Industrial management & engineering economy.pptx

Industrial Management and Engineering
Economy
Instructor: Alif Mohammed
Dept. of Mechanical & production Engineering
AMIT

Chapter 1
Basic Management Concepts and
Industrial Organization
• Introduction to management
• Functions of management
• Organizational structure
• Basics of productivity

1.1. Introduction To Management
• The theory of management goes back to the dawn of
human civilization, when human being started group
activities for the attainment of some common
objectives.
• Whenever a group is formed and a group activity is
organized to achieve certain common objectives,
management is needed to direct, coordinate and
integrate the individual activities of a group and secure
team work to accomplish organizational objectives.

• Management has been defined by different thinkers
in a number of ways. Some of the important
definitions of management are:
• is the art of getting things done through people
(Parker Follett in Stoner and Freeman, 1992).
• is the process of achieving results through efficient
utilization of human and material resources
(Bedeian, 1993).

• is also defined from the viewpoint of some
interrelated activities which make up the functions
of management.
• is defined as a process of planning, organizing,
leading, and controlling the work of organization
members and of using all available resources to
reach stated organizational goals.

• Planning: Planning is the most basic of all the
management functions.
• Planning is thinking before doing.
• Planning is the work done to predetermine a course of
action, in order to provide focus and direction for
enhancing the efficiency and effectiveness of the
company.
• Planning defines who, how, where, when and
using which resources to do the what work.

Planning can be divided in to two as:
• Strategic planning, and Operational planning.
• Strategic planning is to define future activities
which are worth doing by the unit/company to
assure that the company applies its recourses
(skilled manpower, time, money, physical
resources, equipment, facilities, and business
relationships) effectively to achieve its short-term
and long-term goals.

• Operational planning is to define tasks/events to
be accomplished with the least amount of resources
within the shortest time, to assure that the company
applies its resources efficiently to achieve its short-
term and long-term goals.

Advantages of planning
• It focuses attention on desired objectives
• It helps to minimize risk
• It improve efficiency
• It avoid confusions
• It encourage innovation and creativity
• It enables co operation and group work
• It serves as the basis of control

Limitations of planning
• Lack of accurate information
• Time consuming
• Expensive
• Rigidity due to strict compliance with plans
• Unwillingness to people change
• External limitations (political)

How we overcome the limitations?
• Top management support
• Better forecasting
• Developing clear-cut objectives
• Participation of employees in planning
• Sound communication
• Overcoming resistance to change
• Scientific planning
• Well balanced keeping plans

• Organizing: After managers develop their plans,
they have to build an organization that can put these
plans into effect.
• Managers do this by designing organizational
structures to execute their plans (often building
organizational charts that divide an organization
into divisions, departments, and other parts
developing systems and processes to direct the
allocation of human, financial, and other resources.

Steps in organizing
1) Identifying the activities required for achieving
objectives.
2) Classifying these activities in to convenient groups.
3) Assigning the group of activities to appropriate
persons.
4) Delegating authority and fixing responsibilities.
5) Coordinating Authority Responsibility relationship
throughout the enterprise.

Staffing:
• According to koontz and O Donnel “The managerial functions
of staffing involves managing the organizational structure
through proper and effective selection, appraisal and
development of personnel to fill the roles designed in to the
structure’’.
• It is concerned with the Human resources of the enterprise.
• It is concerned with acquiring, developing, utilizing, and
maintaining human resources.
• It is a process of matching jobs with individuals to ensure right
man for the right job.

Importance of staffing
• It helps in discovering and obtaining competent
employees for various job.
• It improve the quantity and quality of output by
putting right man for right job.
• It improves job satisfaction of employees.
• It reduces cost of personnel by avoiding wastage of
human resource.
• It facilitates the growth and diversification.

• Leading/directing:
 Direction consist of the process and techniques
utilized in using instructions and making certain
that operations are carried out as planned”
 It is concerned with the execution of plans through
organized action.
 It is also known as commanding or actuating

• Managers are expected to lead their employees,
that is, to motivate them to achieve the
organization’s goals—quickly and efficiently.
• Great leaders can make great things happen,
inspiring their employees to do extraordinary things
and accomplish extraordinary goals.

• Controlling:
• To accomplish their goals and the goals of the
organization, managers must establish performance
standards based on the organization’s goals and objectives,
measure and report actual performance, compare the two,
and take corrective or preventive action as necessary.
• The outcome of the control process is the ability to
measure performance accurately and regulate
organizational efficiency and effectiveness

What does organization mean?
• A group of two or more people working together in
structured fashion to attain a set of goals.
• are social units /institutions deliberately constructed
and reconstructed to seek a set of specific goals
(Skinner & Ivancevich, 1992)
• have several factors in common. Perhaps, the most
common element is a goal or purpose.

• have different purposes: Production Organizations-
established to provide goods and services to the
society.
(Manufacturing firms, dept. Stores, hospitals etc.)
• Are needed for several reasons:
-Serve society - Preserve knowledge
-Accomplish objectives - Provide career

Administration, Management and Organization
• In the study of management there is a controversy
in using the terms administration and management.
• But it should be clear that administration,
management and organization are neither
synonymous nor interchangeable.
• They have their own field of operation.
• Administration determines the objectives and
policies of an enterprise.

• Management caries out these policies to achieve the
objectives of the enterprise.
• For administration and management to function effectively,
there must be proper structuring of the enterprise
(organization).
• Administration gives proper direction.
• Management properly executes, it is an execution function.
• Organization is an effective machinery to achieve
enterprise objectives in a team spirit.
• Management caries out the policies of administration
through the framework of an organization.

Administration Management Organization
Process of determining the
objective to be achieved
Process of planning the
work as per the objectives
laid down by the
administration
Process of dividing work in
to different duties and tasks
as planned
Lays down policies and
principles
Executes policies and
programs
It organizes the work
Prepares the framework
under which one is asked
to work and execute
Supervises and controls the
execution of assigned work
Draws the line of authority
and determines the line of
action
Provides: direction,
guidance, & leadership
Co-ordinates activities It delegates the authority
and fixes responsibility

Levels of Management
• In any organization all those are responsible for the
works of others are called managers.
• Though their primary task remains the same
getting the things done by other people, there is a
wide variation in their authorities and
responsibilities.
• These differences are mainly due to the levels of
management.

• Levels of management refers to a line of separation
between different positions drawn with a view to
distinguish each other in respect of their duties,
responsibilities, rights and authorities.
• The three levels of management that are commonly
found in organizations are:
a.Top management
b.Middle management
c.Lower level management

• Top management: top management constitutes
the highest level in the management hierarchy.
• This is the policy making level in any organization.
• This level consists of small group of executives,
board of directors, chairman, managing director,
personnel manager, chief executive etc.

• Middle order management: middle level occupies a
central place in the hierarchy.
• It is concerned with execution of the detailed policies and
plans determined by top management (Administration)
through the framework of the organization.
• Middle level management is answerable to top management.
• Its main functions are to plan, to guide, to supervise, to
coordinate, to exercise control over the lower level
management.

• Lower level management: this is the lowest level in the
hierarchy of management.
• Managers at this level function under the control and direction of
middle level management.
• Their functions are also to plan, to guide, to supervise, to coordinate,
to exercise control, but all these functions are performed to get work
done from the operating staff.
• This levels management takes orders from middle management and
explains to the workers at operating level.
• This level includes foreman, supervisor, superintendent, inspector
etc.

Organizational Structure
• The framework, typically hierarchical, within which an
organization arranges its lines of authority and
communications, and allocates rights and duties.
• Determines the manner and extent to which roles,
power, and responsibilities are delegated, controlled,
and coordinated, and how information flows between
levels of management.
• Depends entirely on the organization’s objectives and
the strategy chosen to achieve them.

• Generally organizational structure can be
categorized as:
• Centralized structure: the decision making power
is concentrated in the top layer of the management
and tight control is exercised over depats and
divisions.
• Decentralized structure: the decision making
power is distributed & the depts. & divisions have
varying degrees of autonomy.

• There are three main types of organizational structure:
Functional structure, Divisional structure and Matrix
structure.
1. In the functional structure, the employees are
working in departments based on what they are doing
i.e. we have engineering department, maintenance
department, finance department, research department,
Warehouse department, purchasing department.
• This structure enhances the experience of each function.

• Strength: it’s easy to understand, and keeps businesses
neatly compartmentalized. Enhances the experience of
each function
• Weakness: if a weak, poorly organized executive is at the
top, then cases where the right hand fails to talk to the left
will occur, causing frustrating problems.
- makes the coordination b/n different dept more difficult
than other structures.
- It also does not allow for flexibility because of the
centralization.

• Functional structure is a top down flowchart with a high
ranking executive at the top, with multiple middle
managers or dept.
• heads – all directly reporting to the top executive.
Functional Organizational Structure

2. Product/Divisional structure
• Divides the employees based on the
product/customer segment/ geographical location.
• i.e. a group of the highest executives sit at the top,
while different products are separated into mini-
companies.
• Each division is responsible for certain product and
has its own resources such as finance, marketing,
warehouse, maintenance. etc.

• Accordingly, this structure is a decentralized
structure and thus allows for flexibility and quick
response to environmental changes.
• It also enhances innovation and differentiation
strategies.
• This type of structure is designed for large
companies.
• So the two points mentioned above can be taken as
the strength of divisional structure.

• Weakness: results in duplication of resources because, for ex., we
need to have warehouse for each division. obviously, it does not
support the exchange of knowledge between people working in the
same profession because part of them are working in one division
and the others are working in other divisions.

3. Matrix structure
• Matrix structure combines both structures.
• For example, we can have a functional structure and then
assign a manager for each product.
• Some employees will have two managers: functional
manager and product manager.
• This type of structure tries to get the benefits of functional
structure and also of divisional structure; however, it is not
easy to implement because of the dual authority.
• This structure is very useful for multinational companies.

Matrix Organizational Structure

• The matrix structure is often used by video game
and movie companies, with various departments,
all equal, working in tandem to produce a single
final product.
• In this case, a strong manager at the top – such as a
video game publisher or movie director – acts as
a team leader to insure that each segment receives
the data they need to complete their separate task.

• When setting up a new business, you should pay
careful attention to designing your company’s
organizational structure.
• This should be decided according to your
company’s size, industry and aims.
• You should think of organizational structures as
communication flowcharts
.

Ways to structure a business
• By function: arranging the business according to what
each section or department does
• By product or activity: organising according to the
different products made
• By area: geographical or regional structure
• By customer: where different customer groups have
different needs
• By process: where products have to go through stages as
they are made

Basics of Productivity
• Implies development of an attitude of mind and a
constant urge to find better, cheaper, easier, quicker,
and safer means of doing a job, manufacturing a
product and providing service.
• It is a measure of how much input is required to
produce a given output, i.e, the ratio of output to input.
• Productivity of a production system is analogous to the
efficiency of a machine = O/I = the production
efficiency

Measurement of Productivity
• The basic objectives behind productivity
measurement (productivity index) are:
• To study the performance of a system over time
• To have a relative comparison of different systems
for a given level; and
• To compare the actual productivity of the system
with its planned productivity.

Kinds of Productivity Measurement
• Material productivity = No. of units produced/Cost
of material
• Labor productivity = Total revenue from
prodn/Expenditure on labor
• Capital productivity = Turn over/Capital employed
• Machine productivity = Output/Actual machine hr
utilized

Productivity and Production
• The concept of productivity and production are
totally different.
• Production refers to the absolute output while
productivity is a relative wherein output is always
expressed in terms of input.

• Production is an organized activity of transforming
raw materials into finished products which have
higher value of any product/service is the volume
of output irrespective of the quantity of resources
employed to achieve the level of output.
• It can be increased by employing more labor,
installing more machinery, and putting in more
materials, regardless of the cost of production.

Example:
• 50 persons employed in an industry may be
producing the same volume of goods over the
same period as 75 persons working in another
similar industry.
• Productions of these two industries are equal, but
productivity of the former is higher than that of the
latter.

Means of Improving Productivity
• PI is the result of managing and intervening in transformation
or work processes.
1. Increasing the resources and thereby production (controlling
inputs)
2. Effective utilization of resources
3. Improving technology
• Productivity = O/I
• Increasing O from same I (improving process)
• Reducing I, for the same O
• By a small increase in I, achieving a substantial increase in O

Productivity Analysis
For the purposes of studies of productivity for improvement ,
following types of analysis can be carried out:
1. Trend analysis: Studying productivity changes for the firm over a
period of time.
2. Horizontal analysis: Studying productivity in comparison with other
firms of same size and engaged in similar business.
3. Vertical analysis: Studying productivity in comparison with other
industries and other firms of different sizes in the same industry.
4. Budgetary analysis: Setting up a norm for productivity for a future
period as budget, based on studies as above, and planning
strategies to achieve it.

Chapter 2 Forecasting
• Forecasting is an important and essential part of
effective planning.
• It refers to a systematic analysis of past and present
circumstances.
• Forecasting is a tool used for predicting future demand
based on past demand information.
• The success of a business greatly depends on the
efficient forecasting and preparing for future events.

• Forecasting may be done in connection with sales,
production or any other type of business activities.
• Forecasting begins with the sales forecast and is followed
by production forecast and forecast for probable costs,
finance, purchases, profit or loss etc.
• Underlying basis of all business decisions
o Production
o Inventory
o Personnel
o Facilities

Why is forecasting important?
Demand for products and services is usually uncertain.
Forecasting can be used for…
• Strategic planning (long range planning)
• Finance and accounting (budgets and cost controls)
• Marketing (future sales, new products)
• In general, forecasts are almost always wrong. So, Production and
operations throughout the day we forecast very different things such
as weather, traffic, stock market, state of our company from different
perspectives.

Types of Forecasts
1. Economic forecasts
• Address business cycle – inflation rate, money
supply, housing starts, etc.
2. Technological forecasts
• Predict rate of technological progress
• Impacts development of new products
3. Demand forecasts
• Predict sales of existing products and services

Types of forecasting Techniques
1. Qualitative methods
• Used when situation is vague and little data exist
-New products
-New technology
• Involves intuition, experience
• e.g. Forecasting sales on Internet
• Rely on subjective opinions from one or more experts.
• Judgmental methods
• Market research methods

2. Quantitative methods
• Used when situation is „stable‟ and historical data
exist
-Existing products
-Current technology
• Involves mathematical techniques
• e.g. forecasting sales of color televisions
• Rely on data and analytical techniques.
• Time series methods
• Casual methods

How should we pick our forecasting model?
1. Data availability
2. Time horizon for the forecast
3. Required accuracy
4. Required Resources
 Time Series method
• Moving average
• Exponential smoothing
• Trend analysis
• Seasonality
 Develop seasonal forecast by applying seasonal index to base
forecast

Moving average
The moving average model uses the last t periods in
order to predict demand in period t+1.
There can be two types of moving average models:
simple moving average and weighted moving average
The moving average model assumption is that the most
accurate prediction of future demand is a simple
(linear) combination of past demand

Time series: simple moving average
• Assumes an average is a good estimator of future behavior
• Used if little or no trend
• In the simple moving average models the forecast value is
𝐹𝑡+1 =
𝐴𝑡 + 𝐴𝑡−1 + 𝐴𝑡−2 … + 𝐴𝑡−𝑛+1
𝑛
t is the current period.
Ft+1 is the forecast for next period
n is the forecasting horizon (how far back we look),
𝐴𝑡 is the actual sales figure from each period.

Example: forecasting sales at company A
company A sells bottled spring water

• What if we use a 3-month simple moving average?
𝐹𝑗𝑢𝑙 =
𝐴𝑗𝑢𝑛 + 𝐴𝑚𝑎𝑦 + 𝐴𝑎𝑝𝑟
3
= 1227
𝐹𝑗𝑢𝑙 =
𝐴𝑗𝑢𝑛 + 𝐴𝑚𝑎𝑦 + 𝐴𝑎𝑝𝑟 + 𝐴𝑚𝑎𝑟 + 𝐴𝑓𝑒𝑏
5
= 1268
𝐹𝑗𝑢𝑙 =
𝐴𝑗𝑢𝑛 + 𝐴𝑚𝑎𝑦 + 𝐴𝑎𝑝𝑟 + 𝐴𝑚𝑎𝑟 + 𝐴𝑓𝑒𝑏 + 𝐴𝑗𝑎𝑛
5
= 1277
• In other words, because we used equal weights, a slight
downward trend that actually exists is not observed.

Weighted Moving Average
• Gives more emphasis to recent data
• Make the weights for the last three months more than
the first three months
• The higher the importance we give to recent data, the
more we pick up the declining trend in our forecast.
• Make the weights for the last three months more than the
first three months.

• Able to vary the effects of past data
• A method to assign weights (not the only method):
𝒘𝟏 > 𝒘𝟐 > … > 𝒘𝒏 > 0, weights sum to 1
• Sum-of-digits weights 𝒘𝟏 + 𝒘𝟐 + ... + 𝒘𝒏
• 𝑆 = 1 + 2 + ⋯ + 𝑛
• 𝒘𝟏 = 𝑛/𝑆, 𝒘𝟐 = (𝑛 − 1)/𝑆, ……, 𝒘𝒏 = 1/𝑆
year 2007 2008 2009 2010 2011 2012
total 1080 1190 1100 1220 1300 ?
𝒅𝟐𝟎𝟏𝟐 = (0.4* 𝒅𝟏𝟏 + 0.3* 𝒅𝟏𝟎 + 0.2* 𝒅𝟎𝟗 + 0.1* 𝒅𝟎𝟖 ) = 1225

How do we choose weights?
• Depending on the importance that we feel the past
data has.
• Depending on known seasonality (weights of past
data can also be zero).
• WMA is better than SMA because of the ability to
vary the weights!

Exponential Smoothing (ES)
• Main idea: The prediction of the future depends mostly on the most
recent observation, and on the error for the latest forecast.
• Why use exponential smoothing?
1. Uses less storage space for data
2. Extremely accurate
3. Easy to understand
4. Little calculation complexity
5. There are simple accuracy tests

Exponential Smoothing (ES)
• Assume that we are currently in period t. We calculated the forecast for
the last period (Ft-1) and we know the actual demand last period (At-1) …
• The smoothing constant α expresses how much our forecast will react to
observed differences…
• Larger 𝛼 values make forecast more responsive
• If α is low: there is little reaction to differences.
• If α=1, then the latest forecast would be equal to the previous period
demand value (naive model)

Exponential Smoothing: Example
• A firm uses SES with α = 0.2 to forecast demand.
The forecast for the 1st week of Jan was 400 units,
where as actual demand turned out to be 450 units.
(a)Forecast the demand for the 2nd week of Jan
(b)Assume actual demand for 2nd week of Jan is 460
units. Forecast the demand up to Feb 3rd week,
assuming the subsequent demands as 465, 434, 420,
& 462 units.

• Solution: the forecast for the second week of
January is computed as;
𝐹𝑡 = 𝐹𝑡−1 + α(𝐷𝑡−1 − 𝐹𝑡−1)
400 + 0.2(450 − 400)
• The working for the remaining weeks are

Exponential Smoothing: Example….
• Initial forecast was available. If no previous forecast value is known,
the ‘Old forecast’ starting point may be estimated or taken to be an
average of the values of some preceding periods.

Linear Regression Analysis/Least Square
• Functional relationship b/n two/more correlated variables.
• It is used to predict one variable given the other
• The data should be plotted 1st to see if they appear linear/at least parts of the data
are linear.
Y = a + bx
• For linear equations, the line of best fit is found by the simultaneous solution for a
and b of the following two normal equations:
• By using linear regression, we are trying to explore which independent variables
affect the dependent variable
• The equation has the form Y= a + bX, where Y is the dependent variable (that's
the variable that goes on the Y axis), X is the independent variable (i.e. it is plotted
on the X axis), b is the slope of the line and a is the y-intercept.

• Used for long-term forecasting of major occurrences &
aggregate planning

Forecast Errors
The difference b/n the forecast value & what actually occurred
Demand for a product is generated through the interaction of a no. of
factors too complex to describe accurately in a model.
•Therefore, all forecasts certainly contain some error.
–Variety of sources: unaware of is projecting past trends into the
future
–Bias : occurs when a consistent mistakes is made: Failure to include
right variable, use of wrong relationships among variables, etc
–Random: those that can’t be explained by the forecast model being
used

Chapter 3
Plant design
-Basics of Plant layout
-Ergonomics and Industrial Safety

Basics of Plant layout
 Plant layout refers to a floor plan/the physical
arrangement of facilities (personnel, equipment, tools
and fixtures, storage space, MHE and services) in the
plant (James More)
 is defined as the most effective physical arrangement
of machines, processing equipment, and service
depts. to have the best co-ordination and efficiency of
man, machine and material in a plant.

Basics of Plant layout….
 Is the configuration of depts., work centers in the
conversion process (how the space needed for material
movement, storage, indirect labor, etc is arranged in a
factory).
• For a factory which is already in operation, this may
mean the arrangement that is already present.
• For a new factory this means the plan of how the
machines, equipment, etc will be arranged in the
different sections or shops.

Objectives of a Good Plant Layout
 Integrate the p/n centers into a logical, balanced and effective
p/n unit.
 Reduce /Economic material handling
 Effective utilization of available space
 Minimize congestion of material, machinery, workers
 Worker convenience and job satisfaction/Improved work
conditions
 Better supervision
 Flexibility of plant & workspace design for expansion/to
changing production conditions

 Removal of bottlenecks
 Quick disposal of work
 Minimize accident
 Minimization in damage & spoilage
 Maintenance of decency and orderliness in the plant area
 Achieve the required output quality and quantity most
economically.
 Unidirectional workflow
 Provide a logical distribution of functional facilities in the
plant.

Situations in which Layout Problem may arise
• When starting a new plant
• Changes in the product design
• Necessity of introducing a new product
(Diversification)
• Changes in the volume of production
• Poor working conditions
• Frequent accidents
• Changes in location of the industry

Principles of Plant Layout
 Overall integration
 Minimum distance
 Cubic space utilization
 Smooth and continuous flow
 Maximum flexibility
 Safety, security and satisfaction
 Minimum handling

Types of factory Layout
• From the point of view of factory layout, we can classify
business or units into three categories:
1.Manufacturing units
2.Traders
3.Service Establishments
Some Special Layouts
• Office
• Storage (Warehouse, distributor)
• Service/Retail (grocery, drug, dept. stores)

Types of Factory Layout: Manufacturing unit
• Product or line layout
• Process or functional/job layout
• Mixed/Combination layout
• Static layout/ Fixed position/Project
• Group layout

Manufacturing unit: Product/Line Layout
• In this type of layout, only one product or one type of product is
produced in a given area.
• The product must be standardized and manufactured in large quantities
in order to justify the product layout.
• Machines, equipment and auxiliary services are located according to
the processing sequence of the product (cars, motor cycles assembly)
• suitable for continuous type of production
• Can employ one of the basic Horizontal flow lines.
• is selected when the volume of production of a product is high
• In a strict product layout, machines are not shared by different
products. Hence, high production volume

Product/Line Layout…
• The raw material moves very fast from one workstation to
other stations with a min. work in progress storage &
material handling.

2. Process/Functional/Job Layout
• All machines/facilities/performing similar type of operations are
grouped at one location/according to their functions.
e.g., all lathes, milling machines, etc. Turning, Welding, Presses, etc.
Hence, is recommended for batch production.
• is normally used when the production volume is not sufficient to
justify a product layout.
• Typically, job shops employ process layouts due to the variety of
products manufactured and their low production volumes.
• The flow paths of material through the facilities from one
functional area to another vary from product to product.

Process/Functional/Job Layout cont…

Process/Functional/Job Layout: work travels to
dedicated process centers

Process /Functional/Job Layout con’t….
• Similar equipment & tasks grouped
• Useful for low volume, high variety jobs
• Advantages:
– low capital investment,
– fewer m/c;
– higher space utilization;
– flexibility in equipment allocation;
– workers gain expertise;
– problems localized;
– job variety

Process /Functional/Job Layout con’t….
• Disadvantages:
–needs more space
–no mechanization
–high work in process
–work scheduling problems
–high set-up & inspection costs

3. Mixed/Combination Layout
• Is a combination of process and product layouts combines
• the advantages of both types of layouts.
• is possible where an item is being made in different types
and sizes.
• Machines are arranged in a process layout but the
• process grouping is then arranged in a sequence to
• manufacture various types and sizes of products.
• It is to be noted that the sequence of operations remains
same with the variety of products and sizes.

Mixed/ Combination Layout for manufacturing different sized gears.

4. Static/Fixed/Project Layout
• the product or project remains stationary, and
workers, materials, and equipment are moved as
needed

Static/Fixed/Project Layout
• Advantages:
–Reduces movement of m/c & equipment
–Minimizes damage/cost of movement
–Continuity of assigned work force
–Layout capital investment is lower.

Static/Fixed/Project Layout
• Disadvantages:
– Skilled & versatile workers needed due to multiple
operations
– skill combination may be difficult to obtain
– higher pay
– movement of people/material may be expensive
– equipment utilization low as they are left at location for
subsequent usage instead of being moved as & where
needed

5. Group/Cellular Layout (GT)
• is the analysis and comparisons of items to group them into
families with similar characteristics.
• can be used to develop a hybrid b/n process and line (product)
layout.
• is very useful for companies that produce variety of parts in small
batches/product layout.
• The application of GT involves two basic steps;
1st - to determine component families or groups.
2nd - to arrange the plants equipment used to process a
particular family of components.

• Group/Cellular Layout: Parts Families

Group/Cellular Layout (GT) con’t…
• Advantages: it can increase
– Component standardization and rationalization.
– Reliability of estimates.
– Effective machine operation and productivity.
– Customer service.

Group/Cellular Layout (GT) con’t…
• Disadvantages: It can decrease the
– Paper work and overall production time.
– Work-in-progress and work movement.
– Overall cost.
– This type of layout may not be feasible for all
situations.
– If the product mix is completely dissimilar, then we
may not have meaningful cell formation.

2. Traders
• When two outlets carry almost same merchandise,
customers usually buy in the one that is more
appealing to them.
• Thus, customers are attracted and kept by good layout
• –i.e. good lighting, attractive colors, good ventilation,
air conditioning, modern design and arrangement and
even music.
• All of these things mean customer convenience,
customer appeal and greater business volume.

2. Traders . . .
• The customer is always impressed by service,
efficiency and quality.
• There are three kinds of layouts in retail operations
today.
1.Self service or modified self service layout
2.Full service layout
3.Special layouts

3. Services Centers & Establishment
• In today’s environment, the clients look for ease in
approaching different departments of a service organization
• Services establishments: Banks, Insurance, Motels, Hotels,
Restaurants, must give due attention to
• –client convenience, quality of service, efficiency in delivering
services and pleasing office ambience.
• the layout should be designed in a fashion, which allows
clients quick and convenient access to the facilities offered by
a service establishment.

Factors influencing Plant Layout
1. Management policy
2. Manufacturing process
3. Nature of product
4. Volume of production
5. Type of equipment
6. Type of building
7. Availability of total floor area
8. Arrangement of Material Handling Eq.
9. Service facilities
10. Possibility of future expansion

Factors to be Considered in Planning Layout
(Type of layout, pattern of the flow lines and communication systems)
Hazards : moving parts, projecting machine elements, suspended weights, air
pollution, physical & chemical risks, safety of personnel & plant.
Type of Production : Job, batch or continuous or combinations
Type of Operation : Wet or dry, Light or heavy machines etc.
Sequence of Operations
- Integration of production : Single/Multi flow
- Type of Products : Weight, Volume, Physical state
- Type of Inspection : Centralised/Decentralised
: Frequency etc.
- Management policy: Plans for future expansion, changes in
product design & variety.

Symptoms of Bad Plant Layout
-Material congestion
- Excessive WIP
- Poor space Utilization
- Long transportation lines
- P/n bottlenecks at certain machines when some other
identical machines are idle.
- Excessive handling by skilled operators
- Long production cycles and delays in delivery
- Mental and/or physical strain on Operators
- Poor effective supervision and controls
- Higher rejections/damages
- Accidents

Flow Systems in Layouts
• Flow pattern means the system to be adopted for the
movement of raw materials, from the beginning up to
the end of manufacturing.
• Flow Systems:
Horizontal Flows
Vertical Flows
• Horizontal flow is adopted by on a shop flow while
• Vertical flow is adopted by where aerial has to move
in multi-store building.

Layout Selection: Considerations
• Ease of future expansion,
• Adaptability and versatility,
• Flexibility of layout,
• Flow of materials effectiveness,
• Materials handling effectiveness,
• Storage effectiveness,
• Space utilization,
• Effectiveness of supporting service integration,
• Safety and housekeeping,
• Working conditions and employee satisfaction

Layout Selection: Considerations….
• Ease of supervision and control,
• Appearance, promotions value, public or community relations,
• Quality of products,
• Maintenance problems,
• Fit with company organization structure,
• Equipment utilization,
• Utilization of natural conditions or surroundings ,
• Ability to meet capacity or requirements,
• Investment or capital required and
• Savings, payout, returns, profitability.

Building Layout: The design shall provide:
a. Adequate ventilation, lighting, heating & drainage;
b. Dehumidification equipment, if necessary;
c. Accessibility of equipment for operation, servicing, & removal;
d. Flexibility of operation;
e. Operator safety;
f. Convenience of operation;
g. Chemical storage and feed equipment in a separate room to reduce
hazards and dust problems;
h. Employee facilities per State Plumbing Code

Ergonomics and Industrial Safety
• Ergonomics is a concept, an idea.
• It is a way of looking at the world.
• A way of thinking about people at work .
• And how they cope with it.
• Their environment
• Their motions
• And their working equipment.

HFs/Ergonomics defined, Cont’d
• Denotes the science of work. Greek ergon (work) & nomos (laws)
• Literal meaning “the rules of work, “the science of work”
• A systems-oriented discipline which now extends across all
aspects of human activity
• It is “Designed for human use.”
• “Fit the task to the person, not the person to the task.”
• “About ´fit´ “Ergonomics Society (Europe)
• Ergonomics focuses on changing things (tools, equipment,
facilities, etc.), not changing people.

• Its all about interaction b/n people and…
– the things they do, the objects they use & the env’ts they
work, travel & play in.
• If good fit is achieved, the stresses on people are reduced.
– They are more comfortable,
– they can do things more quickly & easily,
– increase safety on the job, &
– they make fewer mistakes”

• is the science of adapting products & processes to
human characteristics & capabilities in order to
improve well-being & optimize productivity.
• is the scientific discipline concerned with
interactions among humans and other elements of a
system in carrying out a purposeful activity.
• aims to improve human well-being and overall
system performance by optimizing human-system
compatibility.

Ergonomics (or human factors)
• Human-system interaction design considerations
include physical, cognitive, social, organizational
and environmental factors."
• Contribute to the design & evaluation of tasks,
jobs, products, environments & systems in order to
make them compatible with the needs, abilities &
limitations of people.

Human-system interaction design:considerations
–Physical factors
–Social factors
–Workstation factors: Sitting: chairs, work
benches, Displays,
–Environmental factors( heat, lighting, noise)

WHY Ergonomics/HF?
• Basic HF that must be accounted for in the design of a system &
workplace:
1. People are different – shapes and sizes: tall, short; young, old
design premise “one size fits all”
2. People have limitations – physical and mental limits
3. People have certain expectations and predictable responses to given
situations (with certain signals, such as traffic light)
• If these factors are ignored, design consequences can be costly, both
financially & in terms of human discomfort & performance

HF Vs Safety???
 HFs professionals are concerned with safety: H cause
accidents & injured
 HFs can help to reduce hazards:
1) Eliminate the hazard through design
- design controls & displays that are simple to
understand & operate
- plan activities in a system to reduce errors caused by
overwork

HF Vs. Safety….
 HFs can help to reduce hazards:
2) Incorporate safety devices
- design & location of safety devices
• provide dimensions for proper fit of safety tools
3) Provide warning devices
- determine color, location & wording of warning devices, Vol. & pitch of
warning signals, & design of warning & caution markings & video
displays
4) Develop procedures & training
- establish criteria for personnel selection & devt. of safety training
programs

• Work space requirements . . . Safety
• Layout
–involves work space arrangement;
–determine the floor space that will be required by an operator.
• The study of floor space needed considers the following points:
–While at work, the operator's arms and hands should move as
easily as possible
• ought to reduce, to the minimum the movement of his/her
shoulders, his/her body and his/her person from one position to
another.

A good plant layout should consider the safety of all personnel.
Safety hazards to be watched for in plant layout are:
–inadequate passage and inadequate exits,
–insufficient storage space allowance for safe handling procedures,
–insufficient handling equipment capacity,
–floor load capacity and floor obstructions,
–slippery finish floors, inadequate stairs, ramps and ladders,
–inaccessible fire extinguisher and first aid boxes
–unguarded moving parts of equipment ,
–workers located under the above hazards and
–improper ventilation for removal of dangerous or toxic gases.

Industrial management & engineering economy.pptx

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