Industrial Engineering

Faculty - Hitendra bankot

 Unit - 1
Chapter - 1

Productivity
 Productvity

• Productvity is a measure of how well resources are utlized to produce output.

• Productvity is a measure of output from a producton process, per unit of input.
• In other words Productvity may be defined as the rato of output/input.
• In engineering the rato of output/input is termed as efficiency however in
producton system this rato is known as producton efficiency or productvity.
• Productvity can also be defined as human efforts to produce more and more with
less and less inputs of resources.
• According to Peter Drucker, “Productvity means a balance between all factors of
producton that will give the maximum output with the smallest effort”.
• European productvity council defines, “Productvity is an attitude of mind. It is a
mentality of progress, of the constant improvement of that which exists. It is
certainty of being able to do better than yesterday and contnuously.”
 Examples of Productvity

• A tailor is able to make 10 shirts from 13 meters cloth, by changing his cutting
method in place of the usual 1.5 meters per shirt he used to take previously.
• A farmer produces 10 more bags of wheat in a season, in the same area of land,
using improved farming technique and better quality seeds.
• A lathe machine tool, instead of 80 jobs being produced previously, now produces
100 jobs per day using improved material of cutting tool.
• A machinist is able to produce 30 jobs per shift by attending two machines at a tme,
instead of 20 jobs per shift by attending only one machine at a tme.

• The common thing in all above is the increase of output without any change in
input. Farmer produced more without change in input only by changing farming
technique & using better quality seeds. Tailor is able to increase number of shirts by
using only improved method of cutting, in which input (cloth) per shirt reduces and
the output remains constant.
 Producton and Productvity

• Producton refers to absolute output while the productvity is a relatve term

wherein output is always expressed in terms of input.
• Producton is related to the actvity of producing goods or service. It is a process (or
system) of convertng input into some useful, value added output.
• The producton may rise with without the corresponding rise in the productvity and
vice versa.
• If the input remains the same and the producton of output increases there is a rise
in productvity.
• If the input and output are both varying & output rises in greater proporton than
increase in input, there is a stll rise in the level of productvity & if the output rises
at a slower rate than the input there will be a fall in productvity even though there
is an increase in producton as a whole.
• Producton therefore means the output in terms of money whereas the productvity
is the efficiency of producton system.
 Measurement of Productvity

The basic objectves behind productvity measurement is

• To study performance of a system over a period of tme.
• To have relatve comparison of different systems for a given level
• To compare the actual productvity of the system with its planned productvity.

Productvity is measured in following three manners:

• Partal Productvity
• Total Factor Productvity
• Total Productvity
 Partal Productvity

Partal Productvity
• It may be defined on the basis of class of input being considered.
• Example includes, if the labor is increased by 18% during last financial year, its effect on the
increased output is represented by productvity.
• It is a good diagnostc measure to identfy areas where improvements may be done.
Different forms of Partal Productvity
S No Partial Productivity Formula Uses
1. Labor Productvity or Human Total Revenue from producton / To understand the effect of increase/decrease in the hiring
Productvity Expenditure on labor of labor and to see how they perform.

2. Material Productvity No. of units produced / Cost of In material management

material

3. Capital Productvity Turnover / Capital employed In financial assessment

4. Energy Productvity Output / Energy Input In the consideraton of energy required by the system

5. Advertsing and Media Output / Advertsing and Media In marketng management

Planning Productvity Planning Input

6. Other Expense Productvity Output / Other Expense Input In the analysis of system
 Total Factor Productvity

Total Factor Productvity

• It is the rato of the net output to the sum of labor and capital inputs.
• This method is preferred as it is easy to compare in cross-industry context.
• It involves a disadvantage as many important inputs, such as material, energy, etc. are ignored.

Formula for Total Factor Productvity

Total factor productivity = Net Output

------------------------------
Labor + Capital Inputs

= Total Output – Intermediate goods / Services purchased

--------------------------------------------------------------------------------
Labor + Capital Input
 Total Productvity

Total Productvity
• It is the rato of the total output to the sum of all inputs factors.

• Since it contains all the input and output factors thus it is a more accurate representaton of
real economic performance of the organizaton.

• It is easy for top management to understand the company performance.

• Its study with partal productvity, reveals the focused areas of improvements.

• Since it includes total factors summaton hence it is difficult to generate companywide and
sector wise data.

• While calculatng total productvity many indirect measures of input/output are ignored.
 Productvity Index

• It shows the total kinds of productvity measurements.

Productvity Index
S No Partial Productivity Formula Uses
1. Labor Productivity or Human Total Revenue from To understand the effect of increase/decrease in the hiring
Productivity producton / Expenditure on of labor and to see how they perform.
labor

2. Material Productivity No. of units produced / Cost In material management

of material

3. Capital Productivity Turnover / Capital employed In financial assessment

4. Energy Productivity Output / Energy Input In the consideraton of energy required by the system

5. Machine Productivity Output / Actual Machine Machine hours management

hours utlized

6. Raw material productivity Total output / Cost incurred Effectve use of raw material
in raw material
 Ways to improve Productvity

• It can be improved either by proper use of resources or by effectve utlizaton of system or processes.

S No Area of focus Agenda

1. Machine • Manual labor be replaced by machines
• Reliable machines
• Automaton

2. Management • Motvated workforce

• Better planning and co-ordinatons
• Effectve control of processes

3. Process • Computerizaton of system

• Use of Management Informaton System (MIS)
• Improvement in scheduling
• Better material flow

4. Work Design • Improved job design

• Better work method
• On-job training

5. Work Environment • Better lightng and illuminaton

• Better ventlaton
• Safe work place
• Total Quality Management (TQM)
 Ways to improve Productvity contd…

S No Area of focus Agenda

6. Program • Quality circle
• Suggeston schemes
• Incentve schemes
• Revise pay or policy

7. Technology • Acquire new technology such as Electro chemical machining (ECM) etc.
• Acquire computer controlled machines such as CNC
• Use automated guided vehicle (AGV) for material transportaton

8. Manufacturing Strategy • Change the manufacturing system from functonal to cellular layout if it is a batch
producton unit
• Adopt stockless producton strategy and Just-in-tme (JIT) framework in producton unit
• Keep work place clean and environment friendly

9. External Environment • Better politcal stability

• Boostng economy and purchasing capacity of buyers
• Globalizaton and open market economy
 Producton system

• In order to convert the basic inputs like men, material, money, energy, informaton
etc, into useful outputs like finished products and services a transformaton process
is needed.
• This transformaton is done through a process known as producton.

Thus a producton system can be defined as a transformaton system in which a

saleable product or service is created by working upon a set of inputs given above.

• Producton systems are usually classified on the basis of the following:

• Type of product,
• Type of producton line,
• Rate of producton,
• Equipments used etc.
 Types of Producton system

• The producton system varies from factory to factory and from product to product.
However one of the most important issues is producton volume.

Types of Production systems Types of

Producton
systems

Intermittent Contnuous
Producton Producton

Process or
Project Job shop Batch Mass & Flow
Contnuous
Producton Producton Producton Producton
Producton
 Intermittent Producton system

In this system, the goods are manufactured specially to fulfill orders made by
customers rather than for stock.

• Here the flow of material is intermittent.

• Intermittent producton systems are those where the producton facilites are
flexible enough to handle a wide variety of products and sizes.
• These can be used to manufacture those products where the basic nature of inputs
changes with the change in the design of the product and the producton process
requires contnuous adjustments. Considerable storage between operaton is
required, so that individual operatons can be carried out independently for further
utlizaton of men and machines.
• Examples of intermittent system are: machine shops, hospitals, general office etc.
 Types of Intermittent Producton system
Project Producton

Project producton where a single assignment of complex nature is undertaken for

completon within the given period and within the estmated expenditure.

• Generally work is carried out at the site of the work rather than in a factory. All
resources such as tool, material, labor etc. reach the site itself.
• Many civil engineering projects for constructon or military related actvites are
project producton.
• The ship building is the example of project producton
 Types of Intermittent Producton system
Job Shop Producton

In this system products are made to satsfy a specific order. However that order may be produced:
• only once
• or at irregular tme intervals as and when new order arrives
• or at regular tme intervals to satsfy a contnuous demand

• Job shop producton is characterized by its low producton volume.

• The producton lot size is generally small.
• Machines and methods employed should be general purpose as product changes are quite frequent.
• Planning and control system should be flexible enough to deal with the frequent changes in product
requirements.
• Man power should be skilled enough to deal with changing work conditons.
• Schedules are actually non existent in this system as no definite data is available on the product.
• In process inventory will usually be high as accurate plans and schedules do not exist.
• Product cost is normally high because of high material and labor costs.
• Grouping of machines is done on functonal basis (i.e. as lathe secton, milling secton etc.)
• This system is very flexible as management has to manufacture varying product types.
• Material handling systems are also flexible to meet changing product requirements
 Types of Intermittent Producton system
Batch Producton

Batch methods require that the work for any task is divided into parts or operatons.
Each operaton is completed through the whole batch before the next operaton is
performed.

• Batch producton is suited for medium volume lot of same variety.

• It is commonly used to meet repeated customer orders.
• Machines are grouped on functonal basis similar to the job shop manufacturing.
• Labor should be skilled enough to work upon different product batches.
• In process inventory is usually high owing to the type of layout and material handling policies
adopted.
• Semi automatc material handling systems are most appropriate in conjuncton with the semi
automatc machines.
• Normally producton planning and control is difficult due to the odd size and non repettve
nature of order.
 Contnuous Producton system

• In this system the items are produced for the stocks and not for specific orders.
• Before planning manufacturing to stock, a sales forecast is made to estmate likely
demand of the product and a master schedule is prepared to adjust the sales
forecast according to past orders and level of inventory.
• Here the inputs are standardized and a standard set of processes and sequence of
processes can be adopted. Due to this routng and scheduling for the whole
process can be standardized.
 Types of Contnuous Producton system
Mass Producton

In mass producton, same type of product is manufactured to meet the contnuous demand
of the product. Usually demand of the product is very high and market is going to sustain
same demand for sufficiently long tme.

• As same product is manufactured for sufficiently long tme, machines can be laid down in
order of processing sequence. Product type layout is most appropriate for mass producton
system.
• Standard methods and machines are used during part manufacture.
• Most of the equipments are semi automatc or automatc in nature.
• Material handling is also automatc (such as conveyors).
• Semi skilled workers are normally employed as most of the facilites are automatc.
• As product flows along a pre defined line, planning and control of the system is much easier.
• Cost of producton is low owing to the high rate of producton.
• In process inventories are low as producton scheduling is simple and can be implemented
with ease.
 Types of Contnuous Producton system
Process or Contnuous Producton

Process producton is characterized by tle manufacture of a single product produced and

stocked in the warehouses awaitng sales.

• The flexibility of such plants is almost zero as only one type of product can be produced in
such plants.
• Special purpose machines with built-in controls are used.
• Materials handling is highly mechanized.
• Typical examples of such plants are sugar, steel, cement, paper, coke, refineries, etc.