CHAPTER1

Industrial Engineering and

Production Systems

1.1 INTRODUCTION
Industrial engineering determines the most effective ways to use the basic factors of production
such as men, machines, materials, information, and energy to make a product or a service. These
factors of production form the link between management goals and operational performance.
Industrial engineering deals with increasing productivity through the management of men,
methods and technology.
The American Institute of Industrial Engineering (AIIE, 1955) has defined the term

industrial engineering' as given below (Maynard 1963):

Industrial Engineering is concerned with the design, improvement, and installation of
integrated systems of men, machines, materials, and energy. It draws upon specialized
with
knowledge and skills in the mathematical, physical and social sciences together
design specify, predict, and
the principles and method of engineering analysis and to
evaluate the results to be obtained from such systems.

One widely used and

A number of definitions have been given for industrial engineering.
more

below:
ccepted definition of industrial engincering is given
Industrial engineering may be defined as the art of utilizing scientific principles,
information for designing, improving, and
psychological data, and physiological
integrating industrial, management, and
human operating procedures. (Nadler 1955)
concerned with the
Industrial management is closely related to industrial engineering and
and evaluate the integrated systenms ofmen, materials,
techniques to develop, improve, implement
information and energy. It includes the knowledge of
money, machines, methods, knowledge,
effectiveness of an industry. The origin of industrial
various fields to increase the efficiency and
It is a process of planning, organizing, directing,
management has been industrial engineering.
activities of any industry/organization. It organizes and transforms
controlling and managing the value-added products in a controlled
the inputs usingvarious resources of the organization into
and an effective manner.
 2 Industrial Engineering and Management

1.2 HISTORICAL DEVELOPMENT OF CONCEPTS IN

INDUSTRIAL ENGINEERING AND MANAGEMENT
The evolution of industrial engineering has been defincd in five different stages. These
stages are
mentioned below as:

Phase 1: Pre-Industrial Revolution Era

Phase 2: Industrial Revolution Era
Phase 3: Scientific Management Phase
Phase 4: Operations Research and Quantitative Management Phase
Phase. Automation and Computer-Integrated Manufacturing (Modern
Management)
1.2.1 Pre-industrial Revolution Era
Prior to the Industrial Revolution in the
early 1800s, there was focus on only manual operated
manufacturing activities. There was no factory concept; mostly, handicraft and agriculture
products, etc. were dominated in the trade. Three major developments in this era are given
below as:
1774: James Watt developed the steam engine.
1776: Adam Smith wrote The Wealth of Nations and advocated the concept of division of
labour, skill development, specialization, etc. (Smith 1776).
1798: Concept of interchangeability of parts was developed by Whitney and was used in
manufacturing of musket (Hatfield 2013).

1.2.2 Industrial Revolution

Industrial engineering emerged as a profession during the Industrial Revolution. This was due to
the requirement of technically qualified
and skilled people, who were needed to
and control the
plan, organize
manufacturing processes. After the industrial revolution, Taylor and Gilbreth
(Frank B. Gilbreth and his wife, Lillian
Gilbreth) contributed a lot to the field of industrial
engineering and later these contributions were known as the base of Scientific Management.
1.2.3 Scientific Management
Following contributions, as mentioned in chronological order, form
Management:
a major part of Scientine

1910: F. W
1911:
Taylor's Scientific Management
Gilbreth's Motion Study
1913: Gantt's Scheduling Chart
1917: Harris Inventory Control
1924 Shewart's Statistical Control Chart
1927-33: Elton Mayo's
1932 Motivation
Theory
Babbage Wage payment and
1933: Time Study
Barnes Work Study
 Industrial Engineering and Production Systems 3

Fredrick Winslow Taylor (Popularly known as F. W. Taylor) is considered the Father of

Scientific Management. His ideas infuenced by Adam Smith's book The Wealth of Nations,
published in 1776; Thomas Malthus's Population Theory, published in 1798; David Ricardos
Principles of Political Economy and Taxation, published in 1817; John Stuart Mill's Principles
of Political Economy, published in 1848; and Charles W. Babbage's book on the Economy of
Machinery and Manufacturers, published in 1832.
Taylor's four principles are enumerated as follows (Taylor 1911):
1. Replace working by 'rule of thumb,' use the scientific method to study a work and
determine the most efficient way to perform specific tasks.
2. Job specialization, i.e. rather than simply assign workers to do any job, match worker's
capability and motivation to their jobs, and train them to work at maximum efficiency.
3. Monitor worker performance, and provide instructions and supervision to ensure that
they are using the most efficient ways of working.
4 Allocate the work between managers and workers so that the managers spend their time
management, allowing the workers to perform their tasks efficiently.
on

Second major contributions in the field of scientific

management are from Gilbreth family
(Frank B. Gilbreth and his wife, Lillian Gilbreth). Frank B. Gilbreth focused on
identification,
analysis, measurement and setting standards for the fundamental motions, which were
to accomplish a job. His contributions were required
appreciated to set the standard time and method to
perform a task. Lillian Gilbreth worked on a human relation aspect of
Another major contribution also came from engineering.
Henry L. Gantt. He provided the concept of
planning and scheduling the activities on a graphical chart, widely known as Gantt Chart. This is
very helpful in reviewing the progress and updating the schedule of work.
The major
development of industrial engineering was emerged during the period 1920-1940.
In 1924, W. A. Shewhart developed the concept
of Statistical Control Chart to measure the quality.
During this period, concepts of inventory control, incentive plans, material
etc. were evolved. handling,
Ralph M. Barnes worked on motion study for his doctoral work. plant layout,
1.2.4 Operations Research and Quantitative Phase
During World War II, concepts of Operations Research were
resources allocated in the war. During this developed and used to optimize the
phase, the concept of linear programming (LP) was
developed by Dantiz. Some of the major developments observed
below as: during this phase are mentioned
1956: First NC machine was
developed.
1961: First time Robot was used.
1965: Flexible automation was used.

1.2.5 Automation and Computer-integrated Manufacturing Phase

During this phase, most of the automation and
were
implemented in the industries. computer-integrated manufacturing concepts
Concepts of lean
manufacturing and Just-In-Time (JIT)
were developed in automobile industries (Toyota manufacturing
system).
 4 Industrial Engineering and Management

1.2.6 Factory of the Future

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

1.3 PRODUCTION SYSTEMS

with quantity produced. But production implies the

Quantitatively. production is concerned
services. It is concerned with the transformation of inputs into
activity of producing goods and/or
is a value-addition process through which raw
the required outputs. In other words, production
each stage ofthe production process, some values are
material is converted into finished goods. At
furniture, mobile phone, computer, car, etc.
added. Some examples of production are producing i.e. man
i.e. raw materials, conversion subsystems,
A production system consists of inputs,
control and reliability, and outputs, i.e. finished
and machine. control system, i.e. quality
are interrelated to each
other as shown in Figure 1.1. There are a
products. All these components
studied in detail in Chapter 10
number of other subcomponents of production systems that can be
Production Planning and Control' in this book.

Value addition Finished

Raw
material subsystems goods

Control
subsystems

Figure 1-1: Production system of an organization

Type of Production Systems classified as job-

of products, production systems can be
On the bases of volume and variety The first three
production and continuous production.
shop production, batch production,
mass
systems
as discrete types
of production. These production
production systems can be grouped
are shown in Figure 1.2. to accommodate
In discrete production systems, the production
set-up is changed regularly
for example, auto,
the production of different products of
different designs and specifications,
is produceu
In continuous production systems, same product
electronics, textile industries, etc. and powel
or operations, for example,
petro-refinery, chemical
Conunuousiy in the same sequence
of production systems, the products may
be produced in different st
plants.In discrete type of production system, production continues to
but in conlinuous type 24 hours without S

1.3.1 Job-shop Production

Job-shop production is characterized by manufacturing of a large variety of products n sitd

customers. The
quaniues lhat are designed and produced as per specifications given by
 5
Industrial Engineering and Production Systems

Job-shop
production
Batch
production
Mass
production

Continuous
production

Volume of production

Figure 1-2: Types of production systems

feature of this production system is highly flexible. A job-shop comprises general-purpose

machines arranged in difierent departments. The process layout is most suitable for this type of
production system. Each job requires unique technical requirements and processing on machines
in a certain sequence.

Characteristics of Job-shop Production

1. Machines and methods employed are generic type as product changes are quite
frequent.
2. Planning and control systems are flexible enough to deal with the frequent changes in
product designs.
3. Manpower is skilled enough (cross-functional) to deal with changing work conditions.
4. Schedules are actually not fixed or predetermined in this system as no definite data is
available on the product.
5. In-process inventory is usually high as accurate plans and schedules do not exist.
6. The product cost is normally high because of high material and labour costs.
7. Grouping of the machines is done on a functional basis (i.e. lathe section, milling
section, etc.)
8. This system is highly flexible as the management has to manufacture varying product
types.
9. Material handling systems are also highly flexible to meet changing product
requirements.

Advantages of Job-shop Production

1. Most suitable for production of a variety of products due to the use of general-purpose
machines.
2. Opportunities for learning multiple skills and getting varied exposure to the workers.
3. The full potential and skill of operators can be utilized.
4. Importance to creativity and innovative ideas.
 Limitations of Job-shop
Production
1. Higher cost due to low volume of
2. Higher
inventory cost due to higherproduction
level of
and lack of economies
of scale.
3 A
complicated production inventory at all levels.

4 Unnecessary movement ofplanning

men and
is used.
materials cannot be avoided in the
application of functional layout. shop due to
1.3.2 Batch Production
Batch production is a type of production in which the job passes
departments in batches, and each batch may through the functional
have a different routing. Batch
characterized by the manufacture and production is
intervals, awaiting sales. stocking of a limited number of products at
regular
Characteristics of Batch Production
1. Shorter production runs are used.
2. Flexible
3. Plant and
manufacturing is most suitable.
machinery set-up is used for production of items in a batch and
set-up may be required for processing the next batch. a
change in
4.
Manufacturing lead time and cost of production
are lower as
compared to
production due to higher volume. job-shop
5. As the final
product is standard compared to job-shop production and manufactured in
batches, economy of scale can be achieved
up to some extent.
6. Machines are
grouped on a functional basis similar to the job-shop
manufacturing.
7. Semi-automatic and
special-purpose automatic machines are generally used to take
advantage of the similarity among the products.
8. Labours are multi-skilled and work
upon different product batches.
9. In-process inventory is
usually high owing to the type of layout and material handling
policies adopted.
10. Semi-automatic material handling systems are most appropriate in conjunction with the
semi-automatic machines.
11. Normally, production planning and control is difficult due to the odd size
repetitive nature of order.
and the non-
Advantages of Batch Production
1. There is better utilization of plant and machinery
compared to job-shop production.
2. Batch production promotes functional specialization.
3.
3 Cost per unit is lower as compared to job-shop production.
4. Investment is lower in plant and machinery.
5. It is flexible enough to accommodate and process a number of
products.
6. Job satisfaction exists for operators.
 Industrial Engineering and Production Systoms 7

Limitations of Batch Production

1. Material handling is complex because of irregular and zigzag flows.
2. Production planning and control becomes complicated.
3. Work-in-process inventory is higher compared to mass/continuous production.
Higher set-up costs due to frequent changes in the set-up.

1.3.3 Mass Production

Manufacture of discrete components or asscmblies in a very large volume is called mass

production. Machines are arranged in a line according the sequence of operations on the
to

process standardization exists and

all outputs follow the
product in product layout. Produet and
same path.

Characteristics of Mass Production

1. Product and process sequences are standardized.
used.
2. Special-purpose machines having higher production rate are

3. Production volume is large.

4. Production cycle time is shorter compared to job-shop and batch productionsystems.
4
5. In-process inventory is low.
Flow of materials, components and parts is continuous and without any backtracking.
6.
7. Material handling can be completely automatic.
Production
Advantages of Mass
1. It has high production rate with reduced cycle time.
2. Less skilled operators may be employed.
3 Lowin-process inventory is used.
4. Manufacturing cost per unit is low.
Limitations of Mass Production
linc.
1. Breakdown of one machine stops the entire production that is, the
The line layout needs major change with in the
changes product design,
2
layout is less flexible.
3. Higher investment in production facilities is required.
4. The cycle time is determined by the slowest operatio1.

1.3.4 Continuous Production

are arranged as per a predetermined sequence

Production facilities for continuous production
The items are made to
operations from the first operation to the finished product.
of production transfer
material handling devices such as conveyors,
flow in a sequence of operations through
of machine layout is used for continuous production.
devices, etc. A highly rigid type
 8 IndustrialEngineering and Management

Characteristics of Continuous Production

1. Dedicated plant and equipment is employed.
2 Material handling is fully automated.
The production process follows a predetermined sequence of operations.
3.
Component materials cannot be readily identified with the final product.
4.
5. Planning and scheduling are a routine action.
Advantages of Continuous Production
1. Product and process sequences are highly standardized.
The production rate is very high with reduced cycle
time.
2.
due to line balancing.
3. Capacity utilization is higher than the other production systems
as it is completely automated.
4. Manpower is not required for material handling,
line.
5. A person with limited skills can be used on the production
The unit cost is lower due to the high volume of production.
6.
Limitations of Continuous Production
number of products does not exist.
1. Flexibility to accommodate and process a
flowlines.
2 Very high investment is required for setting
3. Product differentiation is limited.

1.4 SELECTION OF PRODUCTION SYSTEMS

all
Any manufacturing system be an ideal system for production of a product considering
cannot

the factors simultaneously. The choice of thhe system depends on

various factors, but basic factors
that infiuence the selection of production system are specification
of the final product and cost-
effective production process. Other factors which determine the choice of the production system
are given below as:
system
Efect of volume/variety: One of the major considerations in the selection production
of
Is the volume/variety of the products. High product variety requires highly skilled labour,
the other han.
general-purpose machines, detailed production planning and control system. On
low product variety (i.e. one or few products produced in large volumes) enables the use or
semi-skilled labour, highly automated production processes using special-purpose machines anu
o
simple production planning and control systems. The relationship between volume and variety
products is already shown in Figure 1.2.
Cupacity of the plant: The projected sales volume is a major influencing factor in determiniu
whether the firm should go in for discrete/intermittent or continuous process. Fixed costs are hgt
for continuous process and low for discrete process while variable costs are more in the disere
process and less for continuous process. Discrete process therefore will be cheaper to install an
operate at low volumes and continuous process will be economical to use at high volume.

Flexibiliy: Flexibility implies the ability of the company to meet the changes required m
the market regarding product design and volume. If more varieties are to be manufactured
 IndustrialEngineering and Production Systems 9

the manufacturing facilities will have to be generalized depending upon the volume. Greater
commonalities demand discrete manufacturing, which results in high inventories, large
manufacturing lead times and elaborate planning and control.
Lead time: The lead time, more appropriately used in production system is delivery lead time
expected by the customers. It is another major infiuencing factor in the selection of a production
system. As a general rule, faster deliveries are expected by customers. The product, therefore, may
require to be produced to stock using principles of batch production/mass production. If customers
are ready to wait for the product, then the product may be produced to meet the order only.

Efficiency: Eficiency measures the speed and the cost of the transformation process. Efficiency
will be higher for the products which are produced in mass. But for mass production of a product,
greater demands are required. Therefore, depending upon the demand, product variety is to be
considered and the process which gives the best efficiency in terms of machine and manpower
utilization will have to be selected.

1.5 PRODUCTIVITY
Production and productivity are two different terms having different meanings. Higher production
does not mean higher productivity, and vice versa. Production is related to the activity of
producing goods or services. It is a process of converting inputs into some useful, value-added
products/services. Productivity is concerned with how effectively the resources are utilized to
increase the output of production. The productivity can be improved by increasing the output for
same inputs or keeping constant output for deceased amount of inputs or increasing the output in
greater proportion than the increase in inputs. Productivity may be calculated using the following
formula:
Productivity = Output/Input

Productivity relates the efficient utilization of input resources for producing goods or services.
Production is a measure of the output or volume produced. The emphasis is only on volume
of production and not on how well the inputs or resources are utilized. In contrast, productivity
emphasizes only on the ratio of the output produced to the inputs used. Productivity may be
divided into two categories: partial productivity and total productivity.

1.5.1 Partial Productivity

Partial productivity is the ratio of the total output and individual input in the case of multifactor
productivity (MFP) (Solow 1957). This term is used to measure the productivity of an individual
input such as manpower, capital invested and energy utilized in production. Partial productivity
is defined on the basis of the class of the input being considered. For example, if the labour
was increased by 18 per cent during the last financial year, its effect on the increased output is
represented by partial productivity. Similarly, partial productivity of capital, material and other
inputs may be defined. The various components of partial productivity and their uses are shown
in Table 1.1.
 Table 1-1: Different forms ofpartial productivity

Partial productivity Formula

1. Labour productivity Output/Labour input

2. Material productivity Output/Material input
3. Capital productivity Output/Capital input
4. Energy productivity Output/Energy input
5. Advertising and media planning Output/Advertising and media
productivity planning input
6. Other expense productivity Output/Other expense input

Advantages of Partial Productivity Measure

1. It is a good diagnostie measure to identify areas where improvements are required.
2. It is easy to calculate because it is independent of other inputs.
3 The management finds it easy to understand and pinpoint the logic for its improvement.
4. It is easy to benchmark (compare) with other industries.
5. Data may be easily generated for it.

Limitations of Partial Productivity Measure

1. It can be misleading if used out of context.
2 It does not represent the overall effect of the system performance since it is concerned
with the contribution of a specific input only and not all the resources.
3 Focused areas of improvements are difficult to identify. Therefore, sometimes wrong
areas of management control may be identified for improvement.
4. It gives a myopic view of the performance of production systems. This means, only
limited factors, which affect the output or performance, are considered.
5. It misses the holistic (or totality) approach.
Example 1.1: A mobile phone manufacturing company is producing 44,000 mobile phones
to
per month by 200 workers in 8-hour shift. The company gets an additional order
employing
supply 6000 mobile phones. The management has decided to employ additional workers. What
will be production and productivity levels when the number of additional workers employeu
is: (a) 20 (b) 25 and (c) 30.
Solution:
Present production =
44,000 mobile phones
Present productivity (of labour) = Present production (i.e., output)
Total worker hours (i.e., input)
44,000 components
(200 workers(8 hours)(30 days of the month)
With increased order

(a) When additional 20 workers are hired

Production 44,000 +6000 50,000 mobile
=
=
phones
Productivity (of labour) = Increased total production/Total man-hours
50,000/(200 +20) (8) (30)
0.946 mobile phones/man-hour
(b) When additional 25 workers are hired
Production 44,000+ 6000 50,000 mobile phones
= =

Productivity (of labour) =50,000/(200 + 25) (8) (30)

=
0.925 mobile phones/man-hour
(c) When additional 30 workers are hired
Production =44,000+ 6000 =
50,000 mobile phones
Productivity (oflabour) = 50,000/(200+30) (8) (30)
= 0.905 mobile phones/man-hour
In this example, it is clear that production has increased by 6000 units. Therefore,
Increase in production = (50,000 - 44,000/44,000) x 100 = 13.6 per cent

1.5.2 Total Factor Productivity

TFP is the ratio of net output to the sum of associated labour and capital inputs. Net output means
total output minus intermediate goods and services purchased. Notice that the denom
this ratio is made up of only the labour and capital input factors.
Net output
Total factor productivity (TFP)=;-Net output
Total factor input
_Total output-Materials and services purchased
=

(Labour+Capital) Inputs
Total output
Otal output
Total productivity =

Total input

Advantage of TFP
(a) It is relatively easy to compare data from company records.
(b) Industrialist prefers this as it is easy to compare in cross-industrial context.

Limitations of TFP
Many important inputs, such as material, energy, etc., are ignored.
(a)
(b) The net output does not reffect the efficiency of the production system in a proper way.
12 Industrial Engineering and Management

Example 1.2: The data for output produced and inputs consumed for a
particular type of a
manufacturing organization are
given below in constant
moncy value. Find out the partial. total
factor and total productivity values.
Output = Rs 3000.00
Labour input = Rs 600.00
Material input = Rs 300.00
Capital input = Rs 800.00
Energy input = Rs 150.00
Other expenses input = Rs 75.00

Solution:
Partial productivities

Labour productivity Output 3000

=5
abour
Labour input
input 60
600

Material Output 3000

productivity =Material = 10
input 3000
300

=a Output
3000
Capital productivityy= 3.75
Capital input 800

Energy productivity = Output

Energy input
300020
150

Other expenses productivity= Output 3000

= 40
Other expenses input 75

Total factor productivity (TFP) =

Net output
Total factor input
Total output - Materials and services purchased

(Labour+Capital) inputs
3000-(300+150+75)176
600 +800

Total productivity = Output 3000

= 1.55
Total input 600+300+800+150+75

Example 1.3: Table 1.2 gives the comparative study of several items of
years 2013 and 2014. Compute the changes in all productivity indices.
a motherboard for the

Table 1-2: Conparative study of productivity for the years 2013 and 2014

Items 2013 2014

Number of output at the rate of Rs 5000 per unit 16,000
10,000
Direct labour cost (Rs) 60,000
32,000
(Continued
 Industrial Engineering and Production Systems 13

Table 1-2: (Continucd)

2013 2014
Items
8000 11,000
Capital depreciation (Rs)
32,000 45,000
Capital book value (Rs)
48,000 56,000
Total indirect cost (Rs)
5000 8000
Energy used Rs 4/kW(in kW
32,000 36,000
Raw materials used (Rs)
20,000 25,000
Services of consultant hired (Rs)

Solution:
16,000/60,000
x100
Direct labour productivity index
=

(a) 10,000/32,000
= 85.33 per cent

(b) Capital depreciation productivity

index 16,000/11,000x100
10,000/8000
= 109.09 per cent

book value productivity

index = 16,000/45,00 100
(c) Capital 10,000/32,000
= 113.77 per cent

index 16,000/56,000x100
X100

(d) Total indirect cost productivity 10,000/48,000

= 137.14 per cent

16,000/8000 x100 =100 per cent

index
(e) Energy productivity 10.000/5000
10,000/5000
16,000/36,000
=0,000/56,000
XI00

Raw material productivity index 10,000/32,000

(1)
= 142.22 per cent

16,000/25,000
100
(g) Consultant productivity index10,000/20,000
= 128 per cent

calculate the index for the following:

information given in Table 1.3,
Example 1.4: Using the
productivity
Direct labour
(a) productivity
(b) Capital depreciationproductivity
book value
(c) Capital
cost productivity
(d) Direct
cost productivity
(e) Total
(1) Energy productivity
 n d u s i r i a l Engineermg dnd v i a l Tay
14

2013
for the years 2012 and
Table 1-3: Comparative study of productivity
2012 2013
tem 300
250
Number of outputs (all of one kind) (in Rs)
(10,000 per unit) 60,000
50,000
Direct labour cost (in Rs) 5000
4000
Capital depreciation (in Rs) 16,000 24,000
Capital book value (in Rs) 44,000
40,000
Total indirect cost (in Rs)
700 2400
Energy used ( Rs. 4 per watt) (in kW)
12 16
Raw material used (Rs 1000 per ton) (in tonnes)

Solution:
Calculation of productivity
index

300 50,000 100 = 100 per cent

(a) Direct labour productivity
index =" 250
60,000
300 4000
index =. x100
(b) Capital depreciation productivity 5000 250
= 96.0 per cent

(c) Capital book value productivity index= A 000

30016,000100 =80 per cent
X
24,000 250

300 40,000 x100 = 109.01 per cent

(d) Direct cost productivityinacx44.000 250
44,000
300 700 x 4 x100 = 35 per cent
(e) Energy used productivity index =

2400 x 4 250

(f Raw material productivity index = -

300
x
12,000-x100 =90 per cent
16,000 250
250

1.5.3 Efficiency
It is the ratio ofoutput to standard output expected. Therefore, eficiency indicates a measure0
how well the resources are utilized to accomplish a target or result. Eficiency may be calculated
using the following formula:

Efficiency= Output/Standard output

Here standard output means output without loss, e.g. for a student 100 (full marks) is the standard
output and the marks obtained by him is simply output.
 15
Industrial Engineering and Production Systerms

.5.4 Effectiveness and Productivity Index

The term 'effcctiveness' is a mcasure ofthe degrec ofaccomplishment or achievement ofan objective
(target). For example, a man rushes to the markct to buy some medicines for a patient. He could go
by a car, or by a bicycle or on foot. The cost and time are different for different modes of travel. Now
suppose by the time the medicine is brought the paticnt dics, then the effort is not effective.
Efiectiveness represents the degrec of success in accomplishing objectives. Therefore,
effiectiveness indicates a measure of how well a set of targets or results are accomplished.
Productivity is the integration of both efficiency and effectiveness. It indicates a combinedeffect
of resouree utilization (i.c. efficiency) and performance (i.e. cffectiveness). The combined effect of
efticiency and eflectiveness is usced in defining a term called productivity index:

Productivity index =F
Performance achieved Productivity in current year
Input resources consumed Productivity in base year
Effectiveness
Efficiency

1.5.5 Productivity Cycle

The productivity cycle consists of four phases: productivity target planning, productivity
comparison, productivity improvement and productivity measurement (see Fig. 1.3). In the first
phase, a target of productivity is to be fixed considering various factors such as availability
of resources and the production demand. In the second phase, productivity is compared with
the productivity of competitor firms or the productivity of other sections in the same firm. In
the third phase, the opportunities and scope of productivity improvement are highlighted and
used for improvement. Finally, in the fourth phase, productivity is measured in other terms like
efficieney. Efficiency represents the system's ability to produce very close to standard output, i.e.
output/standard output. But it is also used frequently as output'input, mathematically.

Productivity
improvement

Productivity Productivity
measurement comparison

Productivity target
planning

Figure 1-3: Productivity cycle

/1.5.6 Factors Influencing the Productivity

There are various factors that influence productivity of an organization, such as man,
machine, materials, space, energy, time and finance. Man is one of the important parts of the
 16 Industrial Engineering and Management

their skills and motivation affect the productivity

production system. The number of employces, To improve the
role in improving the productivity.
important
of the system. Machines play an
third important component
machine's availability, proper maintenance is required. Similarly, the
material at low cost increases
of production system is material's cost and quality. A high-quality
such as inspection,
The time consumed in different processes
the productivity of the system. similar way, proper utilization
maintenance, production affects the productivity ofthe system. In a
effective of money increases the productivity.
of space, cnergy saving and use

Man: The productivity of man depends on the following processes:

1 Selection of an employee
2 The training given to employees
3 Number of personnel required for a job
4. Provision of incentive for workers

the following factors:

Machine: The productivity of a machine depends on

1. Number of machines employed

2 Replacenent policy for existing machines
B. Maintenance plans to avoid machine breakdown
Material: The following factors affect the productivity of a material:

1. Right quality
2. Right quantity
3. Substitutes for the existing material
4. Inspection and quality control programmes
5. Cost of material procurement and handling
Time: It affects the productivity in the following ways:

1. Inspection time for raw material

2. Inspection time for finished products
3. Production time
4. The time required to repair and maintenance work

Space: Utilization of space affects the productivity in the following ways:

1. Plant layout
2. The total area covered for production work
3. Location of different departments and shops
Energy: Use of energy affects the productivity in the following ways:
1. Energy-saving schemes
2. Use of renewable energy sources
3. Use of solar energy

Finance: Availability and efficient use of financial facilities affect the productivity.
 and Production Systems 17
Industrial Engineering

1.5.7 Reasons for Lower Productivity

There are various reasons of poor productivity. Some of them are mentioned as follows:

1. Poor production planning and control

2. Low motivation of people
3. Lack of coordination
4. Unavailability of right tools, material and human force
5. Poor product design
6. Lack of standardization
7. Poor working environment
8. Non-standard methods of working
9. No accountability for loss of production
10. Government rules and regulations
11. Old age of plant and equipments
12. Weak R& D.

1.5.8 Ways to Improve Productivity

The productivity of any system can be improved either by proper use of resources or by effective
utilization of the system or its processes. Some action plans for productivity improvement are

listed below:
Machine
1. Manual labouris replaced by machines
2. Reliable machines
3 Automation.

Management
. Motivated workforce
2. Better planning and coordination
3. Effective control over the system.

Process
1. Computerization ofthe system
2. Use of Management Information System (MIS)
3. Improvement in scheduling
4. Better material flow
5. Fast and accurate retrieval of parts.

Work desig
1. Improved job design
2. Better work method
3 On-job training.
 IndustrialEngineering and Production Systems 17

1.5.7 Reasons for Lower Productivity

There are various reasons of poor productivity. Some of them are mentioned as follows:

1. Poor production planning and control

2. Low motivation of people
3. Lack of coordination
4. Unavailability of right tools, material and human force
5. Poor product design
6. Lack of standardization
7. Poor working environment
8. Non-standard methods of working
9. No accountability for loss of production
10. Government rules and regulations
11. Old age of plant and equipments
12. Weak R& D.

1.5.8 Ways to Improve Productivity

The productivity of any system can be improved either by proper use of resources or by effective
utilization of the system or its processes. Some action plans for productivity improvement are
listed below:
Machine
1. Manual labour is replaced by machines
2 Reliable machines
3. Automation.

Management
1. Motivated workforce
Better planning and coordination
Effective control over the system.

Process
1. Computerization ofthe system
2. Use of Management Information System (MIS)
3. Improvement in scheduling
4. Better material flow
5. Fast and accurate retrieval of parts.

Work design
IImproved job design
2. Better work method
3 On-job training.
Work emvironment
1. Better lighting and illumination
2. Better ventilation
3 Safe workplace
4 Total quality management (TQM).

Programme
1 Quality circle
2 Suggestion scheme
3. Incentive scheme
4. Revise pay or policy.

Technolog
1. Acquiring new technology such as Electro-Chemical Machining (ECM), etc.
2. Acquiring automated assembly line, for example, Surface-Mounting Technology (SMT)
for printed circuit board assembly unit.
3. Acquiring computer-controlled machines, such as Computer Numerical Control (CNC)
or Direct Numerical Control (DNC).
4. Using Automated Guided Vehicle (AGV) for material transportation.

Manufacturing strategy
1. Changing the manufacturing system from functional to a cellular layout if it is a batch
production unit.
2.
2. Adopting stockless production strategy and JIT framework in the production unit.
3. Keeping the workplace clean and environment-friendly (also termed as green-production
system).
4.
4. Opting for total change in the process/product or strategy if the system is not working
properly (also known as Business Process Re-engineering or BPR).

External environment

1. Betterpolitical stability
2. Boosting economy and purchasing capacity of buyers
3. Globalization and open market economy

1.5.9 The Technology used to Improve Productivity

. Technology-based techniques: Computer-Aided Design (CAD), Computer-Aided
Design and Drafting (CADD), Computer-Aided Engineering (CAE), Computer-Aided
Process Planning (CAPP), Computer-Aided Quality Control (CAQC), Computer
Aided Instruction (CA), Computer-Aided Manufacturing (CAM), robotics, Group
Technology (GT) and 1Total Productive Maintenance (TPM).
2 Product-based techniques: Reliability, simplification, standardization, diversification
and Research and Development (R & D).
 IndustrialEngineering and Production Systems 19

3 Material-based techniques: Material Requirement Planning (MRP), Economic Batch

Quantity (EBQ), Economic Order Quantity (EOQ), JIT and material handling.
A Task-based techniques: Work simplification, work measurement, time study, method
study, job analysis, job evaluation, merit rating, job safety and production scheduling
5. Employee-based techniques: Incentive scheme, management by objective, job
enlargement, job enrichment, recognition and punishment, Total Quality Management
(TQM) and zero defects.

1.5.10 Guidelines for Productivity Measurement Systems

Productivity measurement is directly related to the productivity improvement programme.
A good productivity measurement should have the following characteristics.

1. It should be simple in calculation, meaningful, easy to understand and use, and provide
the status of productivity in the organization.
2. It should be accurate enough to present a realistic assessment as perfect accuracy is an
unreasonable expectation.
3. It should help in identifying the areas of low productivity so that productivity efforts
can be applied to that area for improvement.
4. It should provide indices and information for comparison of performance for different
periods.
5. It should provide indices and information for comparison of performance with other
similar organizations/operations.
6. It should provide the information on interrelationship of different subsystems.
7. It should incorporate both tangible and intangible outputs and inputs to the
system
8. The productivity measurement system should be hierarchical in nature; the productivity
at lower levels gives productivity of subsystem and the productivity of subsystems
translates into overall productivity of the system.
9. It should facilitate to devise a reward or an incentive scheme for the workers.
10. It should lead to the participation and involvement of employees of various levels.
11. It should be economical and administratively easy to run the productivity measurement
system.
12. It should be independent from the changes in monetary values and external disruptions.