EM(POS)/KF/Lec-01

THE UNIVERSITY OF THE WEST INDIES

ECNG 3021: Introduction to Engineering Management & Accounting Systems

Lecture 1: Engineering Management and Production/Operations Systems

1.1

Engineering Management Defined

1. Engineering management is the discipline addressed to making and implementing decisions for
strategic and operational leadership in current and emerging technologies and their impacts on
interrelated systems (Engineering Management Society, IEEE)
2. Engineering management is a specialised form of management concerned with the application
in engineering, as a result of the unique personalities and technical nature of engineering.
3. Engineering Management programmes typically include instruction in accounting, economics,
finance, human resources management, industrial psychology, management information
systems, mathematical modelling and optimisation, quality control, operations research, safety
and health issues, and environmental management (from Wikipedia, the free encyclopedia).

1.2

Concepts of Productive System

4. A system is a set of elements that works toward a common goal by acting on inputs to produce
outputs. A productive system is one that adds value, economic or otherwise, in the conversion of
inputs to outputs.
5. A productive system consists of physical elements related to each other. There are five basic
types of productive systems:
a) Extraction of materials or energy from the environment
b) Biological growth and change
c) Tangible-output conversion systems (i.e. Production-oriented systems)
d) Intangible-output conversion systems (i.e. Operations-oriented systems)
e) Hybrid conversion system

1.3

Concepts of Production/Operations
1. Production/operations (P/O) function is to convert inputs into outputs. It is a process that
converts materials into finished goods or products that have value in the marketplace.
2. P/O comes about through the use of money to bring together machines and materials in such a
manner that men can employ proper methods to produce goods or services that will be
acceptable to markets; all of these activities are coordinated by management.
3. The process usually involves a sequence of steps, and each step bringing the materials closer to
the desired final state. This is to produce goods/services with the desired function in the shortest
time using minimum resources at the lowest cost.
Products, Goods and Services Defined
1. Products i.e. core outputs (either manufactured goods or services) produced by a firm.
2. Goods i.e. physical objects or devices that provide benefits for customers through ownership
or use.
3. Services i.e. economic activities that produce time, place, form, or psychological utilities.
Services are acts, deeds or performances that are intangible and are created through one or more
processes.

1.4

Elements of Production/Operations Function The P/O function supports the processes by

providing and transmitting information, energy, knowledge, skills, and services to a firm, to its
vendors and customers. A typical P/O system would include several components below:
1. Product Design - i.e. the function of creating the product (or service) from the concept stage to
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2.

3.

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7.

8.

9.

10.
11.
12.
13.

14.
15.

16.
17.

18.

detailing all components within it. This can involve testing and development and should involve
close liaison with production operations.
Product Planning - i.e. the function of planning the introduction of new or modified products
(services) into the market. This can involve close liaison with marketing, sales and
production/operations.
Production Planning - i.e. the function of scheduling manufacturing activities through an
organisation. This involves detailed analysis of capacity and capability to produce the product
(service).
Production Operation - i.e. the function of producing parts, components and products within the
organisation. This includes machines, inspection facilities, process and handling equipment,
labour and other facilities to enable production to take place.
Production Activities Control - i.e. the function of controlling production activities on a day-today basis. This involves detailed work allocation (to individual departments, workshops and
machines) and the monitoring of production or operations against the schedule.
Production Development - i.e. the function of design and development of new or modified
equipment, facilities and systems. This involves evaluation of quality, quantity, delivery rate,
costs, prices and labour skills. Construction of models and facilities for a pilot production or
operations may also be involved.
Production Costing - i.e. the function of calculating the production/operations costs for a
component or a product (service). This will include direct and indirect materials, direct and
indirect labour, overheads, machine cost per hour and other relevant costs.
Purchasing - i.e. the function of buying or procuring materials, components, products, services
and facilities for the organisation. This involves contract management, quality evaluation,
pricing negotiations and delivery time-scales.
Materials Control - i.e. the function of controlling the issue and movement of materials through
the organisation. This involves the control of stock, work-in-progress, scrap and re-work, and
close liaison with purchasing and quality.
Warehousing - i.e. the function of storing raw materials, components, finished products for
subsequent use or distribution to the organisation or customers.
Quality Control - i.e. the function of measuring the quality of output from a process or system
against a standard specification or tolerance band.
Quality Assurance - i.e. the function of defining the systems, procedures and techniques that
will be employed in order to evaluate and control quality.
Maintenance Control - i.e. the function of controlling the preventive and breakdown
maintenance activities within the organisation. This also involves equipment replacement and
spare-part ordering and stock control.
Facilities Management - i.e. the function of managing the infrastructure, including building,
roads, electricity, gas, water and waste disposal.
Facility Layout and Design - i.e. the function of defining the physical design of the factory
facilities, including layout of equipment, location of services and facilities, such as warehouse,
offices, transport sites and flow of traffic.
Human Resource Control - i.e. the function of controlling labour in the production facility,
including working hours, selection, promotion, overtime, absenteeism, and discipline.
Transport and Logistics Control - i.e. the function of controlling the allocation and movement
of transport equipment in the organisation, including scheduling of repairs and maintenance and
training of drivers.
Information Development and Control - i.e. the function of design, development and control of
information systems based on computers for the necessary activities within the factory. This
may include computer-aided design (CAD), and engineering (CAE), computer-aided production
planning (CAPP), computer-based payment systems, stock control systems, purchasing systems,
materials management and programming of machines.
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* - These elements are arranged in a functional manner to facilitate communications and

safeguard the efficiency and effectiveness of P/O in organisations.
1.5

Interactions with Other Functional Areas

The P/O function interacts with and provides valuable data source and information to other
functional areas across an organisation.
1. With Sales and Marketing
a) Sales and Marketing must work with the P/O function to resolve important issues,
- Availability of materials
- Inventory needs and requirements
- Capacity requirements of production/operations
- Possible schedules for production/operations and delivery
- Possible use of substitute materials
- Storage and handling of goods and materials
b) Sales and Marketing Department should furnish data regarding:
- Anticipated changes in production of other products (or services)
- Anticipated delivery schedules: e.g., the quantity, location and timing
- Desired finished goods inventories
- Packaging requirements
- Output volumes needed to meet anticipated market needs
6. With Finance and Personnel
a) P/O people should work with Finance Department to control and monitoring of budgets,
plans and capital investments of production. Typical categories include:
- Adding of capacity to produce or handle new product lines
- Expansion of distribution facilities
- Improvement of workplace efficiency and working conditions
- Improvement of product quality
- Integration of operations toward sources of material
- Replacement of obsolete equipment(s)
- Replacement of worn-out equipment to maintain current production and operations
levels
- Investment on facilities for growth and expansion
c) It is necessary to co-operate with Personnel Department to recruit and train staff for the
carrying out, supervising, monitoring and maintaining P/O activities at different levels.
7. With Information and Accounting
a) This accommodates information both from the external environment and from the various
other systems within an organisation.
b) Below is a list of information applications in P/O and relevant areas:
- Aiding clerical routines
- Assignments and utilisation of workforce
- Cost analysis and control
- Forecast and scheduling of materials requirement
- Inventory control
- Control of work-in-progress
- Maintenance planning, scheduling and control
- Quality assurance and control
- Routing and traffic control

1.6

P/O Decisions - The relative importance of the decision areas vary for different industries and
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companies. These areas can be distinguished into:

1. Strategic level:
a) Business Planning e.g. does the launch of a new service meet the corporate objective?
What are the service vision and the associated strategies?
b) Capacity Planning - e.g. is sufficient capacity available? If not, what adjustments can be
made?
c) Process Design and Facility Layout - e.g. will changes in office procedures, maintenance
procedures, or will workflow improve productivity? What facilities should be grouped
together?
d) Product Design - e.g. what product types and ranges should we offer? On which
dimensions should we excel?
e) Process Design and Innovation - e.g. what is the best way to deliver/offer a service? What
should we need to provide it?
f) Quality Management - e.g. how do we get the whole organisation committed to quality
improvement, maintenance and development?
2. Tactical and operational levels:
a) Inspection and Quality Control - e.g. is the service meeting quality specifications? How
will the quality of service be measured and controlled? How can aircraft reliability be
carefully controlled?
b) Job Design and Method Study - e.g. should the jobs be specialised or enlarged? Can
unnecessary work be identified and eliminated? Can certain tasks be made easier for frontline personnel?
c) Materials/Resource Scheduling - e.g. what kinds/types of materials and/or resources are
needed? How should these resources be controlled?
d) Production/Operation Scheduling - e.g. how should the workforce be scheduled and the
equipment utilised?
1.7

Analysis of Production/Operations Systems

1. Basic Systems Model
a) The "input-output" relationship of a system is expressed symbolically as an equation:
i.e. "T" * "I" = "O"
Inputs
e.g. labour,
materials,
information

Transformation
Process
Feedback

Outputs
e.g.
Products,
services,
information

Figure 1. A Basic Systems Model

b) Based on the equation, analyses concerning a system fall into one of several categories, namely:
1) System Analysis: Clarify contents of "T", "I" and "O".
2) System Operation: Given "T" and "I", find "O".
3) System Inversion: Given "T" and "O", find "I".
4) System Identification (or Synthesis): Given "I" and "O", determine a suitable "T".
5) System Optimisation: Given certain criteria, find "I", "O" and "T" so that the criteria are
optimised.
2. Systems Inputs and Outputs

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Systems inputs are used in the processes for making goods (or services), including four basic
categories:
a) Production Objects
1) Primary materials: e.g. metals, plastics, raw materials, and purchased parts.
2) Auxiliary materials: e.g. paints, packaging and cleaning materials.
b) Productive Labour - i.e. the human organisation that performs work through physical and/or
mental abilities.
c) Production Means
1) Production or Direct Facilities - e.g. machines, equipment, jigs and tools, devices and
material handling equipment
2) Support or Indirect Facilities - e.g. land, building, roads and warehouses
d) Production Information - This is the knowledge to use the production means and productive
labour and convert the production objects into both tangible and intangible goods or services.
Systems outputs (including goods and services) should have certain values to the customers. These
are determined by several criteria, including:
a) Intended functions and quality
b) Production costs and product prices
c) Production/selling quantity and time
3. Classification of Common Production/Operations Systems
a) Jobbing Systems - i.e. for one-off or to-order production or operations. These systems are
characterised of:
1) High flexibility
2) Highly skilled people
3) High unit costs
4) Low utilisation of equipment
5) Variable lead-times
b) Batch Systems - i.e. for small-medium volume of similar products. These systems are
characterised of:
1) Frequent change over of tooling
2) Intermittent delivery of products
3) Long lead-times
4) Medium utilisation of equipment
5) Relatively high unit costs
6) Variable products provided
c) Flow Systems - i.e. for large volume of similar products with a consistent demand. The main
characteristics include:
1) High flexibility
2) Consistent quality
3) High mechanisation and/or automation
4) Level production volume
5) Low unit costs
6) Low labour skill
7) Short lead-times
8) Standardised product design
d) Mass Production System - i.e. for very large volume of similar products that are in very high
demand. These systems are characterised of:
1) Automated equipment and handling
2) Consistent high volume delivery
3) Consistent quality
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4)
5)
6)
7)
1.8

High volume continuously

Lower skills/unmanned operation
Single product dedication
Very low unit costs

Structured Analysis and Design Technique (S.A.D.T)

1. Concepts and Principles
a)
The concepts of Systems Theory have led to the development of several methodologies for
the systematic design and analysis of complex systems.
b)
S.A.D.T. is one of these methodologies, and has the following features:
It applies the systematic analysis of inputs (I), outputs (O), control (C) and

mechanism (M), which are acting on the transformation or conversion process

being studied.
Each "Block" of the process can be further analysed (or decomposed).

It provides a hierarchical methodology from the strategic level down to the level of

individual system elements or components.

Control

A
Sub-system

Inputs

Outputs

Mechanism

Figure 3. A Building Block of SADT

Figure 2. SADT- A Hierarchical
Methodology

I1

O1

Marketing
Sub-system

I2

O2

P/O
Sub-system

I3

Distribution
Sub-system

O3

Figure 4. The Link of a Typical SADT System

EM(POS)/KF/Lec-01

2. An Illustrated SADT Example

The following illustrates how a typical P/O system is analysed using S.A.D.T. The example
is concerned with the making of pairs of optical contact lens is a jobbing production that is
to be carried out against customers' requirements and orders.

C1
I1

C2
I2

Design

M1
Keys:

C3
I3

Planning

O1

C4
I4

O2
M2

I1..4
Input elements;
O1..4 Output elements;

Distribution

Production

O3
M3

C1..4
M1..4

O4
M4

Control elements
Mechanism elements

Figure 5. A Typical SADT Model in P/O

.
In the "Design" Stage (e.g. Optional contact lens)
Input:
Raw lens, customer requirements and information.
Control:
Refractive index, degree of transparency, lens colour index and selection
criteria.
Mechanism: Testing tools and devices.
Output:
Chosen lens type and specifications.
In the "Planning" Stage
Input:
Chosen lens, coating and reflection information.
Control:
lens dimensions, budget, time and scheduling criteria.
Mechanism: Testing tools and devices.
Output:
Work schedule, final lens dimensions and specification.
In the "Production" Stage
Input:
Chosen lens, work schedule and skilled labour.
Control:
Degree of transparency, focus length and workmanship.
Mechanism: Equipment and testing devices.
Output:
Tested lens to the specifications.
In the "Distribution" Stage
Input:
Tested lens and packing information.
Control:
Costs, and on-time delivery.
Mechanism: Handling equipment, packing and transportation means.
Output:
Packed lens and delivery service to customer.
1.8 Discussion and Revision
1. What are the main differences between Goods and Services?
2. What are the key decision areas for engineering management and P/O functions in local
organisations?
3. Discuss the scope and applications of SADT in industry with reference to any organisation
which you are familiar.

POS/KF/Tut01a

THE UNIVERSITY OF THE WEST INDIES

St. Augustine
FACULTY OF ENGINEERING

Case Study:

Ricketts Golf Equipment Company

Case Briefing:
This case illustrates a decision-making scenario in a medium size manufacturer, Ricketts
Golf Equipment Company that manufactures and distributes golf equipment and supplies
including gloves, leather grips for golf clubs, wood covers, and so on. Based upon some
recent marketing studies, the management has decided to expand its production facilities
to include manufacturing golf bags. This represents a strategic change in the firms
business plan. You have assumed the role of the production manager who has been given
the task of organising and coordinating the overall production effort.
Initially, a list of decision areas was identified and some questions were raised below:

Product Design and Development: What styles and price ranges should be considered?
Of what materials should the golf bags be made? What colours and other features
(e.g. umbrella holders or compartments for shoes) should be included?

Facility Location and Distribution: If a new facility is to be constructed, where should it

be built? How will the product be distributed to markets? Should Ricketts purchase or
lease its trucks? Should public warehouses be used during the peak golfing season?

Resource Requirements Planning: Will market demand forecasts warrant the expansion
of existing facilities or construction of a new production plant? How much equipment
and personnel are necessary in order to meet the forecasted demand?

Job Design: How should work be assigned to different employees? Do the jobs and
work environment meet local safety regulations? Will the employees be satisfied with
their jobs?

Process Analysis and Design and Facility Layout: What machines need to be
purchased? In what sequence should assembly operations be performed? Where
should machines and assembly areas be located in the plant in order to minimise
handling? How will materials and finished products be moved from one work centre to
the next?

Inventory Policy: How many golf bags should be maintained in regional warehouses?
How much leather and vinyl should we order and how often?

Aggregate Production Planning and Master Scheduling: How do we translate demand

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forecasts into production requirements? Will we need additional shifts or overtime? Do

we have sufficient labour and equipment available to meet projected demand?

Material Requirements Planning: For a specific production schedule, when must

individual components (e.g. handles) be ordered so they will be available on time for
the final assembly? Will enough capacity be available in order to meet this production
schedule?

Operations Scheduling and Production Control: How should the work on each machine
be scheduled? What do we do if a machine breaks down? How can we speed up an
important order?

Material Management: How will customer orders be processed and deliveries

scheduled? What storage and packaging requirements are needed? Who is
responsible for material availability? Where should we purchase our leather?

Quality Control: Where should we inspect the golf bags during the production process?
How can we tell if a machine needs an adjustment?

Tasks:
1) Comment on the coverage of the decision areas included and the
appropriateness of the questions being asked.
2) Are these decision areas essential? If so, can the answers of these questions provide
sufficient details for individual areas that help you complete the assigned task? If
not, what other areas are missing? And what other questions should be asked?
3) Submit a group assignment in following week.

_______________

POS/KF/Tut01b

THE UNIVERSITY OF THE WEST INDIES

St. Augustine
FACULTY OF ENGINEERING

Tutorial 1b: Analysis of P/O Systems

C1

C3

C2

I1

I2

I3
Planning

Design X

C5

O3

I5

M4
C7

I7

O5

O7

M6

I11

O9
M9
I1..12 Input elements;
O1..12 Output elements;

C12
I12
Distribution

Production

O10
M10

M8

C11

Planning

Design Z

O8

M7

C10
I10

Distribution

Production

O6

C9

C8
I8

Planning

M5

O4

M3
C6

Design Y

I9

Distribution

Production

M2

M1

Keys:

I4

O2

O1

I5

C4

O11
M11

O12
M12

C1..12 Control elements;

M1..12 Mechanism elements

Descriptions:
The diagram depicts a SADT (Structured Analysis and Design Technique) model of three products or
services (such as "X", "Y" and "Z") that are produced via jobbing, batch and flow production/operations
systems, respectively and/or vice versa. These products/services would have certain inter-relationships. For
example, "X" could be a part, a sub-assembly or a component of "Y" and/or "Z"; or together, they could also
be a product or service of their own in different stages of production (i.e. from a prototype via a trial/pilot to
a final form).

Tasks:
1)
2)
3)

Name any chosen examples for "X", "Y" and "Z" products/services, respectively.
Describe briefly the interrelationship among these products/services and how they fit into jobbing,
batch and flow production/operations process.
Use the given SADT model to bring in as the Input, Output, Control and Mechanism elements that
would apply in different stages of the production process for these products/services.