Industrial Engineering

UNIT-1

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Syllabus
Production system and Productivity:
History of Industrial Engineering,
Introduction, aim and generalized model of Production
systems, Types of production system,
Plant location,
Plant layout, objectives and types.
Productivity, various methods of productivity
measurement, Factors effecting productivity, Strategies
for improving productivity,
Industry 4.0.

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Industrial Engineering

• Industrial engineering determines the most effective

ways to use the basic factors of production such as
men, machines, materials, information, and energy to
make a product or a service.
• These factors of production form the link between
management goals and operational performance.
• Industrial engineering deals with increasing
productivity through the management of men,
methods and technology.

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American Institute of Industrial Engineers (AIIE)
defines Industrial Engineering as follows:
• Industrial Engineering is concerned with the design,
improvement and installation of integrated system of
men, materials and equipment.

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• The prime objective of industrial engineering is to
increase the productivity by eliminating waste and
non-value adding (unproductive) operations and
improving the effective utilisation of resources.

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Historical development in Industrial
Engineering

Phase 1: Pre-Industrial Revolution Era

Phase 2: Industrial Revolution Era
Phase 3: Scientific Management Phase
Phase 4: Operations Research and Quantitative
Management Phase
Phase 5: Automation and Computer-Integrated
Manufacturing (Modern Management)

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Pre-industrial Revolution Era

• Prior to the Industrial Revolution in the early 1800s,

there was focus on only manual operated manufacturing
activities.
• There was no factory concept; mostly, handicraft and
agriculture products, etc. were dominated in the trade.
• Three major developments in this era are:
1774: James Watt developed the steam engine.
1776: Adam Smith wrote The Wealth of Nations and
advocated the concept of division of labour, skill
development, specialization, etc. (Smith 1776).
1798: Concept of interchangeability of parts was
developed by Whitney and was used in manufacturing of
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musket (Hatfield 2013).
Industrial Revolution Era

• Industrial engineering emerged as a profession

during the Industrial Revolution.
• This was due to the requirement of technically
qualified and skilled people, who were needed to
plan, organize and control the manufacturing
processes.
• After the industrial revolution, Taylor and Gilbreth
(Frank B. Gilbreth and his wife, Lillian Gilbreth)
contributed a lot to the field of industrial engineering
and later these contributions were known as the
base of Scientific Management.

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Scientific Management Phase

• Following contributions form a major part of

Scientific Management:
1910: F. W. Taylor’s Scientific Management
1911: Gilbreth’s Motion Study
1913: Gantt’s Scheduling Chart
1917: Harris Inventory Control
1924: Shewart’s Statistical Control Chart
1927–33: Elton Mayo’s Motivation Theory
1932: Babbage Wage payment and Time Study
1933: Barnes Work Study

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Operations Research and Quantitative
Phase

• During World War II, concepts of Operations

Research were developed and used to optimize the
resources allocated in the war.
• During this phase, the concept of linear programming
(LP) was developed by Dantiz.
• Some of the major developments observed during
this phase are :
1956: First NC machine was developed.
1961: First time Robot was used.
1965: Flexible automation was used.

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Automation and Computer-integrated
Manufacturing Phase

• During this phase, most of the automation and

computer-integrated manufacturing concepts were
implemented in the industries.
• Concepts of lean manufacturing and Just-In-Time
(JIT) were developed in automobile industries
(Toyota manufacturing system).

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Factory of the Future

• Factory of the future will be highly automated.

Robots will be used for various operations such as
material handling, loading and unloading of jobs,
welding, painting, etc.
• Most of the manual work will be eliminated.

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Activities of Industrial Engineering

1. Selection of processes and assembling methods.

2. Selection and design of tools and e9uipment.
3. Design of facilities including plant location, layout of
buildings, machines and equipment, material handling
system, raw materials and finished goods storage
facilities.
4. Design and improvement of planning and control
systems for production, inventory, quality and plant
maintenance and distribution systems.

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5. Developing a cost control system such as budgetary
control, cost analysis and standard costing.
6. Development of time standards, costing and
performance standards.
7. Development and installation of job evaluation
systems.
8. Installation of wage incentive schemes.
9. Design and installation of value engineering and
analysis system.
10. Operation research including mathematical and
statistical analysis.
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11. Performance evaluation.
12. Organization Methods (O & M).
13. Project feasibility studies.
14. Supplier selection and evaluation.

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Objectives of Industrial Engineering

The basic objectives of industrial engineering

departments are:
1. To establish methods for improving the operations
and controlling the production costs.
2. To develop programmes for reducing those costs.

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Productivity

• Productivity is the quantitative relation between

what we produce and what we use as a resource to
produce them, i.e. arithmetic ratio of amount
produced (output) to the amount of resources
(input).
• Productivity can be expressed as:
Productivity = Output/Input

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• Productivity refers to the efficiency of the production
system.
• It is the concept that guides the management of
production system.
• It is an indicator of how well the factors of
production (Land, capital, labour and energy) are
utilised.

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European Productivity Agency (EPA) has defined
productivity as,
• Productivity is an attitude of mind.
• It is the mentality of progress, of the constant
improvements of that which exists.
• It is the certainity of being able to do better today
than yesterday and continuously.
• It is the constant adaptation of economic and social
life to changing conditions.
• It is the continual effort to apply new techniques and
methods.
• It is the faith in human progress. 19
Productivity as Viewed by Different People

Economists Ratio of output to input (partial productivity Measure and

Total Productivity Measure)
Accountants Financial Ratios, Budgetary Variances
Behavioural Labour Utilisation (Man days)
Scientists
Engineers Capacity Utilisation, Production per Man hour, Manpower
efficiency

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Definitions of Productivity

1. Productivity is a function of providing more and

more of everything to more and more people with less
and less consumption of resources.
2. The volume of output attained in a given period of
time in relation to the sum of the direct and indirect
efforts expended in its production.
3. Productivity is the measure of how well the resources
are brought together in an organisation and utilised for
accomplishing a set of objectives.

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Production & Productivity
• Production is defined as a process or procedure to
transform a set of input into output having the
desired utility and quality.
• Production is a value addition process.
• Production system is an organised process of
conversion of raw materials into useful finished
products.

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Productivity can be Increased
1. When production is increased without increase in
inputs.
2. The same production with decrease in inputs.
3. The rate of increase in output is more compared to
rate of increase in input.

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Example

A company produces 160 kg of plastic moulded parts of

acceptable quality by consuming 200 kg of raw
materials for a particular period. For the next period,
the output is doubled (320 kg) by consuming 420 kg of
raw material and for the third period, the output is
increased to 400 kg by consuming 400 kg of raw
material.

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Solution

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Expectations from Productivity

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Productivity measures

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Advantages and Limitations of Productivity
Measures

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Example

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Solution

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Solution

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PRODUCTIVITY MEASUREMENT MODELS

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FACTORS INFLUENCING PRODUCTIVITY

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Controllable Factors (Internal Factors)

1. Product factor: The cost benefit factor of a product

can be enhanced by increasing the benefit at the same
cost or by reducing cost for the same benefit.
2. Plant and equipment: The increased availability of
the plant through proper maintenance and reduction of
idle time increases the productivity.

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3. Technology:
(i) Size and capacity of the plant
(ii) Timely supply and quality of inputs
(iii) Production planning and control
(iv) Repairs and maintenance
(v) Waste reduction
(vi) Efficient material handling systems

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4. Material and energy:
(i) Selection of quality material and right material
(ii) Control of wastage and scrap
(Hi) Effective stock control
(iv) Development of sources of supply
(v) Optimum energy utilisation and energy savings

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5. Human factors: Productivity is basically dependent
upon human competence and skill.
6. Work methods: Improving the ways in which the
work is done (methods) improves productivity.
7. Management style: This influences the
organisational design, communication in organisation,
policy and procedures.

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External Factors

1. Structural adjustment includes both economic and

social changes.
I) Economic changes that have influence significant
are:
A. Shift in employment from agriculture to
manufacturing industry
B. Import of technology
C. Industrial competitiveness
II) Social changes such as women's participation in the
labour force, education, cultural values, attitudes are
some of the factors that play a significant role in the
improvement of productivity.
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2. Natural Resources: Manpower, land and raw
materials are vital to the productivity improvement.
3. Government and Infrastructure: Government
policies and programmes are significant to productivity
practices of government agencies, transport and
communication power, fiscal policies (interest rates,
taxes) influence productivity to the greater extent.

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PRODUCTIVITY IMPROVEMENT TECHNIQUES

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Technology Based
1. Computer Aided Design (CAD), Computer Aided
Manufacturing (CAM), and Computer Integrated
Manufacturing System (CIMS)
2. Robotics
3. Laser technology
4. Modern maintenance techniques
5. Energy technology
6. Flexible manufacturing system (FMS)

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Employee Based
1. Financial and non-financial incentives at individual
and group level
2. Employee promotion.
3. Job design, job enlargement, job enrichment and job
rotation
4. Worker participation in decision-making
5. Quality circles (QC), Small Group Activities (SGA)
6. Personal Development

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Material Based
1. Material planning and control
2. Purchasing logistics
3. Material storage and retrieval
4. Source selection and procurement of quality material
5. Waste elimination
6. Material recycling and reuse
Process Based
1. Methods engineering and work simplification
2. Job design, job evaluation, job safety
3. Human factors engineering
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Product Based
1. Value analysis and value engineering
2. Product diversification
3. Standardisation and simplification
4. Reliability engineering
5. Product mix and promotion
Management Based
1. Management style
2. Communication in the organisation
3. Work culture
4. Motivation
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5. Promoting group activity
Production system

• The production system (function) of an organization

is that part which produces the organizations
products.
• Production is the basic activity of all organizations
and all the other activities revolve around production
activity.
• The output of production is the creation of goods or
services which satisfy the needs of the customer.

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Production system has the following characteristics:
1. Production is an organized activity, so every
production system has an objective.
2. The system transforms the various inputs (men,
material, machines, information, and energy) in to
useful outputs (Goods or Services.)
3. Production system does not operate in isolation from
the other organizational systems such as finance,
marketing etc.
4. There exists a feedback about the activities which is
essential to control and improve system performance.
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The production system (facility, equipments and
operating methods) that a company uses depends upon
the type of the product that is offered to the customer
and the strategy that it employs to serve its customers:
Basically, production systems can be categorized as:
1. Make to stock production
2. Make to order production
3. Assemble-to-order production system

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MAKE TO STOCK PRODUCTION

• In this system, manufacture stocks the finished goods

(products) in inventory for immediate shipment.
• This system ensures immediate delivery of good
quality, reasonably priced, off the shelf standard
products.
• For example, automobile bearings, ready to wear
garments, nuts and bolts, motors, televisions etc.

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Situations for Make to Stock Production are:
1. Fairly constant and predictable demand.
2. Products are few and they are standardized.
3. Shorter delivery time expected by the customers.
4. Products having higher shelf life.

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MAKE TO ORDER PRODUCTION

• Some companies make or manufacture products

after the receipt of the firm order from the customer.
• Here the production activities will be initiated only
after the confirmation of the orders and the products
are not supplied from the stock and hence the lead
time (the time between ordering the product and
delivery) is long.

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Situations for make to order productions are:
1. Products are manufactured to customer
specifications.
2. Customer can wait till the order is being processed
(longer delivery schedule).
3. Product is non standard and expensive to store.
4. When there are several product options available to
store.

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ASSEMBLE-TO-ORDER PRODUCTION SYSTEM

• When number of alternative combinations or options

is available to customers as in automobiles,
consumer electronics and computers and customer is
not ready to wait until product is made,
manufacturers produce and stock standard
component parts.
• When the customer places the order, the customer
does the assembly from the parts/components
selected.

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TYPES OF PRODUCTION SYSTEM

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Intermittent Production System

• On the bases of volume and variety of products,

production systems can be classified as jobshop
• production, batch production, mass production and
continuous production. The first three
• production systems can be grouped as discrete types
of production.

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• These products are of different sizes.
• The design of these products goes on changing.
• It keeps changing according to the design and size of
the product.
• Therefore, this system is very flexible.
Example
• The work of a goldsmith is purely based on the
frequency of his customer's orders.
• The goldsmith makes goods (ornaments) on a small-
scale basis as per his customer’s requirements.
• Here, ornaments are not done on a continuous basis.
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The types of intermittent production systems include:
• Project production flows,
• Jobbing production flows, and
• Batch production flows.

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Continuous Production System

• Continuous means something that operates

constantly without any irregularities or frequent
halts.
• In the continuous production system, goods are
produced constantly as per demand forecast.
• Goods are produced on a large scale for stocking and
selling.
• They are not produced on customer's orders.
• Here, the inputs and outputs are standardized along
with the production process and sequence.
Example: The production system of a food industry is
purely based on the demand forecast. Here, a large-
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scale production of food takes place.
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JOB SHOP PRODUCTION

• Job production is a method usually where companies

to all these factors to production to complete at one
time.
• This method is usually used where products are
unique.
• For example an architect, every single building and
structure that an architect designs will always be
different.
• In job production, a single worker or group of
workers handles the complete task.

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Advantages of Job Order Production
1. Because of general-purpose facilities, variety of
products can be processed.
2. Operators will become more skilled and competent
that each job gives them
learning opportunity.
3. Utilization of full potential of operators.
4. Opportunity to use innovate ideas and creative
methods.

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Limitations
1. Higher set up and tooling up cost due to frequent set
up changes.
2. High inventory level of raw material and in process
and hence higher inventory costs.
3. Production planning is complicated.
4. Highly competent and skilled manpower is
demanded.
5. Product cost comes to be high.
6. High cost of material handling and larger space
requirement.
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PROJECT INDUSTRIES

The key feature of the 'project type industries is that

the materials, tools, equipment and personnel are
brought to the location where the product is to be
fabricated.

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INTERMITTENT (BATCH) PRODUCTION

Intermittent production is defined by APICS (American

Production and Inventory Control Society) as a form of
manufacturing in which the job pass through the
functional departments in lost or batches and each lot
may have a different routing.

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PROCESS INDUSTRIES (FLOW PRODUCTION
OR CONTINUOUS PROCESS PRODUCTION)

• Process manufacturing is defined as the production

that adds value by mixing, separating, forming and/
or performing chemical reactions.
• It may be carried out in either batch or continuous
mode.

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MASS PRODUCTION

• Manufacture of discrete components or assemblies in

a very large volume is called mass production.
• Machines are arranged in a line according to the
sequence of operations on the product in product
layout.
• Product and process standardization exists and all
outputs follow the same path.

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Plant Location

• Facility location is categorized as a strategic decision,

because it is concerned with the whole environment
in which the firm operates and it involves the entire
resources and the people who form the company and
the interface between the two.

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NEED FOR SELECTING A SUITABLE LOCATION

The need for selecting a suitable location arises because

of two situations.
1. When starting a new factory.
2. In case of existing factory.
In case of existing factory
1. Whether to expand the existing capacity and
facilities.
2. Whether to look for new locations for additional
facilities.
3. Whether to close down existing facilities to take
advantage of some new locations.
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IMPORTANCE OF LOCATION

1. Competition
2. Cost
3. Indirect Benefits

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LOCATION FACTORS

Location factors involve many factors that influence the

revenues, costs or both and they affect profits.
In general, location factors are grouped into:
1. Market Related Factors: Location of demand and
competition.
2. Tangible Cost Factors: Labour, materials,
transportation utilities, site cost, taxes, etc.
3. Intangible Factors: Legal aspects, environmental
factors, climate; schools, hospital and recreational
facilities, community attitude, etc.

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FACTORS THAT INFLUENCE THE SELECTION
OF PLANT LOCATION

1. Availability of Raw Materials

2. Proximity to Market
3. Infrastructural Facilities
4. Government Policy
5. Availability of Manpower
6. Local Laws, Regulations and Taxation
7. Ecological and Environmental Factors
8. Competition
9. Incentives, Land costs, Subsidies for Backward Areas
10. Climatic Conditions
11. Political Conditions.
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Plant Layout

• According to Moore "Plant layout is a plan of an

optimum arrangement of facilities including
personnel, operating equipment, storage space,
material handling equipment and all other
supporting services along with the design of best
structure to contain all these facilities."

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Factor Affecting Facilities Layout Planning

• Material
• Labour
• Material Handling
• Waiting Time

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OBJECTIVES OF PLANT LAYOUT

1. Streamline the flow of materials through the plant

2. Facilitate the manμfacturing process
3. Maintain high turnover of in process inventory
4. Minimise materials handling
5. Effective utilisation of men; Equipment and space
6. Make effective utilisation of cubic space .
7. Flexibility of manufacturing operations and
arrangements
8. Provide for employee convenience, safety and
comfort

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PRINCIPLES OF PLANT LAYOUT

1. Principle of Integration
2. Principle of Minimum Distance
3. Principle of Cubic Space Utilization
4. Principle of Flow
5. Principle of Maximum Flexibility
6. Principle of Safety and Security and Satisfaction
7. Principle of Minimum Handling

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ADVANTAGES OF PLANT LAYOUT

1. Advantages to the Worker

2. Advantages to the Management
3. Advantages to Manufacturing
4. Advantages to Production Control

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TYPES OF LAYOUT

• Process Layout
• Fixed-Position Layout
• Product Layout

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Process (Functional) Layout

• In the job shop layout, machines are grouped

according to function to machine centers.
• Orders for individual products are routed through
the various machine centers to obtain the required
processing.

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Advantages

1. Flexibility of equipment and personnel.

2. Lower investment on account of comparatively less
number of machines and lower cost of general purpose
machines.
3. Higher utilisation of production facilities.
4. Greater flexibility with regards to work distribution
to machineries and workers.
5. Variety of job makes the job challenging and
interesting.
6. Supervisors will become highly knowledgeable about
the functions under their department.
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Disadvantages

Disadvantages
1. Backtracking and long movements may occur in the
handling of materials thus reducing material handling
efficiency.
2. Material handling cannot be mechanised which adds
to cost.
3. Process time is prolonged which reduce the
inventory turnover and increases the investment in
inventories.
4. Production planning and control is difficult.
5. More space is required.
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Product (Line) Layout

• Here the product (or products) follows a fixed path

through the production resources.
• The resources are arranged to minimize the material
movement.
• This type of plant layout is useful when the
production process is organized in a continuous or
repetitive way.

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Advantages

1. Reduced material handling cost due to mechanized

handling systems and straight flow.
2. Perfect line balancing which eliminates bottlenecks
and idle capacity.
3. Manufacturing cycle is short due to uninterrupted
flow of materials.
4. Simplified production, planning and control.
5. Small amount of work in process inventory.
6. Unskilled workers can_ learn and manage the
production.

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Disadvantages

1. Lack of flexibility - A change in product may require

the facility modification.
2. Large capital investment.
3. Dedicated or special purpose machines.
4. Dependence of the whole activity on each part.
Breakdown of any one machine in the sequence may
result in stoppage of production.

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Fixed Position Layout

• For tasks on large objects such as the manufacture of

an electrical generator, the construction of a building,
or the repair of a large air plane, the machines
implementing the operation must come to the
product, rather than the product moving to the
machine.
• In fixed position layouts, the item being worked on
remains.
• Stationary and workers, materials and equipment
are moved as needed.

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Advantages

1. Material movement is reduced, minimizes damage or

cost of moving.
2. Promotes job enlargement by allowing individuals or
teams to perform the whole job.
3. Continuity of operations and responsibility results
from team. This reduces the problems of re-planning
and instructing people each time a new type of activity
is to begin.
4. Highly flexible; can accommodate changes in product
design, product mix, and product volume.
5. Independence of production centers allowing
scheduling to achieve minimum total production time.
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Disadvantages

1. Increased movement of personnel and equipment

may be expensive.
2. The necessary combination of skills may be difficult
to find and high pay levels may be necessary.
3. Equipment duplication may occur.
4. Higher skill requirements for personnel as they are
involved in more operations.
5. General supervision required.
6. Cumbersome and costly positioning of material and
machinery.

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Industry 4.0

• Industry 4.0 is the digital transformation of

manufacturing/production and related industries
and value creation processes.

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Historical context for Industry 4.0

First industrial revolution

• Starting in the late 18th century in Britain, the first
industrial revolution helped enable mass production
by using water and steam power instead of purely
human and animal power.
• Finished goods were built with machines rather than
painstakingly produced by hand.

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Second industrial revolution
• A century later, the second industrial revolution
introduced assembly lines and the use of oil, gas and
electric power.
• These new power sources, along with more advanced
communications via telephone and telegraph,
brought mass production and some degree of
automation to manufacturing processes.

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Third industrial revolution
• The third industrial revolution, which began in the
middle of the 20th century, added computers,
advanced telecommunications and data analysis to
manufacturing processes.
• The digitization of factories began by embedding
programmable logic controllers (PLCs) into
machinery to help automate some processes and
collect and share data.

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Fourth industrial revolution
• Fourth industrial revolution, is referred as Industry
4.0.
• It is characterized by increasing automation and the
employment of smart machines and smart factories,
informed data helps to produce goods more
efficiently and productively across the value chain.
• Flexibility is improved so that manufacturers can
better meet customer demands using mass
customization.

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Industry 4.0 technologies

Internet of Things (IoT)

• The Internet of Things (IoT) is a key component of
smart factories.
• Machines on the factory floor are equipped with
sensors that feature an IP address that allows the
machines to connect with other web-enabled
devices.
• This mechanization and connectivity make it
possible for large amounts of valuable data to be
collected, analyzed and exchanged.

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Cloud computing
• Cloud computing is a cornerstone of any Industry 4.0
strategy.
• Full realization of smart manufacturing demands
connectivity and integration of engineering, supply
chain, production, sales and distribution, and service.
Cloud helps make that possible.
• In addition, the typically large amount of data being
stored and analyzed can be processed more
efficiently and cost-effectively with cloud.
• Cloud computing can also reduce startup costs for
small- and medium-sized manufacturers.
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AI and machine learning
• AI and machine learning allow manufacturing
companies to take full advantage of the volume of
information generated not just on the factory floor,
but across their business units, and even from
partners and third-party sources.
• AI and machine learning can create insights
providing visibility, predictability and automation of
operations and business processes.

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Edge computing
• The demands of real-time production operations mean
that some data analysis must be done at the “edge”—
that is, where the data is created.
• This minimizes latency time from when data is
produced to when a response is required.
• For instance, the detection of a safety or quality issue
may require near-real-time action with the equipment.
• The time needed to send data to the enterprise cloud
and then back to the factory floor may be too lengthy
and depends on the reliability of the network.
• Using edge computing also means that data stays near
its source, reducing security risks. 107
Cybersecurity
• Manufacturing companies have not always
considered the importance of cybersecurity or cyber-
physical systems.
• However, the same connectivity of operational
equipment in the factory or field (OT) that enables
more efficient manufacturing processes also exposes
new entry paths for malicious attacks and malware.
• When undergoing a digital transformation to
Industry 4.0, it is essential to consider a
cybersecurity approach that encompasses IT and OT
equipment.
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Digital twin
• The digital transformation offered by Industry 4.0
has allowed manufacturers to create digital twins
that are virtual replicas of processes, production
lines, factories and supply chains.
• A digital twin is created by pulling data from IoT
sensors, devices, PLCs and other objects connected to
the internet.
• Manufacturers can use digital twins to help increase
productivity, improve workflows and design new
products.

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Benefits of Industry 4.0

1. Increased Efficiency in Production​

2. More Potential for Innovation
3. Accelerated Response to Customer Needs
4. Reduced Costs And Higher Profit Margins
5. Quality Assurance
6. Fluid Collaboration

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