INDUSTRIAL ENGINEERING - MODULE 1

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MODULE 1
 Introduction to Industrial Engineering
 Evolution of modern concepts
 Functions of Industrial Engineering
 Fields of application
 Product development and Research
 Design function
 Objectives of design
 Manufacturing vs purchase – economic aspects
 CVP analysis – simple problems
 Development of designs – prototype, production and
testing
 Human factors in design
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 Value engineering

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INTRODUCTION

 Industrial Engineer deals with the detailed analysis of the

use of resources of an organization

 Resources: Men, money, materials, and machinery.

 Primary function is management

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INTRODUCTION

 Deals with the optimization of complex systems

or processes.

 Tries to eliminate wastage of various resources

such as time, money, machine, material and
energy.

 Industrial engineers are productivity and quality

improvement specialists.

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INTRODUCTION

 Industrial Engineering is concerned with the

 design
 improvement
 and installation of integrated systems of

 people,
 materials,
 information,
 equipment
 and energy. 5

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INTRODUCTION
 It draws upon specialized knowledge and skill in

 mathematical, physical, and social sciences

together with the principles and methods of
engineering analysis and design to

 specify, predict, and evaluate the results to be

obtained from such system

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 INTRODUCTION
Industrial Engineering

 “Concerned with the design, improvement, and installation of

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

- American Institute of Industrial Engineers (AIIE)

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EVOLUTION OF INDUSTRIAL ENGINEERING

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HISTORY OF IE
 Started with industrial revolution in 18th century (around
1750)
 Passed through various phases with contributions from
various individuals.
 The industrial revolution obtained from the development of
new inventions, particularly in textile industry and the steam
engine led factories with large number of workers.
 With enormous growth in industry, the management thinking
had begun.

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SOME OF THE CONTRIBUTORS
Adam Smith (1723-1790) (Economist- Division of labour):
The Wealth of Nations was published in 1776.
Frederick W. Taylor (1856-1915) – The principles of
Scientific management was published in 1911. Father of
scientific management
Henry L Gantt (1861-1919)- Gantt Chart
F. B. Gilbreth (1868-1924) – Method study-Motion study.
Ralph M Barnes – (American Industrial Engineer) Noted
for his research in the area of motion study. Motion and
Time study published in 1937.
Henry Ford – Contributed in the development of 10
assembly line technique in mass production.
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HISTORY OF IE
 During late 19th century drive for IE was provided by
engineers / managers of US.
 It achieved maturity after World War ІІ.

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HISTORY OF IE
 Phase 1: Pre-Industrial Revolution Era.
 Phase 2: Industrial Revolution

 Phase 3: Scientific Management Phase

 Phase 4: Operations Research and Quantitative

Phase
 Phase 5: Automation and Computer Integrated
Manufacturing Phase

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HISTORY OF IE

 Pre-Industrial revolution era-

 Hand-operated manufacturing activity
 Adam Smith wrote Wealth of Nation and advocated
the concept of division of labour, skill development,
specialization, etc.
 Adam Smith - Father of economics
 Division of labour - This idea relates primarily to the
specialization of the labor force, essentially the
breaking down of large jobs into many tiny
components
 Initially applied to pin manufacturing industry

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HISTORY OF IE
Industrial revolution-
 Industrial Engineering emerged as a profession
during the Industrial Revolution.
 This was during the period around 1750 to 1840.

 The industrial revolution involved the

transformation of a technology resting heavily
on human and animal labor into a technology
characterized by machines.
 Technically qualified people were needed to
plan, organize and control the manufacturing
processes.
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 HISTORY OF IE
 Scientific Management Phase (up to 1940‟s)
 Taylor‟s contribution: Father of Scientific Management
- Real beginning of Industrial Engineering
Time study
 Taylor had observed that there was excessive
inefficiency in the management and functioning of
industrial enterprises.
 Work should be done in the best and the cheapest
manner.
 Unscientific approaches should be avoided– Eg: a trial
and error approach.
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HISTORY OF IE
Scientific Management Phase (up to 1940‟s)

 F. B. Gilbreth (industrial psychologist) : Motion

study-Therbligs are 18 kinds of elemental
motions used in the study of motion economy in
the workplace.

 Therbligs comprise a system for analyzing the

motions involved in performing a task.

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HISTORY OF IE
Scientific Management Phase (up to 1940‟s)

 The identification of individual motions, as well as

moments of delay in the process, was designed to
find unnecessary or inefficient motions and to
utilize or eliminate even split-seconds of wasted
time.

 Henry L Gantt: Gantt chart for planning and

scheduling.
 A Gantt chart, commonly used in project
management, is one of the most popular and useful
ways of showing activities (tasks or events)
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displayed against time.

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HISTORY OF IE
 Operations research and Quantitative
Phase (1940‟s to Early 1980‟s):
 Mathematical and statistical tools were widely
used.
 Mathematical or OR tools: Linear
programming, non-linear programming,
transportation models, queing models, etc.
 Statistical tools: ANOVA, F- test, t- test,
Regression analysis
 Optimization became the buzz word.

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HISTORY OF IE
 Automation and Computer Integrated
Manufacturing Phase (Since Early 1980‟s):

 The term computer integrated manufacturing (CIM)

is used to denote the use of computers
 to design the products
 plan the production
 control the operations, and
 perform the various business related functions
needed in a manufacturing firm.

 Cycle-time reduction
 Flexibility
 Customer focus 19

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FUNCTIONS OF INDUSTRIAL ENGINEERING

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ACTIVITIES/FUNCTIONS OF INDUSTRIAL ENGINEERING
 Methods engineering – method study, time study, selection of
equipment, etc.

 Locate plant & design layout

 Material Handling

 Production planning and control – management of raw materials,

finished products, work-in-process, routing, scheduling, etc.

 Management of Inventory

 Inspection and Quality control

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 Budget and cost control

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ACTIVITIES/FUNCTIONS OF INDUSTRIAL
ENGINEERING
 Job evaluation and merit rating

 Study equipment replacement feasibility

 Measure effectiveness of marketing

 Schedule projects (PERT or CPM)

 New product development

 Logistics management 22

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FIELDS OF APPLICATION

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 AREAS OF APPLICATION
 Initially, applied to manufacturing industries-
 to improve methods of production

 to develop work standards

 to formulate production control and wage policies.

 To control inventory

 To design plant layout

 To schedule machines and processes, etc.

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AREAS OF APPLICATION
 Later, applied to non-manufacturing industries-
 Construction project planning

 Transportation

 Air-line operations and maintenance

 Hospital management,

 Military operations, etc.

 In an industry, besides production, Industrial Engineering

concept is used in the areas of finance, marketing
management, purchasing, industrial relations, etc.
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AREAS OF APPLICATION
 Top management: assist the management in
activities like designing, planning, inspection,
decision making using various techniques (eg:
Statistical technique, Operations research, etc.)

 Procurement of raw material: determines

Economic Order Quantity (EOQ), reorder point,
etc.

 Technical aspects: to choose best design,

equipment, testing method, etc.
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AREAS OF APPLICATION
 Maintenance: To select the proper maintenance
technique and maintenance procedure and thus
to reduce maintenance cost and improve
production output.

 Production and quality control: Proper

scheduling, use of advanced technologies, use of
proper quality control techniques, inspection.

 Material handling: Selection of proper material

handling equipment, management of in bound
and out bound logistics, reduction of damage cost
materials. 27

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AREAS OF APPLICATION
 Marketing: better marketing strategy including
pricing.

 Employee relationship: to improve morale of

the employees by providing proper work
environment, training, etc.

 Finance: Design better financial system

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REDESIGNING MIDDAY MEAL LOGISTICS
 The Akshaya Patra Foundation was founded in
2000 in Bangalore to provide free mid-day meals
to the students of government schools.
 Time of delivery and temperature of food at
the time of delivery should be maintained as per
the specifications.
 1.3 million children in more than 9,000 schools in
nine states.
 The foundation faced a logistics problem in
efficiently distributing food within the available
time window.
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REDESIGNING MIDDAY MEAL LOGISTICS
 Study by IIMB
 Used OR modeling to overcome logistics issues

 Clustering schools
 Assigning appropriate distribution vehicles to
clusters
 Routing vehicles within the clusters.

 Estimate annual cost savings will be about

US$1.96 million.
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ROLE OF AN INDUSTRIAL ENGINEER

 Advisor / Consultant, Advocate/Activist, Analyst,

Motivator, Decision maker, Designer/planner,
Coordinator, Innovator, Trainer/educator, Negotiator,
Project manager and Data gatherer.

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ROLE OF AN INDUSTRIAL ENGINEER
 An industrial engineer works towards finding
simpler, most efficient and cost effective ways to
produce parts.

 They determine the most effective ways to use

the basic factors of production – man, machine,
material, information and energy to process a
product or produce a service.

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 PRODUCTIVITY

 Productivity is one of the commonly used term in industrial

engineering

 It is a measure of how well the resources are utilized to produce an

output.

 It is the quotient (ratio) obtained by dividing output by one of the

factors of production.

 Factors of production: Land, Labour, Capital, Raw materials,

Machines, etc.
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 Two types of productivity should not be directly compared.

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KINDS OF PRODUCTIVITY MEASURES
 Labour productivity – in terms of Labour hours
(Denominator)
This index does not reflect the effect of changes
in wage rates and changes in labour mix.

 Capital productivity – e.g. Value of capital

investment.

 Raw material productivity – e.g. weight of raw

material consumed in the denominator.
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PRODUCTION VS PRODUCTIVITY
 Production and productivity are two different things

 Increased production does not mean increased productivity.

 Higher productivity means that more is produced with the same

expenditure of resources; (i.e. at the same cost in terms of land,
material, machine, time or labor.)

 Alternatively, same amount is produced at less cost in terms of

land, labor, material etc; thereby releasing some of these
resources for the production of other things.
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PRODUCT DEVELOPMENT AND RESEARCH

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PRODUCT DEVELOPMENT AND RESEARCH

 Product development is an activity which involves

creating a new product or modifying the existing
product in order to meet the changing customer
requirements.

 Industries have to continuously upgrade their

products and introduce new products in the market
in order to retain and increase their market share.

 In a manufacturing company, product development

is done by Research and Development Department.
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PRODUCT RESEARCH
 The research may be of two types:
 Pure research
 Applied research
Pure research is concerned with discovering new
facts and to learn more accurately about the
characteristics of known facts.

Applied research is a methodology used to solve a

specific, practical problem of an individual or group.

Product development is carried out after applied

research. 38

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TOOLS OF PRODUCT DEVELOPMENT
 Standardization:
 Simplification:

 Specializaion

 All these factors lead to higher efficiency in

production.

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SIMPLIFICATION
 Simplification is a process of product analysis
through which unnecessary varieties and designs
are eliminated.
 Only a limited number of grades, types and sizes
of the product are retained.

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STANDARDIZATION
 Having selected the varieties and grades of the
products to be retained as much of its
manufacturing details are standardized as
possible.
 It also reduces component cost since standard
components are manufactures by mass production
methods and are cheaper.
 Selection of standard materials ensures physical
performance and guarantees failure-free
operation.

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SPECIALIZATION
 It is the natural outcome of the application of
standardization and simplification.
 Specialization means concentrating efforts on a
particular field of action or towards a specific
attempt.
 A worker is said to be specialized in a work when
he acquires skill and proficiency in it by
concentrating solely on it

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DIFFERENT STAGES OF PRODUCT
DEVELOPMENT

1. Generation of new product ideas

2. Screening of Ideas/ evaluation
3. Concept development
4. Business analysis / market analysis
5. Product introduction
6. Product life cycle analysis

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1 GENERATION OF NEW PRODUCT IDEAS
 Product ideas come from a variety of sources.
 Usually they come from:

 Internal resources like companies on research

and development department, managers, sales
force personnel etc.
 From external sources like customers, dealers,
competitors, consultants, scientist etc.
 Customers needs and wants seem to be the most
logical place to start looking for a new product.
 Also, ideas are generated to address the gaps or
loopholes in a competitor‟s product 44

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2. SCREENING OF IDEAS/ EVALUATION
 After collecting the product ideas, the next stage
is screening of these ideas.
 Interactive brainstorming sessions will help to
determine which of the ideas have the potential
of making significant contribution to marketing
objectives and to finally select the most preferred
idea.

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3. CONCEPT DEVELOPMENT
 At this stage, product idea is transformed into a
product concept.
 i.e. a product which target market will accept.

 Identifying physical features, benefits, price of

the product are done.

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4. BUSINESS ANALYSIS / MARKET ANALYSIS
 Business analysis will prove the economic
prospects of the new product.
 Market analysis involves a projection of future
demand, financial commitment and return.
 The demand potential of the product and the cost
of production and marketing are determined.
 It must also be ensure that product concept is
compatible with the resources of the
organisation, i.e. technological, human and
financial.
 SWOT analysis is also performed
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5. PRODUCT INTRODUCTION
 Make prototype - The first fully operational
production of the complete design solution.
 Only after testing under all expected and
unusual operating conditions the prototypes are
brought into full production.
 After the above basic requirements are met, the
product is sold on a small scale or regional bases
(test market).
 Advertisement and sales promotions for the
product are done.
 Feedback is used to take a decision regarding
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complete market launch.
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6. PRODUCT LIFE CYCLE ANALYSIS /
PRODUCT SUPPORT
 Product planning doesn't stop with the product
launch.
 It must also include managing the product through
various stages of its product life cycle.
 Introduction, growth, maturity and decline stages
 During the growth phase, sales are usually strong
while competition is low.
 However, over time, competitors will come up with
their own products.
 This competitive products will eat into the market
share of the existing product and sales will fall.
 This is the time new strategies have to be formulated
like lowering the product price, throwing in freebies,
developing new or additional features for the product,
etc. 49

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PRODUCT EXTENSION/PRODUCT LINE
EXTENSION

 When a company creates a new product in the

same product line of an existing brand with
unique features that the original product does
not have, it is called a product extension.

 For example, consider the case of Apple iPod.

 Apple realize that it needed new models and new

markets to keep the profits growing, which
resulted in the introduction of iPod shuffle, iPod
nano, iPod touch, and iPod classic.
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PRODUCT EXTENSION/PRODUCT LINE
EXTENSION

 Product extension is most commonly initiated in the

maturity stage.

 The key distinction between a product improvement

and product extension is that when a line extension
is introduced the original product can still be
acquired by the consumer where as a product
improvement serves as a replacement for the
original product

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DESIGN
Design is the most creative part of engineering or
Technology.
Engineers have a wide spectrum of design
requirements.
Research and development is the focus of all
thriving engineering organizations.

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DESIGN FUNCTION
 It is essential to design a product before starting
its manufacture.
 Designing is very important before actual
transformation of raw materials into finished
products.
 The design determines the commercial success of
a product.

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 DESIGN FUNCTIONS
 Things, a designed device or system is supposed to do.
 Engineering functions almost always involve transforming or
transferring energy, information, or material.
More functions leads to more constraints
 For example, the drill should work in high humidity (in rain)
 The drill should switch off if the load exceeds
 Thus, some of the functions can lead to constraints
(specifying the maximum load)

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 DESIGN FUNCTION
 This is about the specifics, the design is planned to do

 Function refers to the way a technical system works

Primary function – It is the basic operational outcome of the

device

Secondary required functions – It supports primary functions

Secondary unwanted functions – Undesirable byproduct eg.

Generate heat , generate noise

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PORTABLE DRILLING MACHINE - DESIGN
FUNCTIONS

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Primary
 The drill should drill hole of required dimension.

Secondary
 Compact and less weight

Secondary unwanted
 Generate heat

 Generate Noise

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OBJECTIVES OF DESIGN
 The objective of product design is to create goods
or services with excellent functional utility and
sales appeal at an acceptable cost and within a
reasonable time.

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REQUIREMENTS/OBJECTIVES OF A GOOD PRODUCT
DESIGN

 Satisfy the customer needs.

 Profitable
 Should provide all functional requirements.
 Extra feature
 Reliable
 Quality
 Environmental friendly
 Safety
 Easy to handle
 Availability of spare parts
 Aesthetics 59

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REQUIREMENTS/OBJECTIVES OF A GOOD PRODUCT
DESIGN

 Easy to store
 Competitive price.

 Easy to manufacture

 Easy to assemble

 Variety-options for the customer.

 Possibility of add-on features.

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PRODUCT DESIGN
 New products have changed the life of one and all.
 E.g. Computer, cell phone, etc.

 Look around-Variety

 Present designs of products are significantly

different from those at some 20 years back.
Design variation of cell phones

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 TYPES OF DESIGN
Classification is based on the difficulty of the
design process:
 Adaptive design

 Development design

 New design

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ADAPTIVE DESIGN
 Easiest
 Deals with the creation of a design process based on an
existing similar process.
 Existing design → Modifications → New design

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DEVELOPMENT DESIGN
 Complex in nature
 The design may start from an existing design,
but the final outcome may vary significantly from
the initial product.
 Eg: Manual Transmission → Continuously variable
transmission (CVT)

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NEW DESIGN
 Most difficult
 Creativity of the designer

 Involves mastering design and engineering

knowledge in addition to creativity and
imagination
 Any product which is the first of its kind may be
regarded as an outcome of a new design process.

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STAGES IN PRODUCT DESIGN
1. Conception
2. Acceptance
3. Execution
4. Translation
5. Pre-production

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1. CONCEPTION
 In this stage, after incorporating the user
requirements, the draft specifications for the
product are laid down.
 On design specification, the following information
should be furnished:
 Performance requirements
 Appearance or supplying requirements.
 Estimated quantity which will be sold.
 Maximum price within which the product should
be offered
 Probable date of introduction of the product into
the market 71

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2. ACCEPTANCE
 This is a stage, where the design activity of the
product begins after the feasibility analysis
 Calculations of the product is accepted in this
stage.

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3. EXECUTION
 Based on general design considerations, a model
is prepared as per the acceptance of specification
in stage 2.

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4. TRANSLATION
 At this stage, the production engineering
department is involved in design work.
 The manufacturing feasibility is tested at this
stage.
 The final manufacturing drawings are also
prepared in this stage.

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5. PRE-PRODUCTION
 Before starting the production on commercial
basis, it is recommended to carry out a pilot run
under production conditions.
 The pre-production run will ensure the quality
and reliability of the product as per the
specifications.

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MANUFACTURING VS PURCHASE –
ECONOMIC ASPECTS

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MAKE OR BUY DECISION
 A make-or-buy decision is the act of choosing
between manufacturing a product in-house or
purchasing it from an external supplier.

 In a make-or-buy decision, the most important

factors to consider are part of quantitative
analysis, such as the associated costs of
production and whether the business has the
capacity to produce at required levels.

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MAKING DECISION – FACTORS
 Purchase and maintenance of any production
equipment.
 Cost of production materials.

 Additional labor required to produce the items

 Storage requirements within the facility or if

additional storage space must be purchased
 Proper disposal of byproducts from the
production process.

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BUYING DECISION - FACTORS
 The price of the item
 Any shipping or importing fees

 Applicable sales tax charges.

 Expenses relating to the storage of the incoming

product
 Labor costs associated with receiving the
products into inventory.
 The reliability of the supplier.

 The firm should also consider whether the

supplier can offer a long-term arrangement, if
that is desired. 79

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FACTORS THAT MAY INFLUENCE FIRMS TO BUY A
PART EXTERNALLY INCLUDE

 Lack of expertise.
 Suppliers' research and specialized know-how
exceeds that of the buyer.
 Cost considerations (less expensive to buy the
item).
 Small-volume requirements.

 Limited production facilities or insufficient

capacity.
 Indirect managerial control considerations.

80

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FACTORS THAT MAY INFLUENCE FIRMS TO
BUY A PART EXTERNALLY INCLUDE

 Brand preference.

 Item not essential to the firm's strategy.

 The supplier has previously provided outsourced

services successfully in the past and can sustain
a long-term relationship.

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FACTORS THAT MAY INFLUENCE FIRMS TO
MAKE A PART INTERNALLY INCLUDE

 Cost considerations (less expensive to make the

part)
 Desire to integrate plant operations

 Productive use of excess plant capacity to help

absorb fixed overhead (using existing idle
capacity)
 Need to exert direct control over production
and/or quality
 Better quality control

 Design secrecy is required to protect proprietary

technology. 82

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FACTORS THAT MAY INFLUENCE FIRMS TO
MAKE A PART INTERNALLY INCLUDE

 Unreliable suppliers
 No competent suppliers

 Desire to maintain a stable workforce (in periods

of declining sales)
 Quantity too small to interest a supplier

 Control of lead time

 Transportation and warehousing costs

 Political, social or environmental reasons (union

pressure)
 Emotion (e.g., pride)
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C-V-P ANALYSIS
 Cost-Volume-Profit Analysis
 It is also known as 'Break-Even Analysis'

 CVP analysis is the analysis of three variable viz.

cost, volume and profit.
 Such analysis explores the relationship existing
amongst costs, revenue and resulting profit.
 It aims at measuring variation of cost with profit.
 Takes into account:
 The total costs (fixed and variable)
 The total sales revenues
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 Desired profits with regard to the sales volume

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CVP ANALYSIS
 CVP analysis could be helpful in the following
situations:
 Budget planning: in determining the sales
volume required to make a profit

 To make decisions regarding pricing and sales

volume

 Determining the sales mix of different products,

in what proportions each of the products can be
sold. 85

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ASSUMPTIONS OF CVP ANALYSIS
 Expenses can be classified as either variable or
fixed.
 CVP relationships are linear over a wide range of
production and sales.
 Sales prices, unit variable cost, and total fixed
expenses will not vary within the relevant range.
 Volume is the only cost driver.

 The sales mix remains unchanged during the

period.

86

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CVP ANALYSIS - FIXED COST
 These are the costs which incurred for a period
and which within certain output and turnover
limits, tend to be unaffected by fluctuations in
the levels of activity (Output or turnover).
 For example: Rent, insurance of factory building
etc. remain the same for different levels of
production

87

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FIXED COST GRAPH

88

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CVP ANALYSIS - VARIABLE COST
 These costs tend to vary with the volume of
activity.
 Any increase in activity results in an increase in
the variable cost and vice versa.
 For example: Cost of direct labour, direct
material, etc.

89

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VARIABLE COST GRAPH

90

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BREAK-EVEN ANALYSIS (CVP ANALYSIS)

91

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BREAK-EVEN ANALYSIS
 BEA is used to analyse the relationship between
cost, volume and profit.

 At break-even point (BEP), the total revenue

cover all fixed and variable costs, resulting in
zero profit.

 No profit or No loss point

92

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BREAK-EVEN ANALYSIS
 Decision to make or buy is based on break-even point.

 Break-even Point (in units) =

𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡

𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡 − 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡

 (𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑝𝑟𝑖𝑐𝑒/𝑢𝑛𝑖𝑡 − 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡/𝑢𝑛𝑖𝑡 ) = Contribution

margin / unit
𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡
 Break-even Point (in sales value or turnover) =
𝑃𝑉 𝑟𝑎𝑡𝑖𝑜
 The contribution margin ratio (CMR) i.e. PV ratio is the
percentage by which the selling price (or revenue) per unit
exceeds the variable cost per unit, or contribution margin as a
percentage of revenue.
93

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CVP ANALYSIS
Example 1:
 Super Bikes wants to produce a new mountain bike
called Hero1 and has forecast the following
information.
 Price/bike = 8000
 Variable cost/bike = 3000
 Fixed costs related to bike production = 5.5 Crore
 Target profit = 20,00,000
 Estimated sales = 1,20,000 bikes
Determine BEP (in units), BEP (in sales value),
Contribution margin/unit, Total contribution margin for
the estimated sales, PV ratio, quantity of bikes to be
sold for the achieving the target profit. 94

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CVP ANALYSIS
Ans:
 BEP (in units) = 11000 units

 BEP (in sales value) = 8.8 crore

 Contribution margin/unit = Rs. 5000/unit

 Total contribution margin for the estimated sales

= 60 Crore
 PV ratio = 0.625

 Quantity of bikes to be sold for the achieving the

target profit = 11400 units

95

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BREAK-EVEN ANALYSIS : EXAMPLE 2
 XYZ company presently purchases a component
for its end product at Rs. 5 per unit. The company
is considering to make the component at Rs. 3 per
unit. However, it will incur a fixed cost of Rs.
20000. What is the minimum quantity to be
manufactured so that it is more profitable as
compared to buying?

96

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BREAK-EVEN ANALYSIS
 Ans: 10000+1

97

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BREAK-EVEN ANALYSIS: EXAMPLE 3
 From the following data (a) find out the break
even point. Variable cost per unit =Rs. 18, Fixed
cost = Rs. 80000, Selling price per unit = Rs. 28.
(b) What should be the selling price per unit if
the BEP brought down to 4000 units.

 Ans: (a) 8000

(b) 38

Graphical method can also be used for Break-even

analysis 98

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PROTOTYPING:
 A prototype is an original model that serves as a basis
for future models.
 Prototyping consists of building a prototype of the
product
 For example, a new aircraft design would first be tested
as a scale model in a wind tunnel.
 Wind tunnel tests would generate information to be
used in constructing a full-size prototype of the aircraft.
 Test pilots then fly the prototype extensively under real
conditions.
 Only after testing under all expected and unusual
operating conditions are the prototypes brought into
full production.
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PROTOTYPING

 This is not just a model but a full fledged product

made as per the design.
 They are tested in the same operating environments
in which they‟re expected to function as final
products.

 At times, prototyping is done for some parts of a

design to check certain requirements.

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PROTOTYPING
 Prototyping is done using the materials specified so that
their performance is also taken into account.
Need of a prototype:
 Cost and time effective
 Feedback is obtained quickly so that product issues are
resolved earlier in time.
 Better product is built after testing and modifications
based on the results of testing.

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PROTOTYPING
 The decision to build a prototype depends on
a number of things, including:
 the size and type of the design space,

 the costs of building a prototype,

 the ease of building that prototype,

 the role that a full-size prototype might

play in ensuring the widespread acceptance
of a new design,
 the number of copies of the final design
that are expected to be made or built.

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 TESTING AND EVALUATION
 Before the product is introduced it is to be tested fully for all the
designed function.
 Testing and evaluation ensures whether the product will work or
does it require refinement.
 To identify potential faults
 Other requirements that are taken into account in the design are
to be evaluated (safety, environmental issues, etc.)

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REASONS FOR TESTING AND EVALUATING
THE PROTOTYPE

 Testing and evaluation allows the Client or

customer to view the prototype and give their
opinions.
 Safety issues are identified by narrow testing and
evaluation.
 The prototype can be tested against any relevant
regulations and legislation.
 The prototype is evaluated in order to allow the
production cost to be assessed and finalized.
 Component Failure is often identified during the
testing process. This may mean that a component
104
has to be redesigned and not the end product.
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PRODUCTION
 When the prototype is designed, manufactured
and tested successfully the next stage is product
manufacturing
 The production manager must plan and control
the process of production so that it moves
smoothly at the required level of output while
meeting cost and quality objectives.

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PRODUCTION
 The time limit for production and the
quantities needed at different points of time
are also decided.

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PRODUCTION
 The production level might need to be
adjusted from time to time to address
fluctuating demand or changes in a
company‟s market share.

 When more than one product is involved,

complex industrial engineering or operations
research procedures are required to analyze
the many factors that impinge on the
problem.

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PRODUCTION

 Successful transformation of design into a

saleable product is a challenge to the
organization.
 This needs a close coordination of production and
design department.
 The concept of DESIGN FOR PRODUCTION is
the current trend.

108

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HUMAN FACTORS IN DESIGN -
ERGONOMICS

109

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ERGONOMICS

 The word "Ergonomics" originated from two

Greek words "ergon," meaning work, and "nomos“
meaning “law."
 How well the design fits the human user.
 It deals with the user interactions with the
product and making sure that it is easy to use
and maintain.
 It is the study of man in relations to his work.
 Human engineering or human factors
engineering.
 The aims of ergonomics are, therefore, to enhance
functional effectiveness while maintaining or 110
improving human welfare.

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ERGONOMICS

 It is concerned with designing and improving the

workplace, workstation, tools, equipment, etc.
 To limit fatigue, discomfort and injuries, while
efficiently achieving personal and organizational
goals.
 A successful ergonomics program utilizes the
skills of many disciplines, including engineering,
psychology, medical, safety, management, etc.
 Two goals:

 Enhance performance and thus productivity

 Prevent fatigue and injury. 111

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ERGONOMICS
 Ergonomics is a multi-disciplinary science
comprising subjects like anatomy, psychology,
physiology, sociology, engineering, anthropology,
physics and medicine.

112

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OBJECTIVES OF ERGONOMICS
 Improve human well-being and overall system-
performance by optimising the integration of man
and machine.
 Obtain maximum satisfaction for the worker by
taking care the factors governing the physical
and mental fatigue.
 Attempts to minimize the risk of injury, illness,
and errors without compromising productivity.

113

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ADVANTAGES OF ERGONOMICS
 Higher productivity
 Less fatigue and more comfort to the worker

 Better design of the machine

 Increased safety.

 Reduced labour turnover

 Better integration of man-machine system.

114

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RELATED SCIENCES OF ERGONOMICS
Anthropology:
 It is the study of human characteristics such as
height, weight, reach, and its variations over
time.
 The data is useful for determining the boundaries
of the work-place, heights and shapes of the seats
and work tables to suit human body
measurements.
 The data is useful for designing handles, levers,
etc. so that they are easy to reach and operate.
115

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RELATED SCIENCES OF ERGONOMICS
Physiology:
 Concerned with the determination of :

 The effect of stress and strains caused by

environmental factors such as light, heat, noise,
humidity, etc. on human body and the extent to
which it can tolerate.
 The speed, accuracy and force with which body
movements can carried out.
 Human stamina

116

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RELATED SCIENCES OF ERGONOMICS
Psychology:
 Study concerned with human behaviour and
human reactions under various working
conditions and under the influence of mental
strain.
 In the language of ergonomics, the factors which
make the job uncomfortable are called „stressors‟
and the effect of stressors on human body is
called strain.
 Strain can either physiological or psychological or
combination of them.
117

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FACTORS AFFECTING HUMAN COMFORT IN
WORKPLACE

 Physical factors such as lighting, ventilation,

noise and temperature.
 Psycho-social factors such as working hours, rest
pauses, shift timings, safety, etc.

118

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 119

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 120

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ERGONOMICS

 International labour organization defines human

factors engineering as “the application of
human biological sciences along with
engineering sciences to achieve optimum
mutual adjustment of men and his work,
the benefits being measured in terms of
human efficiency and well-being”.

121

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ERGONOMICS

 The fundamental concept of human engineering

is the system.

 A system is composed of humans, machines, and

other things that work or interact together to
accomplish some goal which these same
components could not produce independently.

122

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MAN-MACHINE SYSTEM
 Human-factors engineers regard humans as an
element in systems, and a man-machine model is
the usual way of representing that relationship.

 The simplest model of a man-machine unit

consists of an individual operator working with a
single machine.

 In any machine system, the human operator first

has to sense what is referred to as a machine
display, a signal that tells him something about
123
the condition or the functioning of the machine.
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MAN-MACHINE SYSTEM
 A display may be the position of a pointer on a
dial, a light flashing on a control panel, the
readout of a digital computer, the sound of a
warning buzzer, or a spoken command issuing
from a loudspeaker.

 Information processing

 Human operator normally takes some action; a

pushbutton, lever, crank, pedal, switch, or
handle.
124

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MAN-MACHINE SYSTEM
 The man-machine system is a combination of one
or more human beings and one or more machine
interacting to bring about, from given inputs,
some desired output.

125

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 126

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 127

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VALUE ENGINEERING

128

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 VALUE ENGINEERING / VALUE ANALYSIS
 Value analysis aims at a systematic
identification and elimination of unnecessary
costs.
 It is primarily developed as a cost reduction
technique.
 It critically investigates and analyses the
different aspects of materials, purchase, design
and production of each and every component of
the product.
 Value analysis is normally applied to existing
rather than to new products.
129

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VALUE ENGINEERING / VALUE ANALYSIS
 Value analysis examines the design, function,
and cost of each and every component in order to
produce it economically without decreasing its
utility or reliability.

function (or utility) 𝑤𝑜𝑟𝑡ℎ 𝑡𝑜 𝑦𝑜𝑢

 Value = =
𝐶𝑜𝑠𝑡 𝑝𝑟𝑖𝑐𝑒 𝑦𝑜𝑢 𝑝𝑎𝑦

 Thus, value analysis should not be taken as only

cost reduction technique; but instead it may
increase the value of a product either by
increasing its utility with the same cost 130

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VALUE ANALYSIS- QUESTIONS ASKED BY A
VALUE ANALYSIS TEAM

 Does it (a component) contribute value to end

product?
 Is its cost proportionate to its function?

 Would there be a better product?

 Can a component be produced by less costly

process?
 Is it possible to use a standard component?

131

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VALUE ENGINEERING
 It is the application of the concepts of value
analysis at the design or pre-manufacture stage
of the component parts.

132

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VALUE ENGINEERING
 Value engineering (VE) is the study of
functions to satisfy the user needs of a
quality product at low life cycle cost through
well planned design with creativity.

 Value, as defined, is the ratio of function to

cost.

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VALUE ENGINEERING
 Value engineering is a systematic method to
improve the "value" of goods or products and
services by using an examination of function.

 Value can be increased by either improving the

function (performance) or reducing the cost.

134

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VALUE ENGINEERING
 It is a primary tenet of value engineering that
basic functions be preserved and not be reduced
as a consequence of pursuing value
improvements.

 Value Engineering is gaining much more

significance in the present scenario because of a
lot competition among the various companies.

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VALUE ENGINEERING
 Maximum value is obtained when essential
function is achieved for minimum cost
 Maximizing the functionality and/or minimizing
the cost would add value to the products

Value Equation: V= P/C

V- Value
P- Performance
C – Cost

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VALUE ENGINEERING
 Reduction of parts during design.

 Introduction of simple design modifications that could

assist in manufacture or assembly.

 Choosing materials that can replace costly ones and

improve the performance.

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 Functions may be primary, secondary or tertiary.

138

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APPLICATIONS
VA/VE has applications in almost all fields.

 Machine tool industry

 Automobile industry

 Military equipment

 Transportation and distribution

 Construction

 Healthcare

139

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BENEFITS
 Faster cost reduction technique.
 Improved customer satisfaction (as the value of the
product is increased).
 Increased sales and thus increased profit.

 It requires little expenditure because the value

analysis team can be formulated out of the staff
available in different sections like purchase,
production, finance, etc.

140

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REASON FOR POOR VALUES
 Gaps in user expectation and the product or
service
 Design based on habitual thinking or faulty
beliefs
 Not enough time for project formulation and/or
design
 Lack of and/or poor coordination amongst
designers
 Failure to utilize all available resources

 Not using standardised products

141

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TYPES OF VALUES
 It is usually difficult to specify value mainly
because values change from person to person.

142

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TYPES OF VALUE
 Use value: It is also called functional value. It
considers the work done, functions performed or
services rendered by a product or component.

 Esteem value: It provides properties, features and

attractiveness to a service, product or work, which
make the ownership desirable.

 Scrap value: It is the money, which can be

recovered when the item is not needed.

143

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TYPE OF VALUE
 Cost value: It is the total cost of material, labour,
overhead and services to produce an item (or to
deliver a service).

 Exchange value: A product is said to possess

exchange value if the same (because of its
qualities) can be exchanged for something else.

144

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STAGES IN VALUE ANALYSIS
 VA starts with the identification of its function or end
use.
 The main purpose is to provide the required function
at the least cost.
Stages:
 Orientation phase
 Information phase
 Functional analysis phase
 Creative phase
 Evaluation phase
 Investigation/development phase
 Presentation phase
 Implementation phase
145
 Follow-up phase

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STAGES IN VALUE ANALYSIS
 Orientation phase: Identification of the problems
very clearly, formation of teams, laying down
objectives and in-depth training of all the team
members.
 Information phase: All the relevant information
like drawings, technical specifications,
manufacturing processes, quality, production
problems, etc. is gathered.
 Functional analysis phase: Involves analysis and
identification of functions.

146

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STAGES IN VALUE ANALYSIS
 Creative phase: This is the essence of value
engineering. Brainstorming sessions and other
creativity techniques are used to generate a large
number of ideas for providing the functional
requirements.
 Evaluation phase: the possible alternatives
developed are analysed and ranked. One or more
alternatives are selected for development.
 Investigation/development phase: short-listed
ideas are investigated in-depth to arrive at
optimum and practical solution.
147

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STAGES IN VALUE ANALYSIS
 Presentation phase: the selected alternative is
presented to the decision maker for approval and
implementation.
 Implementation phase: involves the
implementation of the selected alternative.
 Follow-up phase: compares the results with the
original expectations and suggests corrective
action, if any.

148

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VALUE ENGINEERING
What the product is supposed to do?

What else can it do?

What else is needed to enhance the value?
Will these secondary functions add value ?

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VALUE ENGINEERING - UNNECESSARY
COSTS

 These are costs which neither contributes to

function or appearance of the product.
 Value engineering aims to reduce unnecessary
costs.
Reasons for unnecessary costs:
 Poor design of the product

 Unrealistic or too tight specifications

 Lack of standardization

150

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VALUE ENGINEERING VS VALUE ANALYSIS
 These two terms are often used synonymously.

 Though the philosophy underlying the two is same,

the difference lies in the time and at the stage at
which the technique is applied.

 Value analysis is the application of a set of techniques

to an existing product with a view to improve its
value. It is thus a remedial process.

 Value engineering is the application of exactly the

same set of techniques to a new product at the design
stage. Thus it is a preventive technique. 151

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 152

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 153

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DIVISION OF LABOUR

154

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 156

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