly Promote the company or product. Typical
example is Sponsoring a sport activity, or project
tulong for the
Community during calamity, scholarship programs
etc.,
Which normally catches attention of broadcast or
Print media.

In general, the function of advertising department

may be
Classified as follows:

1. Preparation and control of advertising budget

2. Liaisons with the agency
3. Supervising advertising and marketing research
4. Keeping in touch with representatives of
important media
5. Cooperation with the sales dept. and with other
depts..
6. Distribution of advertising material
 7. Production and supervision of sales-promotion
materials.
8. Supervision of copy
9. Merchandising the advertising
10 Administration

Servicing:

Service is an essential part of the sale itself. A

Manufacturer of production machinery finds it
essential
To see that his products are properly installed.

Channels of Distribution

The problem of selecting routes or paths by

which the
Product goes from manufacturer to the actual user
vary in
Terms of the nature of the product. The manufacturer
may choose a direct channel with the consumer. He
may go through
Intermediary trade known as middlemen, who in
general are
Specialists in the resale of products to consumer

Organization for Marketing

 The organization in its simplest form is a line
sales organization. The manager works in a liaison
relationship with
Other divisions, carries the responsibility for sales
promotion, advertising, market investigations and
contact with selected customers, and through his
assistant coordinates the work of sales personnel .
Below are three types of organization:

The Line Organization

Marketing Manager

Sales Manager

Salesmen
 Divided by Regions

Sales Manager

Assistant Sales Manager

Branch Mgr. A Branch mgr. B Branch Mgr. C

Salesmen Salesmen Salesmen

Divided by products

General Manager

Sales Manager Sales Manager Sales Manager

Product A Product B Product C

Salesmen Salesmen Salesmen

Assignment/seatwork:

Prepare a sales forecast by trend equation:

A linear Trend equation has the form Y = a + bt

Where t = specified number of time periods from t = 0
Yt = forecast for period t
A = value of Yt at t = 0
B = slope of the line

Given:

WEEK Unit Sales

1 700
2 724
3 720
4 728
5 740
6 742
7 758
8 750
9 770
10 775
11
12
 13
Required:

a. Plot the sales on the Y – axis to create a trend

Line equation.
b. Find the trend line equation.
c. Compute forecast for week 11, 12, & 13

Values of ∑t, and ∑t2

T ∑t ∑t2

1 1 1
2 3 5
3 6 14
4 10 30
5 15 55
6 21 91
7 28 140
8 36 204
9 45 285
10 55 385

Formula:

B = (n∑ty - ∑t∑y)/n∑t2 – (∑t)2

A = (∑y - b∑t)/n

Where:
N = number of periods
Y = value of the time series

Seatwork : Write 2 samples of each of the following:

 1. Advertising
2. Promotion
3. Publicity
4. a jingle of one of your advertising
sample in number 1.

5. Managing the Finance Functions

Planning the financial structure

Enterprises can still be started on a shoestring and may be

developed into large-scale companies. The problem of
Starting a new enterprise is always much more difficult than
That of expansion for existing firm but modern condition make
Financial planning a necessities.

Financing the non-corporate Enterprise

In case of single proprietorship and partnership, the initial

Capital comes from the individuals directly interested and possibly
through loans and investments that their friends are
willing to make in the business. In addition to cash these
individuals may contribute the actual lands, buildings, machinery,
and materials needed to make up the productive capital of the
business.

Corporate Capitalization –

Capitalization for corporation may come from the

incorporators themselves in terms of cash or fixed assets. The
corporation may sell stock (common or preferred) , bond Issues,
and for working capital may opt for trade credits. If the corporation
has assets, it can be used as collateral for bank short or long term
loans.

Kinds of Capital
Capital – is a single term used to cover the land, buildings,
Machineries , tools, and materials of a productive enterprise.

1. Fixed Capital – are money needed to finance or buy Land,

buildings, machineries, tools and other installation to be
used over and over again for a long period of time. If
acquired they now become fixed assets of the company.
2. Working Capital – are money or funds needed to cover its
operation- to maintain plant, to purchase materials and
supplies, to pay salaries and wages, to cover storage,,
transportation, and shipping services, for advertising, and to
tide over the enterprise during the time lag between the sale
of its products and payment for them. This are current
operations and the funds to cover them is called working
capital.

Sources of capital funds:

1. The money market
e. Banking houses for short and long term loans
f. Industrial financing corporations
g. Government owned and controlled corp. like DBP,
DOST, Land Bank, ect.
h. Trade Credits - acquisition of machineries, tools,
Supplies, and raw materials on credit terms
i. Credit instruments
The Budget
It is a long term responsibility of management to use
investment that will yield the largest possible profit or return, and
it is the function of budgeting to plan that profit picture.
Types of budgets:

1. The static budget – This type of budget serve a valua-

ble purpose in the planning and control of certain fixed
types of expenditures, and suited for government type of
operation. This is used solely in manufacturing
budgeting for projects like automation program,
expansion program, etc.

2. The Variable Budget – The variable budget is

constructed in anticipation of variations in sales. It
provides in advance for orderly change in the volume of
production and expenditures.

Preparing the budget

The annual budget is normally done in the latest part of the

year October to December in preparation for the budgetary
requirement for next year operations. The Finance department is
the coordinating unit and given the task of consolidating the entire
budget by cost centers. Projected financial statements are then
prepared to determine possible outcome. Unit cost per product is
then provided so that operating units would be informed as their
target.

The budget process start with guidelines from top management

which will be used as basis for all units in preparing their required
expenditures. The bulk of activity is
Centered on the line organization, and the planning group of
operation which is normally spearheaded by the industrial
engineering department. Sales forecast then is the key element for
the budgeting process and normally there is the so called first pass
of the budget, second pass, or third pass depending on each
outcome, or what if sales forecast.

Basic accounting terminology

1. Income Statement – shows the annual sales

/revenue and expenses and taxable income or
loss and gross income subject to tax and net
profit after tax.
Example of Income Statement XYZ
Enterprises for the year ended 2013.

1. Gross revenue/sales Php.1,500,000.00

Less: cost of goods sold 500,000.00
2. Gross Income from sales 1,000,000.00
Less Operating Expenses:
2.1 Salaries & wages Php. 200,000
2.2 Interest from loan 100,000
2.3 Amortization 100,000
2.4 Depreciation 150,000
2.5 Rent 50,000
2.6 Admin. Expense 150,000
2.7 Energy, fuel,& water 50,000
 2.8 Maintenance exp. 30,000
2.9 Insurance 20,000
2.10 Others 20,000 (870,000.0)
3.0 Taxable Income +/(-) -------- Php.130,000.0
Less: 30% tax -------- 39,000.0

4.0 Net Income Php. 91,000.00

2. Balance Sheet (XYZ Enterprises) – Shows

the assets and liabilities of an enterprise, or the
value / worth of the enterprise

1. Assets:
Current Assets
Cash on bank Php. 1,000,000.0
Accounts receivable 200,000.0
Inventories 300,000.0
Total Php. 1,500,000.00

Fixed Assets:
Land 1,500,000.00
Buildings 4,000,000.00
Machineries & Equipt. 2,500,000.00
Total 8,000,000.00
 Total Assets Php.9,500,000.00

2.0 Liabilities & Owners Equity

Accounts Payable 150,000.00
Bank Notes 250,000.00
Mr. XYZ Equity 9,100,000.00
Total Liabilities Php. 9,500,000.00

3. Cash Flow – Shows the operating revenue on

a given particular time and cash ending balance
on the same period after allocation of required
cash for operations

Operating Revenue Php. 1,500,000.00

Less : Labor 200,000.0
RM/CGS 500,000.0
Amort. Exp. 100,000.0
Rent 50,000.0
Adm. Exp. 150,000.0
Energy/etc. 50,000.0
Maint. 30,000.0
Insurance 20,000.0
Others 20,000.0 1,120,000.00
Cash Flow Ending Balance Php. 380,000.00

FINAL PERIOD:
6. QUALITY CONTROL & PROJECT
MANAGEMENT

1. QUALITY CONTROL
A. Definitions of terms

1. Quality – is an excellent product or service that fulfills

or exceeds our
expectations
American Society For Quality (ASQ) defines Quality
as the characteristics of a Product or service that bears
on its ability to satisfy stated or implied needs or a
product or service that is free ofdeficiencies.
ISO9000 - defined quality as the degree to which a set
of inherent characteristics that fulfills requirements.

Quality can be quantified as follows:

Q = P/E, where Q = quality, P = Performance, E

= Expectations

If Q is greater than 1 then the customer has a

good feeling
about the product or service. P & E will most
likely be based
on perception.
2. Quality Control – is the use of techniques and
activities to achieve, sustain, and improve the quality
of a product or service. It involves integrating related
techniques and activities:
a. Specifications of what is needed
b. Design of a product or service to meet
specifications
c. Production or installation to meet the full intent
of the specifications
d. Inspection to determine conformance to
specifications
e. Review of usage to provide information for the
revision of specifications if needed.

2. History of Quality Control

Middle Ages:
a. Quality is controlled by long period of training
for workers
b. The concept of specialization of labor

In 1924:
a. W. A. Shewhart of Bell Telephone laboratories
developed a
statistical chart for control of product variables
b. H. F. Dodge & H. G. Romig developed the area
of acceptance
Sampling as substitute for 100 percent
inspection.
In 1946:
a. American Society for Quality was formed
In 1950:
a. W. Edwards Demings, learned statistical quality
control from
Shewhart made lectures on Statistical Methods to
Japanese
b. Joseph M. Duran emphasized management
responsibility to
achieve quality
In 1960:
a. First quality control circles were formed for the
purpose of quality improvement . Simple Statistical
Techniques were learned and applied by Japanese
workers
In 1970 & Early 1980:
a. U.S. Managers made frequent trips to Japan to
learn about
Japanese miracle
b. Middle of 1980, the concept of TQM were being
publicized

In late 1980:
a. Automotive Industry began to emphasize
Statistical Process
Control (SPC)
b. Genechi Taguchi introduced the concept of
Parameter and
Tolerance design and brought about a resurgence
of design of
Experiments (DOE)
 In 1990:
a. Emphasis on quality continued in auto Industry in
the 1990’s

b. ISO 9000 became the worldwide model for

environmental
Management systems
c. ISO 14000 was approved as the worldwide model
for environmental management systems

In 2000:
a. Quality focus was shifted to information
technology

3. Scope of Quality Control

1. Standards and specifications that established
the quality objectives to be measured and
evaluated
2. Inspection of materials, parts, and products
to compare them against the established
standards and to separate good quality from
bad
3. Statistical Techniques including sampling
analysis and charting to indicate whether or
not quality is under control
4. Measuring instruments or inspection devices
used for objective and measurable
 comparison of actual quality against the
established standards.
5. Total quality management and compliance
with International Standards

4. Responsibility For Quality:

Areas Responsible
Quality – is not responsibility of one person or
functional area, it is
everyone’s job.
The areas responsible are:
1. Marketing – helps to evaluate the level of
product quality that the customer wants,
needs, and willing to pay for

4 methods that can develop to obtain the

desired product or service quality

a. Visit or observe the customer to determine

the conditions of product used and the
problem of the user
b. Establish a realistic testing laboratory
c. Conduct a controlled market test
d. Organize a dealer advisory or focus group

Product or Service Brief Elements

a. Performance, characteristics such as
environmental, usage, & reliability
considerations
b. Sensory characteristics such as style, color,
taste & smell
 c. Installation configuration or fit
d. Applicable standards statutory regulations
e. Packaging
f. Quality Verification

2. Design Engineering – Design Eng’g.

translates the customers quality requirements
into operating characteristics, exact
specifications and appropriate tolerance
Tolerance – is the permissible variations in
the size of quality characteristics and the
selection of tolerances has a dual effect on
quality.

3. Procurement – has the responsibility for

obtaining quality materials and components
and establishing a long term relationship with
suppliers
- Determine suppliers capability
- Evaluate performance of supplier
through a rating system
4. Process Design – has the responsibility for
developing processes and procedures that will
produce a quality product or service
- Process Design
- Process selection and development
5. Production – has the responsibility to
produce a quality product or service. Quality
cannot be inspected into a product, it must be
built into a product or service
 6. Inspection and Test – It is the responsibility
to appraise the quality and produced items
and to report the results. This might be
located in both production and quality
assurance.
7. Packaging & Storage – Has the
responsibility to preserve and protect the
quality of the product or service
8. Service – Service and marketing work
closely with each other to determine the
quality the customer wants, needs, and
obtains
9. Quality Assurance or Quality Control –
Does not have the responsibility for quality.
Does have the direct responsibility to
continually improve the effectiveness of the
quality system.

5. The Chief Executive Officer

The CEO of a plant has the responsibility for each of

the areas in the close loop. The CEO must be
involved directly in the quality effort.
- Management by walking around
- CEO performance can be measured by
a proportion (percent non- conforming)
6. Computers and Quality Control – Computers play a
major role in quality control function to :
- Perform complex calculations
- Control a process or test
- To analyze data, to write reports
 - Recall information
Statistical Analysis
- spread sheet software using EXEL
- ANOVA, Fourier Analysis & T-test
Process Control
- Application of computers in process
control involved numerically controlled
N/C machines
-
II – Principles and Practices of Total Quality
Management
TQM – is the art of managing the whole to achieve
excellence. TQM is both a philosophy and set of guiding
principles that represent the foundation of a continuously
improving organization.
Total – Made up of the whole
Quality- degree of excellence a product or service
provides
Management – Act, art, or manner of handling,
directing, and
controlling quality programs

Scope of TQM Activity :

Principles and Practices Tools and
Techniques
- Leadership Quantitative
Non quantitative
 - Customer satisfaction SPC
ISO 9000
- Employee involvement Acceptance sampling
ISO 14000
- Continuous improvement Reliability
Benchmarking
- Supplier partnership Experimental design
Total productive

maintenance
- Performance measures Taguchi’s Quality
Management and
Engineering
Planning tools
FMEA
Quality by design
QFD
Product Liability
I
nformation Tech-
nology

DEMING’S 14 POINTS

1. Create and publish the aims and purposes of the

organization
2. Learn the new philosophy
3. Understand the purpose of inspection
4. Stop awarding business based on price alone
 5. Improve constantly and forever the system
6. Institute training
7. Teach and institute leadership
8. Drive out fear, create trust, and create a climate for
innovation
9. Optimize the efforts of teams, groups, and staff
areas
10. Eliminate exhortations for the work force
11. a. Eliminate numerical quotas
b. Eliminate management by objectives
12. Remove barriers that rob people of pride of
workmanship
13. Encourage education and improvement
14. Take action to accomplish the transformation

Project : Control Chart for Variables, data will be

provided
for constructing bar X - chart, R- Chart and s
– Charts
after lecture on these topics.

III – Tools and Techniques of Total Quality

Management

IV – CONTROL CHART FOR VARIABLES

- Introduction :
Variation – variation concept is a law of nature, in that
no two natural items in any category are exactly the
same. One of the truism of manufacturing is that no two
objects are ever made exactly alike.

-Variables – are things that causes quality of a product

to vary from time to time, ie. time, speed, measurement of
product, temperature, pressure, cycle time weight, etc.
- Three Categories of variations in a piece part
production:
1. Within-piece variation – ie. surface roughness
2. Piece – to – piece variation – variations among
pieces produce at same time
3. Time – to – time variation – variations of a
product produced in different time
of the day
- Variation is present in every process because of :
1.Equipment, Materials, operator and environment

- Causes of Variation:
* Chance causes – as long as these sources of
variation fluctuate in a natural or expected manner, a
stable pattern if many chance causes ( random causes) of
variations develops. (small in magnitude).
* Assignable causes – these causes of variation are
large in magnitude readily identified.
- When only chance causes are present in a process, the
Process is considered to be in state of statistical control

- The control chart method

Objective of variable Control Charts:
 1. For quality improvement
2. Determine process capability
3. For decisions in regard to product
specifications
4. For current decision in regard to production
process
5. For current decisions in regard to recently
produced items

- Control Chart Techniques

Steps in establishing Control Charts for average (bar
X) and range (R)
1. Select the quality characteristics
2. Choose the rational sub-group
3. Collect the data
4. Determine the trial Central Line and control
limits
5. Established a revised central line and control
limits
6. Achieve the objectives
Decisions on the size of the sample or subgroup
require helpful guidelines as follows:
1. As the subgroup size increases, the control
limits become closer to the central value
which make the control chart more sensitive
to small variations in the process average
 2. As the subgroup increases, the inspection
cost per subgroup increases does the
increased cost of larger subgroups justify
greater sensitivity.
3. When destructive testing is used and the item
is expensive, a small subgroup size of 2 or
three is necessary, since it will minimize the
destruction of expensive products or services
4. For ease of computation a sample size of 5 is
quite common in industry, but when
inexpensive calculators are used, this no
longer an issue.
5. From a statistical basis, distribution of
subgroup averages, bar X’s are nearly normal
for subgroups of 4 or more, even when
samples are taken from a non-normal
population
6. When the subgroup size exceeds 10, the s
chart should be used instead of the R – chart
for control of dispersion.

Table : Sample Size from ANSI/ASQZ1.9 – 1993,

level II, Normal Inspection
 _______________________________________
______
LOT SIZE SAMPLE
SIZE
_______________________________________
______
91 - 150 10
151 - 280 15
281 - 400 20
401 - 500 25
501 - 1,200 35
1,201 - 3,200 50
3,201 - 10,000 75
10,001 - 35,000 100
35,001 - 150,000 150

The above table can be a valuable aid in making

judgments on the amount of Sampling required. If a
process is expected to produce 400 pieces per day, then 75
total inspections are suggested.
Data on the Depth of the Keyway (mm)

Subgroup Measurements Average Range

Number Date Time X1 X2 X3 X4 X R
Comments
1 12/26 8:50 35 40 32 37 6.36 0.08
2 11:30 46 37 36 41 6.40 0.10
3 1:45 34 40 34 36 6.36 0.06
4 3:45 69 64 68 59 6.65 0.10 New,
temporary - operator
5 4.20 38 34 44 40 6.39 0.10
6 12/27 8:35 42 41 43 34 6.40 0.09
7 9:00 44 41 41 46 6.43 0.05
8 9:40 33 41 38 36 6.37 0.08
9 1:30 48 44 47 45 6.46 0.04
10 2:50 48 43 36 42 6.42 0.11
11 12/28 8:30 38 41 39 38 6.39 0.03
12 1:35 37 37 41 37 6.38 0.04
13 2:25 40 38 47 35 6.40 0.12
14 2:35 38 39 45 42 6.41 0.07
15 3:55 50 42 43 45 6.45 0.08
16 12/29 8:25 33 35 29 39 6.34 0.10
17 9:25 41 40 29 34 6.36 0.12
18 11:00 38 44 28 58 6.42 0.30
Damaged oil line
19 2:35 35 41 37 38 6.38 0.06
20 3:15 56 55 45 48 6.51 0.11
Bad Material
21 12/30 9:35 38 40 45 37 6.40 0.08
22 10:20 39 42 35 40 6.39 0.07
23 11:35 42 39 39 36 6.39 0.06
24 2:00 43 36 35 38 6.38 0,08
25 4:25 39 38 43 44 6.41 0.06
_____________________________________________________________
___________
Sum 160.25 2.19
For simplicity in recording the individual measurements are coded from 6.00
mm
Procedure in establishing control chart

1. Determine the trial central line and control limits

Formula : = _
X = ∑Xi / g and R = ∑Ri / g

Where : =
X = average of the subgroup averages (X
double bar)
_
X = average of the ith subgroup
g = number of subgroups
_
R = average of the subgroup ranges
Ri = range of the ith subgroup
Trial central limits for the charts are established at +/- 3 standard
deviations from central value.

Formula :
Control Charts for Attributes

Attributes – The term attribute, as used in quality,

refers to those quality characteristics that conform to
specifications or do not conform to specifications.

Types of attribute Charts

1. A proportion p chart – shows the proportion

nonconforming in a sample or subgroup. The
proportion is expressed as a fraction or a percent.
2. A np chart – number nonconforming chart also
expressed as a number
nonconforming
3. A c chart – shows the count of nonconformities in
an expected unit such as an automobile., a roll of
paper, etc.
4. A u chart – is the count of nonconformities per
unit.

Control Charts for Nonconforming Units

The p chart is used for data that consist of the

proportion of the number of occurrences of an event to
the total number of occurrences. It is used in quality to
report the fraction or percent nonconforming in a
product.
In symbolic terms:
 p = np/n : where : p = proportion or fraction
nonconforming in a sample or sub-group
n = number in the sample or subgroup
np = number nonconforming in the sample or
subgroup

Example: During the first shift, 450 inspections are

made of book-of-the-month shiftments and 5
nonconforming units are found. Production during the
shift was 15,000 units. What is the fraction
nonconforming?

p = np/n = 5/450 = 0.011

Objectives of nonconforming charts are to:

1. Determine the average quality level
2. Bring to the attention of management any changes in
the average
3. Improve the product quality
4. Evaluate the quality performance of operating and
management personnel
5. Suggest places to the use of bar X and R chart
6. Determine acceptance criteria of a product before
shipment
7. Project Management

Project – is a temporary endeavor undertaken to create

a unique product or service. It is specific, timely, usually
multidisciplinary, and always conflict ridden. Projects
are part of overall programs and may be broken down
into tasks, subtasks, and further if desired.
Example: 1. Writing of a book is a project
2. The installation of window panels
3. Planning for expansion of Plant
Capacity
Project Management
In order to understand project management, one must
begin with the definition of a project. A project can be
considered to be any series of activities and tasks that:
 Have a specific objective to be completed within
certain specifications
 Have defined start and end dates
 Have funding limits (if applicable)
 Consume human and nonhuman resources (i.e.,
money, people, equipment)
 Are multifunctional (i.e., cut across several
functional lines)
Project management, on the other hand, involves
project planning and project monitoring and includes
such items as:
  Project planning
o Definition of work requirements

o Definition of quantity and quality of work

o Definition of resources needed
 Project monitoring
o Tracking progress
o Comparing actual outcome to predicted
outcome
o Analyzing impact
o Making adjustments
Successful project management can then be defined as
having achieved the project objectives:
 Within time
 Within cost
 At the desired performance/technology level
 While utilizing the assigned resources effectively
and efficiently
 Accepted by the customer
The potential benefits from project management are:
  Identification of functional responsibilities to
ensure that all activities are accounted for,
regardless of personnel turnover
 Minimizing the need for continuous reporting
 Identification of time limits for scheduling
 Identification of a methodology for trade-off
analysis
 Measurement of accomplishment against plans
 Early identification of problems so that corrective
action may follow
 Improved estimating capability for future planning
 Knowing when objectives cannot be met or will be
exceeded
Unfortunately, the benefits cannot be achieved without
overcoming obstacles such as:
 Project complexity
 Customer's special requirements and scope
changes
 Organizational restructuring
 Project risks
 Changes in technology
 Forward planning and pricing
Project management can mean different things to
different people. Quite often, people misunderstand the
concept because they have ongoing projects within their
company and feel that they are using project
management to control these activities. In such a case,
the following might be considered an appropriate
definition:
Project management is the art of creating the illusion
that any outcome is the result of a series of
predetermined, deliberate acts when, in fact, it was
dumb luck.
Although this might be the way that some companies
are running their projects, this is not project
management. Project management is designed to make
better use of existing resources by getting work to flow
horizontally as well as vertically within the company.
This approach does not really destroy the vertical,
bureaucratic flow of work but simply requires that line
organizations talk to one another horizontally so work
will be accomplished more smoothly throughout the
organization. The vertical flow of work is still the
responsibility of the line managers. The horizontal flow
of work is the responsibility of the project managers,
and their primary effort is to communicate and
coordinate activities horizontally between the line
organizations.
The following would be an overview definition of
project management:
Project management is the planning, organizing,
directing, and controlling of company resources for a
relatively short-term objective that has been established
to complete specific goals and objectives. Furthermore,
project management utilizes the systems approach to
management by having functional personnel (the
vertical hierarchy) assigned to a specific project (the
horizontal hierarchy).

A power point lecture will be conducted to cover

comprehensively this topic. (see power point file entitled
operation PERT/CPM.
8. Principles of Industrial Relations

8.1 Office Management

* Introduction to Office Management
- Office –is a place where records of various
activities are kept. It is a place where clerical
operations are carried out. The basic functions are:
Receiving, Recording, Arranging, and giving of
information
Objectives of an Office:
1. To plan the activities of an office and
ensure their execution
2. To coordinate the activities of various of
departments
3. To preserve all the records of the business
4. To maintain books of accounts, registers,
books, stationary and non-stationary
registers, etc. of business

Modern Office Functions:

The processing of information in a
modern office may be grouped under the following
headings:

6. Maintenance of records
7. Record keeping – through accounting &
filing records
8. Handling incoming and outgoing mail
 9. Communications – written and oral
10 Designing and purchase of office
furniture
11. Computing and summarizing operations
results
12 Selection and purchase of office furniture,
equipment and Machines Systematizing and
cost reduction- through systems &
procedures analysis
13. Safeguarding of assets
14.procurement and development of
personnel

Office Manager
OM – is any person appointed to head the office,
he is part of management responsible for getting the
work done in the office and has to ensure that
procedures and policies formulated by his management
are properly implemented.

Qualities of a good manager:

1. Leadership – As a leader the office
manager should possess an analytical
mind to take care of different situations
arising in the office. Has the ability to
enthuse, inspire, and guide subordinates.
 2. Personal Qualities – Tact, self control,
enthusiasm, sincerity, and adaptability
3. Professional Interest – The office manager
should be familiar with Administrative
Management Society, a chapter oriented
society that is concerned with the
identification, development, and
dissemination of modern business
management techniques and philosophies
as these fall within growing areas of
responsibility of the body of management
knowledge and techniques that has come to
be known as “Administrative Management”.
Functions of the Office Manager:
1. Recruitment of staff
2. Training of staff
3. Devising methods of work measurement
4. Coordination
5. Discipline
6. Controlling stationery and supplies
7. Other functions
a. Managerial functions
b. Supervisory functions
Functions of Management:
1. Planning
2. Organizing
3. Staffing
4. Coordinating
5. Directing
6. Controlling
7. Budgeting
 Effective Management Techniques
1. Communicate the big picture
2. Delegate work and responsibilities
3. Help employees set goals
4. Recognize problems
5. Reward employees
6. Be a mentor
7. Give reviews
8. Have a heart
9. Take the time to be a manager
10.Managing change
11.Be up front with employees
12.Involve key communicators
13.Create an effective message
14.Listen to your employees
 Office Organization
Organization – the structure of relationships and
responsibilities, authorities and duties by means
of which the work to be done and the personnel
and means to do it are brought together and
coordinated.
Significance of an Organization
It is the edifice of managerial success, it is
the backbone of management through which
operations of an enterprise are run. Sets the
relationship between people, work and resources
of the enterprise.
Principles of an office organization
1. Principle of objectives
2. Principle of efficiency
 3. Division of work
4. Span of control
5. Scalar chain of authority
6. Number of levels of management
7. Unity of command
8. Functional definition
9. Parity of authority and responsibility
10. Principle of balance
11. Flexibility
12. Facilitation of leadership
13. Principle of continuity
14. Simplicity
Types of Organization
1. Line
2. Pure Functional
3. Line and Functional Staff
4. Committee
Assignment:
Write advantages and disadvantages of each
type of organization

Departmentalization of Organization
Basis or patterns of methods of
departmentalization
1. Departmentalization by function
2. Departmentalization by products or
services
3. Departmentalization by Territory
4. “ by process
performed
 5. “ by customers
6. “ by office work

* Forms Management
Form – is a piece of paper with fixed data and
blank spaces for
variable data. Forms are used both in
procedures and as
instructions to employees and managers
Purposes of Forms
1. They make clear what information must be
gathered and
communicated
2. The provide a specific location for each
item of information
needed, thus speeding data entry,
processing, and reference.
3. They eliminate the need for recopying
standard or repetitive information
4. Facilitate use of multiple copies, often
greatly simplifying procedures as a result
5. Identify records and facilitate filing and
future reference

 Records Management
Record management – refers to the
administrative function in any organization
concerned with the creation, organization,
maintenance, use, retrieval, and disposition of
records. By assuring that valuable records are
disposed of in a timely fashion, records
 management promotes economy and efficiency
within an organization.

Objectives of Records Management

1. To ensure that information is available when
needed, where needed, in usable format
. 2. To preserve the historical memory of the
organization through the archival records
3. To control the creation and growth of
records
4. To improve productivity
5. To assimilate new records management
technologies
6. To ensure regulatory compliance
7. To minimize litigation risks
8. To safeguard vital information
9. To foster professionalism in operating the
business, agency, or organization
10. To furnish accurate, timely and complete
information for efficient decision-making in the
management and operation of the organization
11. To provide information and records at the
lowest possible Cost.
12. To render maximum service to the user of
records
13. To dispose of records no longer needed

Principles of Records Management

1. Justification
2. Verification
3. Classification
 4. Availability of information
Essentials of Record Management System
1. Simplicity
2. Accuracy
3. Economy
4. Usefulness

Benefits
1. Economy
2. Efficiency
3. Legal protection
4. Statutory requirements
Objectives of Filing
1. It keeps records, protects letters and
documents
2. It makes past records easily accessible
3. It provides suitable storage function
4. Proper filing leads to economy in space
5. It enhances the image of the office
considerably
6. It is less expensive and consumes less time to
take out the records
Principles of Filing
1. Simplicity
2. Suitability
3. Adaptability
4. Economy
5. Protection
6. Less Space
7. Accessibility
8. Cross reference
 9. Coordination and control
10. Flexibility
Records Retention System
1. Define documents to be retained
2. Define retention period
3. Design Filing system and filing area
4. Use essentials to maintain original quality of
files
* Office automation
Use of office appliances and equipment are labor
saving devices and advantageous in terms of speeding
up office work.

Objectives of introducing machines:

1. More work is done within less time
2. Mechanization involves capital cost. The
company has to incur certain amount of
investments while purchasing machines, but
the company can do away with securing
liability of paying salary, bonus, as well as
other long term benefits to workers
3. Machines wont complain of fatigue. Hence
there is no idle time. Overheads can be
reduced
4. There is accuracy as machine will not make
mistakes.

Machines Used in Office

1. Machines for communication

 2. Machines for recording
3. Machines for duplicating
4. Machines for accounting records
5. Machines for handling cash

 Hiring and Training

- Hiring
Employment Test
1. Performance Test – requires the applicant to
produce results
on a job sample. A typist might be asked to
copy a page of text, or a plumber to cut and
thread a pipe
2. Personality Test – measures self-action or
knowledge of others people behavior. If
personality test are answered honestly, they
measure person-to-person behavior.
Commonly used in selecting salesperson and
supervisors
3. Aptitude Test – explore inborn tendencies to
perform well in particular fields. In
industry, mechanical aptitude is necessary to
success as a machinist, toolmaker, or other
tradesman. Finger dexterity maybe
measured for assemblers
4. Intelligence Test – are used for many
different jobs requiring adaptability or
learning ability
 5. Interest Test – measures similarities in
preferred activities among certain
occupational groups and the applicant

Employment Interview
Psychological tests and application blanks
supply valuable Information to the employment
interviewer, but his own skill must Finally determine
his success.

Physical Examination
The physical examination of employment
applicants is commonly on a service basis by industrial
hospital. In some factories the physical standards of
employment are set by plant physician or industrial
surgeon in consultation with the safetyand health
engineer.

Training Programs
1. Technical training – Industrial training for
production employees
2. Development training – various training
and seminars
for all employees

Labor – Management Relations

1. Industrial Relations
2. Public Relations
3. Labor Relations
4. The Labor Movement
 - Industrial Labor Unions

8.2 Leadership/ Skills/Roles

Power point presentation entitled “Little Book on
Leadership”

Leadership – is the art and process of influencing people

so that they will strive willingly and enthusiastically toward
the achievement of group goals.
- Involves most vital resources of any organization, the
people, employees, subordinates and followers.- Power
distribution between leaders and group members is unequal
- Involves the use of different forms of power to influence
the behavior of the followers
- Is about values – James McGregor Burns argues that the
leader who ignores the moral component of leadership may
well go down in history as a scoundrel, or worse.
Leadership Theories
1. The trait theory – a leader is conceived to be a “great
man” whose superior endowments induce others to
follow him.
2. Pose solutions or exhibit Environment Theory –
Leadership on the basis of situations and crises that
provide opportunities for people to propose solutions
or exhibit heroic actions that place them in the
position of leadership.
3. Personal-environment Theory – maintains that
characteristics of a leader, the followers, the followers
and the situations that interact determine the will of
the leader.
4. Exchange Theory – suggest that the group interaction
represents an exchange process in which leadership is
conferred upon the members whose efforts appears
more likely to reward other members for their effort
on behalf of the group.
5. Humanistic Theory – based on hypothesis that groups
will be more effective and members will be better
satisfied when the leader allows freedom to satisfy
their needs for achievement and self-actualization

6. Exceptional Theory – Maintains that leadership is

most likely to be achieved by the member who
succeeds in initiating and reinforcing the expectations
that he will maintain the role structure and goal
direction of the group
7. Contingency Theory – proposes that a given patterns
of leadership behavior will lead to effective group
performance in some circumstances and ineffective in
some cases
8. Path- Goal Theory – The theory suggests that certain
patterns of leader behavior facilitate the clarification
of the group goals while other patterns of behavior
stimulate effective instruments and responses on the
follower group.

Leadership Styles

1. Autocratic Leader – commands and expect

compliance, is dogmatic and positive and leads by the
ability to withhold or give rewards and punishment.
2. Democratic or Participative leader – consults with
subordinates on proposed actions and decisions and
encourages participation from them
3. Benevolent- Autocrat - This leader is a father figure
who wants everyone to feel good. The emphasis is
keeping every happy and satisfied.
4. Liberal Leader or Free-rein Leader – uses his
power very rarely, if at all, giving subordinates a high
degree of independence in their operations. Depends
largely on subordinates to set their own goals and the
means of achieving them.

Other Types of Leadership

1. Laissez-Faire – Let people do as they choose. This

particularly no leadership at all, as it allows everything
to run its own course.
2. Manipulative-Inspirational – This style of leadership
is hard to find.
The leader sets the rules and interprets as they see fit.
9. Problem Solving Approach to Personnel Decisions

1. Cases no 14D and 15D – to be submitted on or

before final examination, to be treated as project in computation
of grade for final period

Case Study : 14D: Maintenance Department Case:

Electrician Bill Endicott looked up from replacing a burned –out

motor when he heard footsteps. It was his boss, maintenance chief Paul
Sands. “Cmon” said Sands crisply. There is a breakdown on the new mill.
I’ll show you how to fix it, the two walked silently toward the center of the
plant. The giant mill was quiet. Anxious-looking production guys stood
around. Endicott had seen the mill often, but he had not been there when it
was installed. He did not even know where to start looking for trouble on his
monster-so different from those he has used to. In 17 years experience he
had never seen one like it.
As they approach the mill, Sands broke away and sought out Harv
Warren, the production foreman. The two talked rapidly for a few minutes.
Sands turned back to Endicott, who had felt he should not eavesdrop. Bill,
this is Harv. We got to look at his control box. It must be a relay, Sands said
confidently.
Sands lead the way to the rear of the machine. He removed a panel
facing and handed it to Bill, who looked about for some place to lay it.
Thirty seconds later a motor started. “Well need to replace that relay soon”
Sands said. He looked pleased with himself. Bill, put that panel back on. I
have to get back to the Union negotiations. Bill turned to find the panel,
muttering to himself.
It was a week later, Sands was at a plant-equipment show out of town.
Bill Endicott was burning off some insulation in the yard when Harv Warren
dashed up , Hey, been expecting you back. The new mill is down again. Quit
just like it did last week. Got a rush order, and I guess I overloaded it. Come
on, get us back in production.
Questions:
1. What do you expect to happen next?
 2. Can you suggest why Bill Endicott muttered to himself at the end of
the first breakdown?
3. Outline in simple terms the steps you should take if like Paul Sands,
you had to teach a skilled man a new task which you fully understood.
4. Write out what Paul might have said as the two men stood before the
motor panel behind the giant mill.

Case 15D The National Production Company

There are several different unions with separate jurisdictions in the
company. The training director has been operating a job training program for
the technical employees covered by Union A of the Technical Engineers.
Employees of the company who belong to Union B of the Production and
outside Engineers are considered professional workers and no training is
given in the work which they perform. Both Unions have contracts in force
which give them the right to use test stands under certain conditions. In
September Union B claimed exclusive jurisdiction over test stands and
refused to work if Union A members operated any test stand equipment.
Delivery of the Company’s products depends on the operation of test stands
for final inspection. This is normally done by Union B, but the members are
not working, and no other employees are trained for final inspection.

Questions:

1. If you are required to meet with Union B for negotiations, what

would you propose to them to get shipments made?
2. Union A feels that its members are being discriminated against Union
B and calls upon the company to live up to the written contract in
force. What answer will you give?
3. The dispute is not settled, but Union B members go back to work and
then ask management to renegotiate their contract to grant their
exclusive to operate the test stands. Would you grant the demand, and
if you did, how would you handle Union A negotiations later?

Class Activity on Management Functions (by Groups):

FACTS:

A multinational Company is to be established in the

Philippines as an offshore plant in the far east. The
management has decided to put up the plant in the
Philippines with its plan of having a Private Eco-zone as
approved by the Philippine Economic Zone Authority
(PEZA), to be situated in Subic which has near access
with International Ports both air and sea.

The company envisioned to be the number one

Wafer Fabrication Plant in the Far East which will
produce Integrated Circuit and Wafers for solar
lighting system. The IC wafer Fab. Will support the
company’s Assembly and Test Operations in mainland
China, Singapore, Thailand, Penang, Malaysia, and
Vietnam. While the other silicon wafer output will be
supplied to solar wafer manufacturer in the Philippines.

The five major components of its planned

organization is as follows:
1. Finance Department – composed of: One
Finance Manager, One accounting Supervisor,
with 3 staff to handle bookkeeping, One
accounting supervisor for Payroll and
employee benefits with 3 staff.
2. Manufacturing – one Production Manager,
and one Superintendent and 6 line Supervisors
to man 24 hours operation. Estimated number
of operators initially is 90 people
 3. Logistics – One Logistics Manager with 3
Staff, for procurement, 1 Supervisor for stores
and Incoming/Receiving and 3 staffs for
receiving, production issuance and Supplies
issuance. One Supervisor for Traffic with 2
staffs for Import/Export activities.
4. Human Resource Department – One
Personnel Manager, 2 Staff for Hiring and
compensation, 1 staff for Human Resource
Management, 1 staff for Human Resource
Development, and 3 Clinical Nurses

Activity:

1. Write the Vision Statement of the

company
2. Write the Mission Statement of the
Company
3. Define what other personnel or group
that is needed in support for production
4. What support group is needed where
Engineering discipline is necessary
5. To support the easy decision making
process of management, in all aspect of
operation, what support department is
needed to have online or ready access of
information. Where should this
organization be attached?
6. Construct an Organizational chart
Note: Marketing Organization is not necessary as all
activities are the sole task of the central Marketing
group in the general headquarter in Silicon Valley USA.