INTRODUCTION

CONCEPTS OF INDUSTRIAL ENGINEERING

Industrial engineering is a profession in which a knowledge of mathematical and
natural sciences gained by study, experience and practice is applied with judgement to
develop the ways to utilize economically the materials and other natural resources and
forces of nature for the benefit of mankind.
American Institute of Industrial Engineers (AIIE) defines Industrial Engineering
as follows: Industrial Engineering is concerned with the design, improvement
and installation of integrated system of men, materials and equipment. It
draws upon specialized knowledge and skills in the mathematical, physical
sciences together with the principles and methods of engineering analysis and
design to specific; predict and evaluate the results to be obtained from such
systems.
Industrial engineering is thus concerned with bringing together and effective
utilization of various resources to facilitate efficient production operation. Effective
utilization of resources means that input to the production—operation system—such as
people, material, information and equipment are used in right way so that they form an
integrated combination to meet production/operation objectives. Efficient
production/operation systems are those 'systems which score high on norms of actual
performance.
It is important to note that industrial engineering is concerned not merely with the
system of material, equipment and processes but also with people who interact with this
system. The impact of people on the operating system is both from inside and from
outside. People who operate a machine, who plan the process or those who handle
material are within the operating system. Therefore, work-study, ergonomics,
motivation, wage-incentive plan, time and motion study, etc., are integral part of
industrial engineering.
In addition to the people inside the purview of production/operation system,
those people, who are outside also play important role. For example, customers, outside
the production/operation system, determine the demand of the product. Customer's
demand is dependent on product design, quality, price-discount, etc. Therefore,
industrial engineering also focusses on these aspects. With changed paradigm of quality
during recent years, the focus of Total Quality Management (TMQ) is now on customer-
delight.
Industrial engineers are now expected to work on continuous improvement on
product and process. The prime objective of industrial engineering is to increase
productivity by eliminating waste and non-value adding (unproductive) operations and
improving the effective utilization of resources. Industrial engineering is not restricted
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only to manufacturing activities. It includes service sectors, like, banking, education,

waste management, health care, transportation, distribution, etc.
The scope. of industrial engineering is quite big and certainly not restricted within
the boundary of industry (factory). It includes design and improvement of condition,
design and improvement of organization, design and improvement in workplace,
method and procedure, and design and improvement in product and services.
The scope of Industrial Engineering is shown in Fig.

HISTORY AND DEVELOPMENT OF INDUSTRIAL ENGINEERING

Industrial engineering has developed during past 250 years. Five different phases
of industrial engineering have almost passed. These phases are:
Phase Pre-Industrial Revolution Era (upto Early 1800's)
Phase II: Industrial Revolution (Early 1800's to Late 1800's)
Phase III: Scientific Management Phase (1890 to 1940)
Phase IV: Operations Research and Quantitative Phase (Late 1940's to Early 1980's)
Phase V: Automation and Computer Integrated Manufacturing Phase(Since Early 1980's).
The future trend is towards more automation, computer-controlled
manufacturing, information handling through computers, and integration of
manufacturing systems. Now, we will briefly discuss the various phases in Industrial
Engineering.
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Though Frederick Taylor is named as father of scientific management and

Industrial Engineering, there are many others who contributed to the industrial
engineering field before Taylor and then they got associated with industrial engineering.
Adam Smith's concept of division of labour through his book "The Wealth of
Nations" in 1776 is important as it influenced the factory system. James Watt, Arkwright,
Boultin Mathew and Robinson obtained a place in the history of industrial engineering
because of their progressive and scientific attitude towards the improvements in the
performance of machines and industries.
The period between 1882-1912 was the critical in the history of industrial
engineering.
The important works during this period are:
1. Factory system and owner - engineer and manager concept.
2. Equal work, equal pay and incentive schemes.
3. Scheduling and Gantt charts.
4. Engineers started taking an interest in cost control and accounting. The most often
quoted and acknowledged investigator that have led to be discipline of industrial
engineering in present form was F.W. Taylor, who took interest in human aspects of
production and productivity.
The modern· industrial engineering techniques had their origin during the period
between 1940 to 1946. Predetermined time standards (PMTS), value analysis and system
analysis are a few prominent ones. They were expanded, refined and applied in
subsequent years. Operation Research technique has brought a revolution and changed
 INTRODUCTION

and expanded the scope of industrial engineering activities. Computers have added a
new dimension to industrial engineering activities.
Presently, Industrial engineering has not remained restricted _to manufacturing
activities but has extended its services to service industries also. The development of
techniques such as:
1. Value Engineering
2. Operation Research
3. Critical Path Method (CPM) & PERT
4. Human Engineering (Ergonomics)
5. Systems Analysis
6. Advances in Information Technology and Computer Packages
7. Mathematical and Statistical Tools
These techniques of industrial engineering helps in contributing maximum
towards increasing productivity and efficiency in particular and Quality of Work Life
(QWL) in general.
CONTRIBUTIONS TO INDUSTRIAL ENGINEERING
1. ADAM SMITH (1776) - Adam Smith through his book titled Wealth of Nations
laid foundation to scientific manufacturing. He introduced the concept of "division of
labour." Through his concept of division of labour which included the skill development,
time savings and the use of specialised machine was able to influence the factory system.
2. JAMES WATT (1864) - Steam engine advanced the use of mechanical power to
increase productivity.
3. CHARLES BABBAGE was an English mathematician who worked on the same
line as Adam Smith's division of labour and advocated specialisation as one more
advantage of division of labour.
4. FREDERICK TAYLOR (1859-1915) - Frederick Taylor is generally credited with
being the father of industrial management and industrial engineering. Taylor was a
mechanical engineer who initiated investigations of better work methods and went ·on
to become the first individual to develop an integrated theory of management principles
and methodologies., Taylor believed that a scientific approach to management could
improve labour efficiency. Taylor's contribution are:
(i) Constitution of day's work
(ii) Wage payment system
(iii) Elimination of waste
(iv) Training of workers
(v) Understanding between managers and workers
Taylor’s Scientific Approach later developed into method study and work
measurement, training, selection, placement and Industrial relations.
5. HENRY L. GANTT (1913) - Gantt an engineering contemporary of Taylor, had a
profound impact on the development of management thinking. His contributions were:
(i) Work in the area of motivation field and development of task and bonus plan, a highly
successful incentive plan.
(ii) Measurement of management results by Gantt charts.
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(iii) Recognition of social responsibility of business and industry.

(iv) Advocated training of workers by management.
6. FRANK AND LILLIAN GILBRETH (1917) - The advancement of motion studies
is a contribution by ,Gilbreth. Assisted by his wife, he developed method study as a tool
for work analysis. Gilbreth emphasised the relationship between output and the effort of
the worker. He developed micro motion study, a breakdown of work into fundamental
elements called Therbligs
7. HARRINGTON EMERSON (1913)- He developed his managerial concepts
simultaneously with Taylor, Gantt and Gilbreth. Amongst his contributions is the
Emerson's Efficiency Bonus Plan, an incentive plan which guarantees the base day rate
and pays a graduated bonus. Emerson's Twelve Principles of Efficiency are:
(i) Clearly defined ideas
(ii) Common sense
(iii) Competent counsel
(iv) Discipline
(v) Fair deal
(vi) Reliable, immediate and adequate records
(vii) Dispatching
(viii) Standards and schedules
(ix) Standardised conditions
(x) Standard operations
(xi) Written standard practice instructions
(xii) Efficiency reward
8. L.H.C. TIPPET (1937) - He developed the concept of work sampling to
determine the equipment. and manpower utilisation and for setting performance
standards for long cycle, heterogeneous jobs involving teamwork.
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FUNCTIONS and ROLES OF AN INDUSTRIAL ENGINEER

1. Developing the simplest work methods and establishing one best way of doing the
work. (Standard Method)
2. Establishing the performance standards as per the standard methods. (Standard Time)
3. To develop sound wage and incentive schemes.
4. To aid in the development and designing of sound inventory control, determination of
economic lot size and reducing work-in-process for each stage of production.
5. To assist and aid in preparing a detailed job description, and job specification for each
job and to evaluate them.
6. Development of cost reduction and cost control programmes, and to establish a
standard costing system.
7. Sound selection of site and developing a systematic layout for the smooth flow of work
without any interruptions.
8. Development of standard training programmes for various levels of organization for
effective implementation of various improvement programmes.
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TECHNIQUES OF INDUSTRIAL ENGINEERING

The various tools and techniques of industrial engineering are:
TOOLS/TECHNIQUES USES
METHOD STUDY In this technique, critical examination and systematic
recording of existing and proposed methods of doing a work
is done to find out better ways of doing it. It aims to eliminate
various forms of unnecessary delays and waste, thereby
resulting in an increase in efficiency.
TIME STUDY This is a work measurement technique used to determine
standard time for performing a job after taking into account
various allowances needed.
MOTION ECONOMY Principles that are used to analyse the motions employed by
a worker for performing an operation. These are important
in case of mass production.
FINANCIAL & NON- These incentives helps to evolve a rational compensation for
FINANCIAL the efforts of a worker.
INCENTIVES
VALUE ANALYSIS A technique, wherein critical and systematic analysis of
different aspects of a product is done for the identification of
unnecessary costs without decreasing its utility or function.
It helps in enhancing the value of a product.
PRODUCTION The PPC system by virtue of integrating and coordinating
PLANNING AND men, materials and machines ensures proper utilisation of
CONTROL industrial facilities. It also allocates labour for efficient
(PPC) production. The ultimate objective of PPC system is
production of products of right quality and quantities in
right time for meeting the delivery schedules.
INVENTORY In an industrial setting inventory can be defined as any stock
CONTROL of an atom with a certain value that can be used at a later
point of time. Inventory control models answers questions
as (i) how much quantities of items are to be ordered? and
(ii) when they have to be ordered?
JOB EVALUATION Job evaluation compares the relative worth of different jobs
in an organisation. It determines which jobs are more
valuable and needs to be paid more remuneration.
MATERIAL It scientifically analyses and examines the movement of
HANDLING materials in a plant for elimination of unnecessary
ANALYSIS movements. Thus, it enhances efficiencies related to material
handling.
ERGONOMICS This is also referred to as human engineering. It is mainly
concerned with integrating human factors while designing
the workplace.
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SYSTEMS ANALYSIS Study of various sub-systems and interdependencies among

various elements to design, modify and improve its
efficiency and effectiveness.
OPERATIONS Operations research techniques attempts to find optimal
RESEARCH solutions to problems based on a set of objective and
TECHNIQUES constraints imposed on a problem under consideration.
Various techniques used in operations research are linear
programming, simulation models, transportation models,
assignment models, queuing models, network analysis,
dynamic programming, integer programming, game theory,
etc.
OTHER TECHNIQUES These include statistical process control techniques, group
technology, organisation and methods, etc.
APPLICATION OF INDUSTRIAL ENGINEERING
Industrial engineering is widely used in manufacturing as in well as the service
sectors. Some examples are:
Sector Few Applications of Industrial Engineering
Formulation of production plan
Control of processes and products
Manufacturing Inventory control
Design of plant layout
Scheduling of machines and processes, etc.
Construction project planning
Airlines operations
Service Hospital management
Transportation problems
Optimal use of natural resources, etc.

INDUSTRIAL ENGINEERING IN MANUFACTURING SECTOR

Variety of process like work methods, fixation of time and performance standards,
plant layout, estimating, cost reduction, etc in Small company (100 to 300 direct workers);
there is a division of responsibility for industrial engineering service in Medium company
(300 to 600 direct workers) and In Large company, functions such as value engineering,
operation research, training, wage programmes are done in greater depth apart from
regular specialized functions.
INDUSTRIAL ENGINEERING IN SERVICE SECTOR
Modern industrial engineering is a broad discipline encompassing the analysis,
design and improvement of all productive elements of any enterprise.
Industrial Engineering in Health Services: Optimization techniques are helpful to achieve
the expected service levels in health care industries by optimum utilization of resources.
Industrial Engineering in Government Organizations: The range of activities
encompassed by the government is as extensive as the industrial engineering techniques
themselves with an extremely broad-based new technique.
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Industrial Engineering in Banking: The computer as a tool of industrial engineering is

making a major impact on banking. The role of industrial engineering is: (i) Training, (ii)
Use of Operation Research, (iii) Cost system and (iv) Information systems.
The Other Areas of Application of Industrial Engineering: Public utilities such as the
companies which supply essential commodities such as water, gas, electricity,
telephone services. The basic concepts of industrial engineering and operations research
are widely used in financial management, marketing management, logistics, purchasing
etc. For example, the depreciation of machines is required in financial management also.

INDUSTRIAL ENGINEERING AND PRODUCTION MANAGEMENT

Industrial engineering is closely related to production management. The
differences are as follows:
(i) The focus of industrial engineering is on the design, analysis, planning and control of
productive system, which includes both production and services. Production
management is more focused on the management of production system.
(ii) Industrial engineers are generally specialists who perform the role of staff-function in
the organisation. Their role is to advise the line managers. On the other hands, production
managers are line managers. It is, therefore, common that industrial engineers do not
operate the system they design. Production managers are directly responsible for the
shop-floor operations of the system.
(iii) Industrial engineer does not operate the systems they designed and Production
managers tells how to manage and maintained the works designed by industrial
engineering .

PRODUCTION SYSTEMS
The production system is a part of a larger system – the business firm. The
production system can be viewed as a framework or skeleton of activities connecting the
inputs and outputs which creates the value of the product or services provided.

The production system (facility, equipments and operating methods) that a company
uses depends upon the type of the product that is offered to the customer and the strategy
that it employs to serve its customers: production systems can be categorized as:
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⮚ Make to stock production

⮚ Make to order production
⮚ Assemble-to-order production system

TYPES OF PRODUCTION SYSTEM

The types of production system are grouped under two categories viz.
1. Intermittent production system, and 2. Continuous production system.

The production system varies from factory to factory and from product to product.
However, one of the most important issues is production volume. The most common type
of production systems are
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 INTRODUCTION

Volume – variety Suitability for Different Production Systems

INPUT – OUTPUT MODEL

Input – Output model is one of the basic models of the production system, having
a set of interconnected input – output elements and is made up of three component parts
namely inputs, process and outputs as shown in fig.
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A wide variety of inputs are transformed so that they give out a set of outputs. The
transforming process can be complicated and the design of an actual input and output
system for manufacturing may be expensive and difficult.

PRODUCTIVITY
Productivity is one of the most used buzz words in industrial engineering, refers
to the efficiency of the production system. Productivity is the quantitative relation
between what we produce and what we use as a resource to produce them, i.e. arithmetic
ratio of amount produced (output) to the amount of resources (input).
Productivity is the concept that guides the management of production system. It
is an indicator of how well the factors of production (Land, capital, labour and energy)
are utilised.
Productivity is formally defined by Organisation of European Economic
Cooperation (OEEC) as: “Productivity is the quotient (ratio) obtained by dividing output
by one of the factors of production. Thus, it is possible to speak productivity of capital,
investment or raw materials according to whether output is being considered in relation
to capital, investment or raw materials, etc.”
DEFINITIONS OF PRODUCTIVITY
1. Productivity is a function of providing more and more of everything to more
and more people with less and less consumption of resources.
2. The volume of output attained in a given period of time in relation to the sum
of the direct and indirect efforts expended in its production.
3. Productivity is the measure of how well the resources are brought together in
an organisation and utilised for accomplishing a set of objectives.
4. Productivity is concerned with establishing congruency between
organizational goals with societal aspirations through input-output relationship.
5. Productivity is the multiplier effect of efficiency and effectiveness.
DIFFERENCE BETWEEN PRODUCTIVITY AND PRODUCTION
Production and productivity are different terms and carry different meanings. It
is wrong to assume that higher production will always lead to higher productivity or vice
versa.
Production is related to the activity of producing goods or services. It is a process
(or system) of converting input into some useful, value-added output. Productivity is
related to the efficient utilization of input resources into produced output in the form of
value-added goods or services.
Production is a measure of output produced. The emphasis is NOT on how well
the input-resources are utilized. Productivity, on the other hand, puts emphasis on the
ratio of output produced to the input used. Its focus is on how well the input resource is
used for conversion into output.
Productivity can be Increased,
1. When production is increased without increase in inputs.
2. The same production with decrease in inputs.
3. The rate of increase in output is more compared to rate of increase in input.
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Efficiency, Effectiveness and Productivity of the Production System

FACTORS AFFECTING PRODUCTIVITY

Factors influencing productivity can be classified broadly into two categories:
(a) Controllable or internal factors
(b) Uncontrollable or external factors

INCREASING PRODUCTIVITY OF RESOURCES

It implies getting more number of goods (output) from the same amount of
resources (input) as explained below:
(a) Material: High productivity can be achieved through proper use of materials, by
reducing scrap using correct process, properly trained workers, suitable material
handling, storage facilities and proper packaging.
(b) Labour: Change in design of component parts can increase the number of products
with the same amount of labour.
(c) Plant, Equipment and Machinery: Productivity can be increased using improved
tools, special attachments; production time by reducing set – up times and proper
maintenance.
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(d) Land and Buildings: Suitable plant layout, proper orientation, construction and
building inside conditions affect productivity.
PRODUCTIVITY IMPROVEMENT TECHNIQUES

PRODUCTIVITY MEASURES
Partial Productivity Measures (PPM)
Depending upon the individual input partial productivity measures are expressed as:

One of the major disadvantage of partial productivity measures is that there is an

over emphasis on one input factor to the extent that other inputs are underestimated or
even ignored. This cannot represent the overall productivity of the firm.
Total Productivity Measure (TPM)
It is based on all the inputs. This model can be applied to any manufacturing
organization or service company.

Total tangible output = Value of finished goods produced + value of partial units
produced + dividends from securities + interest + other income.
Total tangible output = Value of (human + material + capital + energy + other
inputs) used. The word tangible here refers to measurable.
Total Factor Productivity Measure (TFP)
It is the ratio of net output to the labour and capital (factor) input.
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ADVANTAGES AND LIMITATIONS OF PRODUCTIVITY MEASURES

Eg.1. A company produces 160 kg of plastic moulded parts of acceptable

quality by consuming 200 kg of raw materials for a particular period. For the
next period, the output is doubled (320 kg) by consuming 420 kg of raw
material and for the third period, the output is increased to 400 kg by
consuming 400 kg of raw material.
During the first year, production is 160 kg
Productivity = Output/Input = 160/200 = 0.8 or 80%
For the second year, production is increased by 100%
Productivity = Output/Input = 320/420 = 0.76 or 76% ↓
For third period, production is increased by 150%
Productivity = Output/Input = 400/400 = 1.0 i.e. 100%
Comments: From the above illustration, it is clear that, for second period, though
production has doubled, productivity has decreased from 80% to 76%, for third, period
production is increased by 150% and correspondingly productivity increased from 80%
to 100%. Thus, Increase in production may or may not increase Productivity.

Eg. 2. The following information regarding the output produced and inputs
consumed for a particular time period for a particular company given below:
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Output = ₹ 10,000, Human input = ₹ 3,000, Material input = ₹ 200, Capital

input = ₹ 300, Energy input = ₹ 100 and Other misc. input = ₹ 50.
The values are in terms of base year rupee value. Compute various
productivity indices.