INTRODUCTION TO INDUSTRIAL ENGINEERING (Last Version).pptx

INTRODUCTION TO
INDUSTRIAL
ENGINEERING
AYBU NATURAL SCIENCE &
ENGINEERING FACULTY
INDUSTRIAL ENGINEERING
DEPARTMENT

CONTENTS
• Definition of Industrial Engineering
• Tools Used by Industrial Engineer
• Course Plan Constitution
• The Definition System and Model
• Simulation and Decision Making
• Historical Overview of Industrial Engineering
• Impact of Globalization on Industrial Engineering
• The Relationship Between Process Design and Industrial Engineering

WHAT IS INDUSTRIAL ENGINEERING?
Training and research are carried out in the development and implementation
of methods and techniques for the effective use of people, machinery, and
materials in order to increase the productivity of the institutions that produce
products or services. It can work in the public sector and private sector
factories.
MAIN COURSES TAUGHT IN THIS PROGRAM
In the first two years of the undergraduate program, basic engineering courses
such as mathematics, physics, chemistry and basic engineering courses such as
static, dynamic, strength, materials, computer programming, and economics
courses are given. In the last two years of the program, a project course on
basic industrial engineering courses such as operation research, statistics,
business survey, ergonomics, engineering economics, facility planning,
production methods and planning, inventory and quality control and other
courses and system design for various departments are given.

REQUIRED QUALIFICATIONS
In order to be successful in the industrial engineering program, it is
necessary to have analytical thinking ability and to be creative,
interested in engineering and social sciences. Among other important
qualities that must be found is the ability to work together with
people and to transfer their thoughts to others.
DIFFERENCE
The difference between industrial engineering and other engineers is
that they always consider the human factor in the design and
operation of production systems, can approach systems and solutions
as a whole and can synthesize various engineering and business
disciplines. Industrial engineers do business analysis in factories.
They work to increase the quantity and quality of production by

TOOLS USED BY THE
INDUSTRIAL ENGINEER
 Understanding “Engineering Language”: Drawings, Specifications,
etc.
 Understanding the Physical Processes, Knowledge of the Basic
Laws of Physics
 Knowledge of Economics and Financial Management
 Understanding Mathematical and Statistical Models
 Knowledge of Human Resources Management
 Knowledge of Computerized Information Systems

TEACHING INDUSTRIAL
ENGINEERING
• The Case Study Approach
• The Modeling Approach

COURSE PLAN
AYBU NATURAL SCIENCES AND ENGINEERING FACULTY INDUSTRIAL ENGINEERING 2017-2018 COURSE PLAN
FALL SPRING
FIRST YEAR
PREQ C. CODE C. TITLE T L/A ECTS PREQ C. CODE C. TITLE T L/A ECTS
MATH101 Calculus I 4 0 6 MATH102 Calculus II 4 0 6
PHYS101 Physics I 4 2 5 PHYS102 Physics II 4 2 6
CHEM107 General Chemistry 3 0 4 IE102
Introduction to Industrial
Engineering
2 0 6
CENG101
Introduction to Computer
Programming
3 2 6 MATH104 Linear Algebra 3 0 6
ENG121 Academic English I 4 0 4 ENG122 Academic English II 4 0 4
TDL101 Turkish I 2 0 1 TDL102 Turkish II 2 0 1
HTR102
Ataturk’s Principles and
History of Revolutions I
2 0 1 HTR201
Atatürk's Principles and
History of Revolutions II
2 0 1
IE101 Industrial Recognition 2 0 2
Total 24 4 30 Total 21 2 30
Year Total 43 6 60

COURSE PLAN
SECOND YEAR
MATH219
Introduction to Differential
Equations
4 0 5 ECON102 Economıcs II 3 0 5
ECON101 Economics I 3 0 5 IE266 Engineering Statistics 4 0 6
IE251 Operation Research I 3 2 6 IE271
Introduction to Material
Science
3 0 4
IE212
Introduction to
Manufacturing Engineering
3 0 5 IE241
Managerial and Cost
Accounting for Engineers
3 0 5
IE265 Introduction to Probability 3 0 5 IE252 Operation Research II 3 0 6
IE286
Management Information
Systems
2 0 4 IE242 Machine Tools 3 0 4
Total 18 0 30 Total 19 0 30
Year Total 37 0 60
Cumulative Total 80 6 120

COURSE PLAN
THIRD YEAR
IE347 Engineering Economy 3 0 5 IE368 Quality Assurance 3 0 5
IE361 Operation Research III 3 0 6 IE372 System Simulation 3 2 6
IE375
Production Planning and
Control I
3 0 6 IE376
Production Planning and
Control II
3 0 6
IE333 Work Analysis and Design 4 0 5 IE332 Facility Design and Planning 3 0 5
IE322 Logistics Management 3 0 4 IE380 Ergonomics 3 2 4
Elective 3 0 4 Elective 3 0 4
Total 19 0 30 Total 18 4 30
Year Total 37 4 60

COURSE PLAN
FOURTH YEAR
IE404 Engineering Management 3 0 5 IE412
Advanced Topics in
Industrial Engineerings
3 0 6
IE489 Systems Engineering I 3 0 5 IE4901 Graduation Thesis II 2 0 8
IE4900 Graduation Thesis I 2 0 8 Elective 3 0 4
Total 17 0 30 Total 17 0 30
Year Total 34 0 60

ELECTIVE COURSES
ELECTIVE COURSES
IE5001 Database Management Systems 3 0 4 IE5022 Queueing Theory 3 0 4
IE5002 Cost Management 3 0 4 IE5023 Textile Technology 5 0 4
IE5003
Quality Management
Tools&Tech.
3 0 4 IE5024
Intelligent Maufacturing
Systems
3 0 4
IE5004 Advanc. In Operations Research 3 0 4 IE5025 Six Sigma 3 0 4
IE5005 Just In Time Production System 3 0 4 IE5026 Group Technology 3 0 4
IE5006
Marketing And Sales
Management
3 0 4 IE5027 Human Resource Management 3 0 4
IE5007 Business Planning 3 0 4 IE5028 Enterprise Asset Management 3 0 4
IE5008 Knowledge & Innovation Syst. 3 0 4 IE5029 Service Systems Management 3 0 4
IE5009 Maintenance Planning 3 0 4 IE5030 Decision Support Systems 3 0 4
IE5010 Lean Manufacturing 3 0 4 IE5031 Introduction To Data Mining 3 0 4
IE5011 Quality Improvement Methods 3 0 4 IE5032
Enterprise Engineering And
Enterprise Modelling
3 0 4
IE5012 Human Factor Engineering 3 0 4 IE5033 Planning For Engineers 3 0 4
IE5013 Erp Systems With Applications 3 0 4 IE5034
Strategic Management
Applications
3 0 4
IE5014 Artificial Intelligence 3 0 4 IE5035 Management And Organization 3 0 4
IE5015 Multi-Criteria Decision Making 3 0 4 IE5036 Financial Analysis 3 0 4
IE5016 Forecasting Methods 3 0 4 IE5037 Supply Chain Management 3 0 4
IE5017 Process Management 3 0 4 IE5038
Advanced Compter
Programming
3 0 4
IE5018 Dynamic Programming 3 0 4 IE5039 Project Management 3 0 4
IE5019
Transportation/Distribution
Planning Management
3 0 4 IE5040
International Business And
Enterpreneurship
3 0 4

SYSTEM DEFINITON
• Some organizations are engaged in the production or supply of products. Other
organizations provide services and some do both.
• These organizations use systems to perform their operations. We define a system
as a collection of resources such as people, computers, information, machinery,
and facilities working to achieve a common goal.
• The role of this system is to transform “inputs” such as raw material, energy, and
demand information into “outputs,” which are products, information, and
customer service. The output may include damaged items, which should be
avoided or minimized as much as possible.

MODELS
 Problem solving and decision making are important parts of the job of the
industrial engineer. Most mathematical programming models define an objective
function and a set of constraints. Such models are designed to find the values of
the “decision variables” that meet the constraints, while minimizing or
maximizing the objective function. When the level of uncertainty is high,
statistical or stochastic models that represent the uncertainty of the real problem
are used.
 Such tools include regression analysis and stochastic dynamic programming.
When decision makers analyze a model, they are trying to find a good solution to
the problem that the model represents. This solution is appropriate for solving
the original problem if it is not too sensitive to the simplifying assumptions
underlying the model. Therefore, a sensitivity analysis of the solution obtained
must be performed to assess its suitability for solving the original problem.

USE OF MODELS
 Models are frequently used for routine repetitive decisions. A
computer can handle some of these decisions automatically.
 Inventory management in a supermarket is a typical example of
routine decisions: Orders for new shipments are required when
the existing inventory level drops below a certain level. The value
of this so-called “reorder level” or “order point” is calculated by
fitting a model.
 Models can be used to solve nonroutine problems as well. A map
is an example of such a model. A tourist can find his or her way
in a city he or she never visited before using a map that
represents real streets and available attractions.
 The map has only two dimensions and in reality there are three
dimensions, it is much smaller than the real city, and it is static
while in the real city people and vehicles are moving.

DYNAMIC ASPECT:
SIMULATION & DYNAMIC
SYSTEM
 Simple models such as a map are static in nature, that is, these
models present a snapshot at a given moment of the organization
and its environment.
 In reality, time plays a very important role in decision making.
Values of key parameters change over time. Different types of
dynamic modeled systems and processes using two kinds of
entities: Levels and rates.
 Rates generate changes in the levels, and levels are used as state
variables so that the value of the levels at a given time determines
the state of the system.

SIMULATION MODELS &
DECISION MAKING
When using simulation as a tool for decision support, the simulation
model presents three aspects of the real world:
The flow of objects such as materials, equipment, and people
The flow of information
The decision-making process
In the inventory system simulation example, the flow of material
deals with materials entering the system, their storage, and exit from
the system. Information related to the flow of materials is collected
during the simulation run. The user can see the exact time when a
unit of material is created, and when it moves within the system or
leaves it. The data collected during the simulation serve as a basis for
understanding and analyzing the inventory system.

SIMULATION MODELS &
DECISION MAKING
 The logic of decision making is part of the simulation model. Such logic
can be based, for example, on a simple model that recommends issuing
an order for new materials each time the inventory level drops below the
designated order point. In this case, the order level is the decision
variable, and the simulation compares system performance for various
reorder levels. The advantage of this approach is that one can try out a
large number of different decision rules by running the simulation.
 One more advantage is the possibility of running large simulations offline,
that is, when the decision makers are not present. For example, the
model can run at night, and in the morning the users get the results for
analysis. The disadvantage of using simulation for decision making is that
in real life many decisions are based on intuition and experience, and it is
very difficult (sometimes impossible) to program a computer to model
intuition and experience. Furthermore, in many organizations, decisions
are made by a group of employees from different fields. Group decision
making is a very complex process, and there is not enough knowledge to

DYNAMIC ASPECT:
SYSTEM
 Consider the following example of
system dynamics: The fuel system
in a car is analyzed to develop the
best strategy for refueling the car.
The objective is to minimize fuel
cost, and the constraints are the
capacity of the fuel tank and the
location of fueling stations. The
rate of the car’s fuel consumption
is determined by factors such as
speed, load, road conditions, etc.

DYNAMIC ASPECT:
SYSTEM
 Another simulation model is discrete event simulation (DES)
developed at IBM in 1961 by Geoffrey Gordon and initially called
general purpose simulation system (GPSS). Since the development
of DES, many simulation languages have been developed and
evolved. For example, SIMULA evolved into BETA and its concepts
are used in SimPy (Python based DES library).
 SLAM (simulation language for alternative modeling) evolved into
SLAM-II, which developed into SIMAN, and finally into ARENA
simulation software. Since the turn of the twenty-first century,
many other DES software packages have emerged: Promodel,
Simul8, SimEvent, Plant Simulation, and SimCAD
 Pro—to name a few. Modern simulation languages are user-
friendly, powerful, and flexible. Simulation is considered an
important tool that is used by industrial engineers for analyzing
complex systems, most of which include random processes.

HISTORICAL OVERVIEW
 Industrial Revolution: Mechanical energy/ The invention of the
Steam Engine
 The transfer of production from the small workshops of craftsmen
into factories applying the principle of division of labor.
 In 1776, Adam Smith published a book analyzing the economic
benefits of the division of labor. His theory is that breaking up the
work required to produce a product into a series of small simple
tasks performed by a number of production workers increases
efficiency. Each worker needs to know only a small part of the
whole process required to manufacture the product
 In 1798, the American inventor Eli Whitney developed the idea of
standard product parts. Whitney developed a system for producing
muskets for the U.S. government. In his system, all the pieces of
the same type produced by any worker (e.g., the barrel of the
musket) were exactly the same.

HISTORICAL OVERVIEW
 In 1911, Frederick Taylor (1856–1915) published his “scientific
management theory.” His goal was to improve productivity by
making employees more efficient. In addition, Taylor argued that
to manage a production system, quantitative measurements of
working time, material, and resources are needed in order to
minimize waste and to build an efficient production system.
 At about the same time, Frank and Lillian Gilbert developed a
method for predicting the time it will take to perform a given task.
Ten years later, a more efficient technique called Motion & Time
Measurement (MTM) was developed by Westinghouse Corporation
and spread throughout the business world.
 In 1913, Henry Ford developed the assembly line. His idea was to
bring division of labor and work standardization to perfection. The
worker repeats short cycles of identical work and the product is
conveyed to the worker on the line.

HISTORICAL OVERVIEW
 In 1914, Henry Gantt developed a chart for scheduling process
activities. The chart used the timeline as the horizontal axis and
the vertical axis was dedicated to machines or operators (each one
having its own horizontal timel ine). In this way, the activities done
at any point in time could be easily illustrated.
 Between 1927 and 1930, Elton Mayo at the Hawthorne plant of
Western Electric studied psychological and sociological factors
impacting the efficiency of a group of workers. These studies were
based on experiments aimed at examining the effects of
environmental changes such as lighting and noise on employees’
performance.
 During World War II, armies were faced with complex logistical
problems, such as the transfer of aircraft, ships, supplies, and
troops between different parts of the world. At the same time, the
operation of newly developed complex weapons (such as the new

HISTORICAL OVERVIEW
 Techniques for planning and managing projects were developed during
the 1950s, including the program evaluation and review technique (PERT).
This tool is designed for project scheduling method and uses a statistical
model to estimate the likelihood (or probability) that the project will end
on a certain date. At about the same time, the critical path method (CPM)
was developed by Union Carbide Corporation. CPM focuses on a project’s
critical activities—activities that management should focus on, as any
delay in a critical activity will cause a delay in the entire project.
 In the 1970s and early 1980s, with the development of relatively
inexpensive computers, industrial engineers started to use computers
and software to solve complicated, large production and logistics
problems. The development of MRP software that manages material in
production facilities helped industrial engineers to quickly adapt
production schedules and procurement planning to the dynamic needs of
the market.

HISTORICAL OVERVIEW
In parallel to what was going on in the West, interesting
developments also took place in Japan after World War II. Following
the war, Japanese industry focused on the quality of its products,
adopting the approach of experts such as Edward Deming and Joseph
Juran. The total quality management (TQM) approach was developed
here and later adopted by Western industry as well.
As part of their efforts, the Japanese stopped using traditional
quality targets: the ratio (percentage) of defective items to
nondefective items in a production batch. In many Western
companies, a defect ratio of 1% was considered acceptable. The
Japanese, seeing defects as a waste, were able to reach a ratio of few
defective parts per million (PPM). This achievement was the result of
using TQM aimed at continuous quality improvement in all processes
within the organization, from the design process to the production

HISTORICAL OVERVIEW
 An important development that also emerged from Japan a decade
after World War II is the Toyota production system (TPS). TPS is
based on the idea of maximizing value to customers while
minimizing waste of any kind. To achieve this goal, techniques for
inventory management and production scheduling were developed
under the inclusive title of Just in Time—JIT.
 Robotic systems, systems for computer aided design (CAD), and
computer aided manufacturing (CAM) along with computerized
flexible manufacturing systems (FMS) were introduced. These
systems have evolved and thrived and are still prominent in the
realm of manufacturing and production.
 In addition, integration of the organization with its business
environment, that is, its partners—customers, suppliers, service
recipients, and service providers, also became a necessity. Out of
this need, information management systems were developed.

HISTORICAL OVERVIEW
The large amount of data (big data) being generated and the need to
analyze it, has led to the rapid development of the field of data
mining (DM) as well as the transformation of operations research
(OR). Together, these developments have produced a new area of
research, business analytics, which combines OR and the processing
of large data sets.
Homework: Cloud Technology & Industry 4.0; Big Data

IMPACT OF GLOBALIZATION
ON THE INDUSTRIAL
ENGINEERING PROFESSION
 Globalization and the development of the Internet have created
new challenges and pushed many organizations facing competition
from all over the world into a state of constant struggle. This
rapidly changing environment, where product life cycles are short
and global competition is fierce, forced many organizations to
search for ways to increase competitiveness in order to survive.
Competition can be expressed and appear in one or more of four
dimensions:
 Cost (Minimization of Cost, Maximization of Profit)
 Quality (Mass Production, Mass Customization to Mass Personalization)
 Time (1) Customer Waiting Time, (2) Supply Lead-Time, and (3) Production Time
 Flexibility Being able (or unable) to convert a production line producing one
product to manufacture a new generation of products.

AND SYSTEMS
 Industrial engineers design and manage production and service systems.
The boundary of the system and the boundary of subsystems is an
important issue and two extreme approaches exist with respect to this
issue.
 The first approach is to view a production or a service system as an open
system; the second approach views it as a closed system.
 Closed systems have clear
boundaries with their surroundings
and for each organizational unit
within the system.
 In open systems, different
organizational units work as a
team to achieve common goals
throughout the organization, and
to find solutions that are good for

AND PROCESS DESIGN
1. The development process: The process starts with an idea for a new
product or service and ends with the design of the new product or service
and a working prototype.
2. Preparation of infrastructure: The process starts with a working prototype
of a new product and ends with the successful completion and testing of the
production facility for the product.
3. Sales: The process starts with market research and ends with an order
from a customer.
4. Delivery: The process starts with an order from a customer and ends with
a delivery and receipt of payment from the customer who received the
requested products.
5. Service: The process starts with a customer’s request for service and ends
when the service is provided to his or her satisfaction.

AND PROCESS DESIGN
 Industrial engineers plan the processes in the organization to achieve
organizational goals and customer satisfaction. This role requires a
thorough understanding of the organization and its environment, and,
accordingly, the industrial engineer must cooperate and collaborate with
other professionals in the organization, and people from other units
such as;
 Marketing: This unit is responsible for contact with customers and processing of
customer orders.
 Purchasing: This unit handles relationships with the external sources involving supply
of products and services.
 Engineering: This unit is responsible for product design and the design of production-
service systems.
 Finance: This unit is responsible for the organization’s budget and management of
cash flow including relationships with banks, payments to suppliers, payments received

MODELLING THE
ORGANIZATIONAL
STRUCTURE AND THE
FACILITY LAYOUT
ENGINEERING FACULTY
DEPARTMENT

ORGANIZATIONAL
STRUCTURE & FACILITY
LAYOUT
 This section discusses the ways people and equipment are
organized in the modern world so that they work together to
accomplish assigned tasks.
 The discussion starts with an examination of organizational needs,
and continues with a description of organizational structure
models, concentrating on the way these models depict the
relationships between members of the formal organization.
 This discussion includes the following subjects:
 Human physiology
 Human psychology
 Rewarding people
 Motivating people
 Learning and training

WHAT IS AN ORGANIZATION?
 An organization is the unification of a group of people for carrying
out processes or activities to achieve certain purposes, typically on
a continuing basis.
 As a human creation, organizations are influenced by the culture
and beliefs of the society in which they were created. The
organizational structure is determined by the purpose for which it
was established.
 Organizations are systems where inputs such as material and
information are combined to create outputs such as products and
services. The purpose of the organization in this regard is
conversion of inputs into outputs. To survive, the organization
must be able to make this conversion effectively without hurting its
ability to perform this conversion in the future.

WHAT IS AN ORGANIZATION?
Organizations are economic entities, aimed at providing economic
goals. A common goal is to maximize profit in the short and long
terms. In cases where revenue is a result of external demand,
maximizing profit translates into minimizing the total cost of the
resources used by the organization (in order to minimize
expenses).
Organizations are a framework in which people are grouped
together to work and achieve common goals, financial or otherwise.
Members develop ways to work together to resolve problems and
deal with conflicts. These patterns of interaction between different
members of the organization are the basis of the organizational
structure consisting of roles and interactions between members of
the organization.
In a well-designed organizational structure, the organization
facilitates the achievement of individual goals through the

DEVELOPMENT OF
ORGANIZATIONS
 Farming communities, tribes, kingdoms, and empires.
 Modern society’s rapidly evolving technology motivates
professionalization in very narrow fields of knowledge. Today, most
products and services are based on the integration of hardware, data,
software, and human knowhow.
 Organizations designed to perform major projects are not new. Examples
of ancient organizational undertakings are the construction of the
pyramids in Egypt, the Great Wall of China, and the Temple in Jerusalem.
 Principles of division of labor and specialization are fundamental
principles in many organizations. Adam Smith, in his book “The Wealth of
Nations” (1776), described the production of pins using these principles.
The process he described is the result of a well-designed division of
labor: Each team member does a small part of the work required for the
production of pins. Repeating the same operation again and again and
developing greater proficiency in carrying out his or her assignment

EXAMPLES OF
ORGANIZATIONAL
STRUCTURES

PROJECT-ORIENTED, MATRIX
AND FUNCTIONAL
ORGANIZATIONS

WHAT ABOUT PROJECTIZED
ORGANIZATIONS?
HOMEWORK

HUMANS & ORGANIZATIONS
 To increase the productivity and efficiency with which people’s
activities are conducted in organizations.
 To maintain and strengthen a number of important values, such as
human health and human safety in the organization.
 To increase the motivation of all employees in the organization to
achieve the organization’s goals.
 To strengthen the ties between the employee and the organization
in general, and the ties between the employee and other
employees involved in the former’s specific role in particular.

HUMAN FACTOR INDUSTRIAL
ENGINEERING COURSES
1. Organizational psychology
2. Organizational sociology
3. Psychology
4. Ergonomics
5. Physiology
6. Anatomy

LEARNING
 Learning is the phenomenon of improving performance through
repetition.
 The principle of division of labor increases repetition, and
therefore, increases the learning and enhances performance.
 When a person repeats the same task over and over again, he or
she learns to perform it in an effective, quick, and efficient way.

ORGANIZING WORKPLACE
EQUIPMENT AND
MACHINERY

PROJECT
MANAGEMENT
ENGINEERING FACULTY
DEPARTMENT

PROJECT MANAGEMENT
 Production and service systems can be clustered into the following three
groups:
 Production and service systems supplying a large number of identical products or
services to a large number of customers over a long period of time; for example, the
mass production of bread in a bakery or milk cartons in the dairy. In such systems,
which produce a single product at a high rate over time, or provide uniform service at a
high rate over time, the main consideration is maximum efficiency and low cost while
satisfying the required quality, often ceding flexibility.
 Production and service systems supplying a limited variety of products or services in
batches. These systems are designed to perform a variety of different production and
service operations using pools of resources. Setup of resources is usually required when
switching from one operation to another. The setup time and associated setup cost
reduce the efficiency and increase cost but the flexibility is higher.
 Production and service systems that carry out projects. These are nonrepetitive
undertakings requiring special resources and knowledge. At previous lesson, we saw
that project-oriented organizations enjoy maximum flexibility but, generally, resource

WHAT IS PROJECT?
 A project is a one-time undertaking to achieve a set of objectives
(such as cost, time, deliverables, and quality) under constraints.
Project work content includes a series of activities carried out in a
specific order. The following three types of constraints are
common in projects:
 Time-related constraints such as the required project start and end dates or
specific dates (milestones) that specify ahead of time when deliverables must be
ready.
 Budget-related constraints such as the available budget and cash flow
constraints.
 Resource-related constraints such as the availability of personnel, equipment,
and/or materials, during specific time periods or throughout the project

PROJECT MANAGEMENT
 In addition, environmental constraints, legal constraints, and
political constraints may be present, as well as project-specific
constraints such as technological constraints.
 Organization of work in the form of a project has several
advantages. They are listed as follows:
 Flexibility
 A clear point of contact for the customer
 Dealing with uncertainty
 Effective teamwork
 A common language

OBJECTIVES
 Achieve the project goal
 Do a great thesis – on time
 Keep customers (e.g., Professors) happy
 Keep the team focus on the goal
 Make sure that team members work well
 Everyone shares the load
Scope, Resources, Schedule & Customers

PROJECT MANAGEMENT
 Project organizations are typical in the construction and
infrastructure industries.
 Projects such as the construction of a new shopping center, the
development of a new oil field, or the construction of a new
hospital are typically large and complex enough to justify a project
organization.
 In addition to the organizational structure, we can classify projects
by their initiation process.
 Within this subset, the first class of projects is when an organization
identifies a need and decides on the implementation of an internal project
to satisfy that need.
 The second class is when an organization initiates a project due to a request
by another organization that issues a request for proposal (RFP) and
chooses the best bidder to execute the outsourced project.
 A third class is a project initiated and executed by an organization to meet
the needs of customers outside the organization. The first and third classes
are called internal projects, and the second class is an external project.

UNCERTAINITY & RISKS
 As explained earlier, projects are subject to uncertainty due to their one-
time nature and the resulting lack of historical information to support
future decisions. Special planning and control methods were developed
for project management. These planning and control methods depend on
the following alternative assumptions regarding uncertainty:
 There is negligible uncertainty: When the level of uncertainty is relatively
low, commonly, predictions are made regarding how long each project
activity will take, how much it will cost, and how many resource units
will be required to perform it.
 There is significant uncertainty that can be assessed correctly and taken
into account in planning the project, evaluating its cost, and predicting
its duration. This is a very difficult task. Not only does the uniqueness of
a project make it hard to assess its uncertainties, the frequent strong
correlation between uncertainty in time and uncertainty in cost must
also be taken into account

 Sources of uncertainty include the following
 Availability of resources
 Uncertainity in the environment
 Technological uncertainity
 It is possible to deal with uncertainty and the risk that it generates
in projects in different ways:
 Accept the risk
 Transfer the risk
 Share the risk
 Reduce the risk

PROJECT LIFE CYCLE
 The need to deal with the constraints affecting projects and the inherent
uncertainty in most projects resulted in the development of project
management methodologies comprising a variety of tools and techniques.
Most of these tools and techniques are based on models. One example is
the project life cycle model that presents the project as a series of steps,
also called phases, and recommends specific management actions in each
phase
 Project initiation
 Gathering Information
 Selection of Alternatives within the Project Scope
 Project planning phase
 Project execution
 Project termination

FRAMEWORK PROJECT
CYCLE
Thesis ideas Thesis Proposal Thesis Completed
Concept
System Design
(Architecture)
Detailed design/
Implementation
Demo/test/
Documentation
• Tech. Foundation
• Capabilities
• Goal
• Systems analysis/
Synthesis
• Project planning
• Thesis proposal
• Project tracking
• Plan modification
• Communicate
• Thesis submission
Thesis Process

EXAMPLE-1
 The analysis starts by transforming the information about stakeholders into a
set of criteria and the relative importance or weight of each criterion. For
example, in the house-building project, some possible criteria are listed as
follows:
 Style and look
 Required maintenance
 Project cost
 Cost of heating and cooling the new house
 Expected life of the house
 There are four combinations of alternatives in this example:
 Using a main contractor and building a wooden structure
 Using a main contractor and using cement blocks
 Self-managing the building of a wooden structure
 Self-managing the building of a structure using cement blocks

EXAMPLE-2 (PROJECT
SCHEDULING MODELS)

INFORMATION
SYSTEMS
ENGINEERING FACULTY
DEPARTMENT

INFORMATION SYSTEMS
 The development of computer technology along with
the parallel development of information systems that
are based on computer technology ignited a revolution
in the industrial and business worlds. This revolution
resulted in changes both in the manufacturing and in
the service sectors. Today, many decisions, which in
the past were based on “gut feelings,” are grounded
on hard data and information provided by information
systems.
 Modern supply chains (materials moving through
stages of a production process from raw materials to
final goods) could not be managed without
information systems revolution.
 Information is gathered quickly and accurately at a
very low cost through advanced data collection
technologies such as bar codes, magnetic stripes,
optical character recognition (OCR), and radio
frequency identification (RFID) tags. New technologies

INFORMATION SYSTEMS
 In the supply chain, for example, the following three interrelated parts
are present:
 Data: Collection, storage, retrieval, and analysis of data generated by the supply chain
organizations as well data about the environment.
 Decision making: Decision making regarding the use of resources and materials,
shipments, storage, pricing, etc.
 Physical aspect: Handling and processing of materials (raw materials, parts, and
finished products) in each organization and across the supply chain.

USE OF INFORMATION TO
SUPPORT DECISION MAKING
& DATA HANDLING
Data Collection
Data Storage
Data Retrieveal
Data Analysis
SQL
OLAP
PROGRAMMING

COMPONENTS OF
INFORMATION SYSTEM
 The transaction processing
system: This system receives and
records transactions, such as
sales order entries in the sales
department, inventory
transactions, and deliveries to
customers. This is the core data
collection, enabling reliable real-
time data base
 The management information
system: This system serves the
areas of planning, monitoring, and
control. Such systems help low- and
medium-level managers in making
decisions via either fully automated
processes or by providing relevant
information when needed.
 The decision support system: This
system integrates data and analytical
models to support semi-structured
decision making. Such systems are
designed to help managers make
strategic and tactical decisions. They
do not provide a decision that can be
applied directly, but present different
types of information and

DATABASE SYSTEMS
 Database systems are designed to handle large amounts of data. The
system provides a physical storage for the data on electronic media,
electromagnetic media or electro-optical media and a mechanism for
retrieving it, which is implemented using the database management
system (DBMS).
 The DBMS is a collection of programs that enable easy access to the data
in order to update it and process it into useful information. The database
system provides the user with the possibility to store and retrieve data in
an easy to use and efficient environment.
 Database system users are not necessarily computer experts. To enable
efficient and beneficial use of the system for all its users, these systems
are designed to hide the complexity of physical data storage and retrieval
using three levels of abstraction
 The physical level
 The conceptual or logical level of the data

DATA FLOW DIAGRAM
 Data flow diagram (DFD) is a model that shows the flow of data in a
computerized system. DFDs are used early on in systems analysis to help
define the following: (1) the required data, (2) its sources, (3) the
operations performed on it, (4) where it is stored, and (5) the output it is
used to create. The basic building blocks of a DFD are as follows
 A bubble that
represents a process
or a function in the
information system.
 A rectangle that
represents an external
entity that provides
input or receives
output.
 Two parallel lines that
represent a database
or a file where data are
stored.
 An arrow that
represents flow or data
transfer between other
 There is no reference to
the timing or frequency of
the different elements in
the diagram.
 Decisions are not
modeled (e.g., it is
impossible to show that
data flows in one direction
if a certain condition is
true and in another
direction otherwise).
 Errors are not represented
in the DFD model.
 Material flow is not
represented in the DFD
 Every process has at least
one input flow and one
output flow of information.
 There must be a process on
at least one side of the flow
of information.
 There is no direct
information flow to the
entity or the entity’s
database repository.
 There is no flow of
information from a process
back to itself.
 Each database has at least
one input flow and one
output flow.
 An external entity on the

FORECASTING
 Good information systems provide high-quality information—information
that is understood, valid, relevant, accurate, and complete. In reality,
there is always some information that is not available, and at best, it can
be estimated.
 This is especially true when dealing with future events. Information about
future interest rates, future inflation rates, and future exchange rates is
important for investment decisions, information on future demand and
competition is important for operating and marketing decisions, and
information on future absences of employees and future breakdown of
machinery is important for production planning.
 Since this future information is not available, if no major changes are
expected, it is customary to use accumulated data to project future
quantities. Therefore, many information systems use models to forecast
such information based on past data

SUPPLY CHAIN
MANAGEMENT-2
ENGINEERING FACULTY
DEPARTMENT

INTRODUCTION TO THE
CUSTOMER INTERFACE AND
ITS DESIGN
 The interface with the customers is very complex;
 Needing to share information among different information systems, it
includes the management of customer orders, as well as activities that
influence customer demand such as advertising, special sales, quantity
discounts, etc. These activities are based on strategies that take into
account the competition in the market.
 In a competitive market, low cost, high quality, and a short supply time
may play a major role, as well as a fast reaction to changing needs of
customers and changing market conditions (i.e., flexibility).
 Changing market conditions and competition force organizations to
continuously seek ways to improve their performances in competitive
dimensions, in order to assure their long-term success.
 The starting point of the customer interface design is the “voice of the
customer” (VOC)—understanding the needs and expectations of the
customers

INTRODUCTION TO THE
ITS DESIGN
 IThe analysis is an effort to determine the “right” price that the customers are
willing to pay and hence the target cost or the “cost objective” of products and
services supplied by the organization.
 The interface design focuses on the flow of information, the flow of material, and
decision making. An example where these flows are essential is the connection
between external customer orders and internal work orders. The design of that
connection includes the flow of information and materials and the use of
organizational resources triggered by work orders. A related example is deciding
how to link orders from customers with procurement decisions. For example,
customers may require a certain quality of materials or components acquired
from the suppliers of the organization. The design of the customer interface is,
therefore, a major factor in the design of the supply chain.
 As an example of customer interface design issues, consider a market in which
time-based competition dominates. In some markets, the customers are not
willing to wait and want to get the goods and services they need instantaneously.
For example, a customer of a supermarket expects to get groceries off the shelf,

INTRODUCTION TO THE
ITS DESIGN
 Since forecasts are subject to forecasting errors, a major design issue is how to
protect the system against these errors in forecasting A possible decision is to
order quantities larger than the forecast to protect (or to “buffer”) against
uncertainty. The result of such a decision is the extra cost of holding excessive
goods and the risk that they may not be sold, especially if they are perishable.
Another result of such a decision is limited flexibility to demand changes. For
example, if the demand changes and some products
are no longer popular, the organization still holds a stock of these products
and usually will not dispose of it until the market trend is clear.
The trade-off between time-based competition and cost-based competition
that is between the required short customer delivery time and the extra cost
of inventory is just one aspect of customer interface design.
A different design problem is presented when the process is triggered by
orders from customers, namely the case where only on receipt of a customer

SUPPLY CHAIN
MANAGEMENT OVERVIEW
Warehousing
Warehousing
Transportation
Transportation
Vendors/plants/ports
Transportation
Factory
Transportation Customers
Information
flows

SUPPLY CHAIN
MANAGEMENT
QC & Shipping
[Hong Kong]
Product Design
[Hong Kong]
Zippers+…
[Japan+…]
Stitching
[Indonesia]
Weaving
[Taiwan]
Yarn Spinning
[Korea]

BOOK OBJECTIVES AND
OVERVIEW
Inventory management
Logistics network planning
Supply contracts for strategic as
well as commodity components.
The value of information and the
effective use of information in the
supply chain.
Supply chain integration.
Centralized and decentralized
distribution strategies.
Strategic alliances.
Outsourcing, off-shoring, and
procurement strategies.
International supply chain
management.
Supply chain management and product
design.
Customer value
Revenue management and pricing
strategies.
Information technology and business
processes.
Technical standards and their impact

COMMON CONTEMPORARY
TERMS
• Value stream/logistics process
•Quick response and flexible manufacturing
•Mass customization
•Reverse logistics
•Service logistics
•Continuous replenishment
•Lean production
•Integrated production

EVOLUTION OF SUPPLY
CHAIN MANAGEMENT
1950s 1960s 1970s 1980s 1990s 2000s Beyond
Traditional Mass Manufacturing
Inventory Management/Cost
Optimization
JIT, TQM, BPR,
Alliances
SCM Formation/
Extensions
Further Refinement
of
SCM Capabilities

EVOLUTION OF SUPPLY
CHAIN MANAGEMENT
Demand forecasting
Purchasing
Requirements planning
Production planning
Manufacturing inventory
Warehousing
Material handling
Packaging
Finished goods inventory
Distribution planning
Order processing
Transportation
Customer service
Strategic planning
Information services
Marketing/sales
Finance
Supply Chain
Management
Supply Chain
Management
Logistics
Purchasing/
Materials
Management
Physical
Distribution
Activity fragmentation to 1960 Activity Integration 1960 to 2000 2000+
Demand forecasting
Purchasing
Requirements planning
Production planning
Manufacturing inventory
Warehousing
Material handling
Packaging
Finished goods inventory
Distribution planning
Order processing
Transportation
Customer service
Strategic planning
Information services
Marketing/sales
Finance
Supply Chain
Management
Supply Chain
Management
Logistics
Purchasing/
Materials
Management
Physical
Distribution
Activity fragmentation to 1960 Activity Integration 1960 to 2000 2000+

SCM DEFINITION
Source
Supplier
Supplier
Distributor
Distributor
Retailer
End-User
Converter
Converter Consumers
Information Flow
Funds/Demand Flow
Value-Added Services
Material Flow
Reuse/Maintenance/After Sales Service Flow

EXAMPLE: EXTERNAL
SUPPLY CHAIN
Part
suppliers
Meditech
Assembly
Meditech
Warehouse
Domestic
Dealers
Int’l
Meditech
Affiliates
Hospitals
Hospitals

EXAMPLE: INTERNAL
SUPPLY CHAIN
Parts Inventory Assembly Bulk Inventory FG Inventory
Packaging &
Sterilization
2 - 16
weeks
2
weeks
1
week

EXAMPLE: PRODUCTION
PLANNING
Annual
Forecast
Monthly
Revision
Transfer
Requirements
Monthly
Plan
MRP
Parts
Procurement
Plan
Weekly
Assembly
Schedule

EXAMPLE: PRODUCTION
PLANNING
Parts Inventory Assembly Bulk Inventory Packaging &
Sterilization
FG inventory
Monthly
Plan
MRP
Order point;
Order quantity
Material
Plan

KEY ACTIVITIES &
PROCESSES
Primary
 Setting customer service goals
 Transportation
 Inventory management
 Location
Secondary, or supporting
 Warehousing
 Materials handling
 Acquisition (purchasing)
 Protective packaging
 Product scheduling
 Order processing

STRATEGY & PLANNING
The objectives of logistics strategy
 Minimize cost
 Minimize investment
 Maximize customer service
Levels of logistical planning
 Strategic
 Tactical
 Operational

DICKSON CHIU 2006 SCM-93
CRITICAL CUSTOMER
SERVICE LOOP
Customers
Transportation
Inventory
or supply source
Customer order processing (and
transmittal)
Customers
Transportation
Inventory
or supply source
Customer order processing (and
transmittal)

Decision area Strategic Tactical Operational
Transportation Mode selection Seasonal equip-
ment leasing
Dispatching
Inventories Location, Control policies Safety stock levels Order filling
Order
processing
Order entry, transmittal,
and processing system
design
Processing
orders, Filling
back orders
Purchasing Development of supplier-
buyer relations
Contracting,
Forward buying
Expediting
Warehousing Handling equipment
selection, Layout design
Space utilization Order picking
and restocking
Facility
location
Number, size, and
location of warehouses

LOGISTIC-PRODUCTION
RELATIONSHIP
Coordinates through scheduling and strategy
 make-to-order
 make-to-stock
An integral part of the supply chain
 Affects total response time for customers
 Shares activities such as inventory planning
Costs are in tradeoff
 Production lot quantities affect inventory levels and transportation
efficiency
 Production response affects transportation costs and customer service
 Production and warehouse location are interrelated

EXAMPLE: THE APPAREL
INDUSTRY
Manufacturer Distributor Retailer Customer
Cost per Percent
Shirt Saving
$52.72 0%
$41.34 28%
$20.45 62%

REASONS EXAMPLES
•Raw material shortages
•Internal and supplier
parts shortages
•Productivity
inefficiencies
Boeing Aircraft’s inventory
write-down of $2.6 billion
•Sales and earnings
shortfall
•Larger than anticipated
inventories
Sales at U.S. Surgical
Corporation declined 25
percent, resulting in a loss
of $22 million
•Stiff competition
•General slowdown in the
PC market
Intel reported a 38 percent
decline in quarterly profit
•Higher than expected
orders for new products
over existing products
EMC Corp. missed its
revenue guidance of $2.66
billion for the second
quarter of 2006 by around
$100 million FIGURE: Order variations in the supply chain

Forecasting is not a solution
Demand is not the only source of
uncertainty
Recent trends make things more
uncertain
Lean manufacturing
Outsourcing
Off-shoring
August 2005 – Hurricane Katrina
 P&G coffee supplies from sites around New Orleans
 Six month impact
2002 West Coast port strike
 Losses of $1B/day
 Store stock-outs, factory shutdowns
1999 Taiwan earthquake
 Supply interruptions of HP, Dell
2001 India (Gujarat state) earthquake
 Supply interruptions for apparel manufacturers

INTRODUCTION TO
SIMULATION
ENGINEERING FACULTY
DEPARTMENT

OUTLINE
 Definition of Simulation
 Types of Models
 When Simulation Is the Appropriate Tool
 When Simulation Is Not Appropriate
 Advantages and Disadvantages of Simulation
 Areas of Application
 Components of a System
 Discrete and Continuous Systems
 Model of a System
 Discrete-Event System Simulation
 Steps in a Simulation Study

DEFINITI
ON
 A simulation is the imitation of the operation of real-world process or
system over time.
 Generation of artificial history and observation of that observation
history
 A model construct a conceptual framework that describes a
system
 The behavior of a system that evolves over time is studied by
developing a simulation model.
 The model takes a set of expressed assumptions:
 Mathematical, logical
 Symbolic relationship between the entities

GOAL OF MODELING AND
SIMULATION
 A model can be used to investigate a wide verity of “what if”
questions about real-world system.
 Potential changes to the system can be simulated and predicate their impact
on the system.
 Find adequate parameters before implementation
 So simulation can be used as
 Analysis tool for predicating the effect of changes
 Design tool to predicate the performance of new system
 It is better to do simulation before Implementation.

HOW A MODEL CAN BE
DEVELOPED?
 Mathematical Methods
 Probability theory, algebraic method ,…
 Their results are accurate
 They have a few Number of parameters
 It is impossible for complex systems
 Numerical computer-based simulation
 It is simple
 It is useful for complex system

WHEN SIMULATION IS THE
APPROPRIATE TOOL
 Simulation enable the study of internal interaction of a subsystem
with complex system
 Informational, organizational and environmental changes can be
simulated and find their effects
 A simulation model help us to gain knowledge about improvement
of system
 Finding important input parameters with changing simulation inputs
 Simulation can be used with new design and policies before
implementation
 Simulating different capabilities for a machine can help determine
the requirement
 Simulation models designed for training make learning possible
without the cost disruption
 A plan can be visualized with animated simulation
 The modern system (factory, wafer fabrication plant, service
organization) is too complex that its internal interaction can be

WHEN SIMULATION IS NOT
APPROPRIATE
 When the problem can be solved by common sense.
 When the problem can be solved analytically.
 If it is easier to perform direct experiments.
 If cost exceed savings.
 If resource or time are not available.
 If system behavior is too complex.
 Like human behavior

ADVANTAGES OF
SIMULATION
 New policies, operating procedures, information flows and son on can be
explored without disrupting ongoing operation of the real system.
 New hardware designs, physical layouts, transportation systems and … can be
tested without committing resources for their acquisition.
 Time can be compressed or expanded to allow for a speed-up or slow-down of
the phenomenon( clock is self-control).
 Insight can be obtained about interaction of variables and important variables to
the performance.
 Bottleneck analysis can be performed to discover where work in process, the
system is delayed.
 A simulation study can help in understanding how the system operates.
 “What if” questions can be answered.

DISADVANTAGES OF
SIMULATION
 Model building requires special training.
 Vendors of simulation software have been actively developing
packages that contain models that only need input
(templates).
 Simulation results can be difficult to interpret.
 Simulation modeling and analysis can be time
consuming and expensive.
 Many simulation software have output-analysis.

AREAS OF
APPLICATION
 Manufacturing Applications
 Semiconductor Manufacturing
 Construction Engineering and project management
 Military application
 Logistics, Supply chain and distribution application
 Transportation modes and Traffic
 Business Process Simulation
 Health Care
 Automated Material Handling System (AMHS)
 Test beds for functional testing of control-system software
 Risk analysis
 Insurance, portfolio,...
 Computer Simulation
 CPU, Memory,…
 Network simulation
 Internet backbone, LAN (Switch/Router), Wireless, PSTN (call center),...

COMPONENTS OF
SYSTEM
 Entity
 An object of interest in the system : Machines in factory
 Attribute
 The property of an entity : speed, capacity
 Activity
 A time period of specified length :welding, stamping
 State
 A collection of variables that describe the system in any time : status of machine (busy, idle,
down,…)
 Event
 A instantaneous occurrence that might change the state of the system: breakdown
 Endogenous
 Activities and events occurring with the system
 Exogenous
 Activities and events occurring with the environment

DISCRETE AND CONTINUED
SYSTEMS
 A discrete system is one in which the state variables change
only at a discrete set of points in time : Bank example

DISCRETE AND CONTINUED
SYSTEMS (CONT.)
 A continues system is one in which the state variables change
continuously over time: Head of water behind the dam

CHARACTERIZING A
SIMULATION MODEL
 Deterministic or Stochastic
 Does the model contain stochastic components?
 Randomness is easy to add to a DES
 Static or Dynamic
 Is time a significant variable?
 Continuous or Discrete
 Does the system state evolve continuously or only at discrete
points in time?
 Continuous: classical mechanics
 Discrete: queuing, inventory, machine shop models

DISCRETE-EVENT
SIMULATION MODEL
 Stochastic: some state variables are random
 Dynamic: time evolution is important
 Discrete-Event: significant changes occur at discrete
time instances

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