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Week 1 1 www.izmirekonomi.edu .tr sst. sst. Prof. Dr. Prof. Dr. Mahmut Ali Mahmut Ali GÖKÇE, Izmir University of Economics GÖKÇE, Izmir University of Economics Spring Spring , 2007 , 2007 ISE 102 – Introduction to Systems Engineering Asst. Prof. Dr. Mahmut Ali GÖKÇE Faculty of Computer Sciences Department of Industrial Systems Engineering
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Page 1: Www.izmirekonomi.edu.tr Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 1 ISE 102 – Introduction to Systems Engineering.

Week 1

1www.izmirekonomi.edu.tr

Asst. Asst. Prof. Dr. Prof. Dr. Mahmut Ali Mahmut Ali GÖKÇE, Izmir University of EconomicsGÖKÇE, Izmir University of Economics

SpringSpring, 2007, 2007

ISE 102 – Introduction to Systems Engineering

Asst. Prof. Dr. Mahmut Ali GÖKÇE

Faculty of Computer Sciences

Department of Industrial Systems Engineering

Page 2: Www.izmirekonomi.edu.tr Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 1 ISE 102 – Introduction to Systems Engineering.

Week 1 www.izmirekonomi.edu.tr

Asst. Asst. Prof. Dr. Prof. Dr. Mahmut Ali Mahmut Ali GÖKÇE, Izmir University of EconomicsGÖKÇE, Izmir University of Economics

SpringSpring, 2007, 2007

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Course Contact Information

Instructor : Asst. Prof. Dr. Mahmut Ali GÖKÇEOffice : A-409Phone : 488 8465

Wednesday 15:30-16:30 Thursday 10:30-12:20 ( and by appointment)

[email protected] :Office Hours :

Page 3: Www.izmirekonomi.edu.tr Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 1 ISE 102 – Introduction to Systems Engineering.

Week 1 www.izmirekonomi.edu.tr

Asst. Asst. Prof. Dr. Prof. Dr. Mahmut Ali Mahmut Ali GÖKÇE, Izmir University of EconomicsGÖKÇE, Izmir University of Economics

SpringSpring, 2007, 2007

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Course Contact Information (Cont.)Teaching Asistant:

Utku Guruşçu - Görkem Sarıyer

Email:  [email protected] and [email protected]

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Week 1 www.izmirekonomi.edu.tr

Asst. Asst. Prof. Dr. Prof. Dr. Mahmut Ali Mahmut Ali GÖKÇE, Izmir University of EconomicsGÖKÇE, Izmir University of Economics

SpringSpring, 2007, 2007

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Course Description An overview of design, analysis, operation and

control of industrial systems; systems analysis of industrial systems and their interactions with other systems in the enterprise; system dynamics analysis of complex interactions among the entities within and without the production system.

Prerequisites : None

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Asst. Asst. Prof. Dr. Prof. Dr. Mahmut Ali Mahmut Ali GÖKÇE, Izmir University of EconomicsGÖKÇE, Izmir University of Economics

SpringSpring, 2007, 2007

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Text Book(s) Main Textbook: Blanchard, B.S and Fabrycky W.J.,Systems

Engineering and Analysis, (4th ed.) : NJ Prentice Hall, 2006.

References Vollmann, T.E., W.L. Berry, and D.C. Whybark,

Manufacturing Planning and Control Systems, 4th edition, Irwin/McGraw-Hill, 1997.

Goldratt, E.M. J. Cox, The Goal - A Process of Ongoing Improvement, North River Press; 2nd Rev edition, 1992.

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Week 1 www.izmirekonomi.edu.tr

Asst. Asst. Prof. Dr. Prof. Dr. Mahmut Ali Mahmut Ali GÖKÇE, Izmir University of EconomicsGÖKÇE, Izmir University of Economics

SpringSpring, 2007, 2007

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Objectives After ISE 102, the students are expected to learn, 

1. What Manufacturing Systems/Industrial Engineering is.

2. how to approach a decision making problem, how to model a problem and make abstractions.

3. to taste the complexity of real life problems and get insights from simple techniques.

4. obtaining familiarity with basic IE/SE terminology.

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Asst. Asst. Prof. Dr. Prof. Dr. Mahmut Ali Mahmut Ali GÖKÇE, Izmir University of EconomicsGÖKÇE, Izmir University of Economics

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Course Contents

In this course, we will discuss, some of the basic SE/IE problems and methodologies.

The following is the tentative list of the content of the course;

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Asst. Asst. Prof. Dr. Prof. Dr. Mahmut Ali Mahmut Ali GÖKÇE, Izmir University of EconomicsGÖKÇE, Izmir University of Economics

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Course Contents - Problems Introduction to Systems and Engineering The System Design Process Forecasting Systems Design Alternatives and Models in Decision Making Models for Economic Evaluation Optimization in Design and Operations Queueing Theory and Analysis Reliability and Availability of Systems Inventory Planning in Production Systems Quality Planning and Assurance Project Management

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Week 1 www.izmirekonomi.edu.tr

Asst. Asst. Prof. Dr. Prof. Dr. Mahmut Ali Mahmut Ali GÖKÇE, Izmir University of EconomicsGÖKÇE, Izmir University of Economics

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Course Contents - Methods

Modelling and Graphical Techniques Mathematical and other Analytical Approches Computerized Algorithms and Simulation Queueing Analysis LP/IP/NLP and other Programming Models Probability and Statistics Economic Analysis Techniques

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Week 1 www.izmirekonomi.edu.tr

Asst. Asst. Prof. Dr. Prof. Dr. Mahmut Ali Mahmut Ali GÖKÇE, Izmir University of EconomicsGÖKÇE, Izmir University of Economics

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Course Grading/Evaluation

Attendance ( 5%) Assignments (10%) Midterm (35%) Final Exam (50%)

The final exam will be comprehensive and will cover the entire syllabus material.

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Asst. Asst. Prof. Dr. Prof. Dr. Mahmut Ali Mahmut Ali GÖKÇE, Izmir University of EconomicsGÖKÇE, Izmir University of Economics

SpringSpring, 2007, 2007

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Class Information

Exams will be closed book & closed notes. The Final Exam will be given during the Final

Exam Week as scheduled by the university.

What is Expected From Students ? Class Attendance and Participation Significant Effort in Learning Materials Ask Challenging Questions Discuss Knowledge & Ideas with the Class Put Forth Best Effort on All Assignments

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Late AssignmentsLate Assignments  Assignments are due on the date and at the time

designated; otherwise, they are late. Unless the instructor has granted prior permission, late assignments turned in by 5:00 p.m. the day they are due will be graded for ½ credit.

 DisclaimerThe instructor reserves the right, when necessary, to alter the grading policy, change examination dates, and modify the syllabus and course content. Modifications will be announced in class. Students are responsible for announced changes.

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Content

Business Organizations Key Functions Manufacturing Systems Manufacturing Systems Engineering Manufacturing vs. Service Operations Operations Management Supply Chain Management

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Asst. Asst. Prof. Dr. Prof. Dr. Mahmut Ali Mahmut Ali GÖKÇE, Izmir University of EconomicsGÖKÇE, Izmir University of Economics

SpringSpring, 2007, 2007

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Business Organizations

Organizations are formed to pursue goals that are achieved more efficiently by the concerted efforts of a group of people than by the individuals working alone.

Business organizations are devoted to producing good and/or providing services.

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What is Production?Production is the making of something new - either

tangible(products) or intangible (services).

Modes of Production Primary - Agriculture, cattle breeding, poultry, fishing,

mining, refining of metals (e.g., copper, iron, aluminum).

Secondary - Manufacturing, construction, energy generation.

Tertiary - Services (e.g., transportation, insurance, banking, education)

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Factors of Production

Land - natural resources. Labour - human effort both physical and mental. Capital - financial resources and physical goods for

reproduction. Knowledge - becomes an increasingly larger

portion of the cost of goods, particularly of information goods; increasing emphasis on intellectual property rights.

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Key Functions of Business Organizations

Marketing

Operations

Finance

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The operation function consist of all activities directly related to producing good and services.

Hence it exists both in manufacturing and assembly operations, which are goods-oriented and in areas such as health care, transportation, food handling and retailing which are primarily service- oriented

Operations

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Manufacturing - A Narrow Definition

In a narrow sense, manufacturing is defined to be the purposeful transformation of raw materials through human labour and knowledge into products by a series of tool and energy applications, each of which aims at well defined changes in the physical, chemical, and biological characteristics of the materials.

Place: Factory / Workshop.

Organization: Manufacturing firm.

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Manufacturing - A Broader Definition*

Manufacturing can be defined as a series of interrelated activities and operations involving the design, material selection, planning, manufacturing process, quality assurance, management and marketing of the products of the manufacturing industries.

*International Institution for Production Engineering Research (CIRP)

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Definition of a Manufacturing Process*External Disturbances

INP

UT

S

A Manufacturing Processis a complex arrangement

of physical elementscharacterized by measurable

parameters

Internal DisturbancesMaterial

Social-PoliticalEnvironment

Knowledge

Demand

Energy OU

TP

UT

S

Customer

Physical ElementsMachine ToolsToolsMat Handl. Equ.People

Measurable Parameters

e.g., Production Rate

Percent on Time Delivery

Manufacturing Lead Time

Defects per MillionUnit Cost

*Adapted from Parnaby and Black

Products

Service

Knowledge

Return

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Production System - A Definition*

Production system is defined as an organization in the industrial sector for the creation of manufacturing goods and commodities and/or providing services.

*International Institution for Production Engineering Research (CIRP)

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Manufacturing System - A Definition*

Manufacturing system can be viewed as an integrated combination of processes, machine systems, people, organizational structures, information flows, control systems and computers, designed and operated in order to properly support a coherent manufacturing strategy.

*B. Wu, Manufacturing Systems Design and Analysis, Chapman

& Hall, 1992.

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Flows in Manufacturing Systems

One distinguishes between three different types of flows in manufacturing systems:

Material.

Information.

Cost.

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Flows in Manufacturing Systems

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Week 1 www.izmirekonomi.edu.tr

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Material Flows in Manufacturing Systems

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Week 1 www.izmirekonomi.edu.tr

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Information Flows in Manufacturing Processes

Information flow can be conceived of flowing from the beginning to the end of the manufacturing process and vice versa. According to the direction, these approaches are called push system and pull system respectively. Push systems are based on a forecast generated at the outset of the production plan. The plan drives the production through issuing work orders for various stages of production. In pull systems, customer demands for the end products pull the component and materials through the system.

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Week 1 www.izmirekonomi.edu.tr

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Flow of Costs in Manufacturing SystemsCost Classification:

Direct labour cost (Direct labour is the labour of those people who work, either with machines or hand tools directly on the materials converted into finished products)

Direct material cost (Direct material are the commodities that enter directly into and become a part of the finished product)

Overhead costs Indirect labour and material cost Rent on land, equipment and building Maintenance and repairs to buildings and equipment Taxes on plant, equipment, material, inventory Taxes on all wages and salaries of the personnel Insurance on all personnel and physical facilities Depreciation on plant and equipment, etc.

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Manufacturing Systems Engineering

Manufacturing systems engineering is a methodology which is associated with the optimum design, analysis, operation and control of manufacturing systems.

It fosters an understanding of the whole manufacturing process and studies it as a system in order to fulfil the objective(s) of the company.It incorporates the new manufacturing technologies and methodologies into manufacturing so that manufacturing systems can efficiently support the manufacturing strategy of the company.

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The operation function consist of all activities directly related to producing good and services.

Hence it exists both in manufacturing and assembly operations, which are goods-oriented and in areas such as health care, transportation, food handling and retailing which are primarily service- oriented

Recall Operations…

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Buys some components from suppliers, do some fabrication and assembles bicycles and sells through a network to customers;

Key management tasks include; Deciding the style of bicycles Where to locate the facilities Make or buy decisions Ordering parts and materials Forecasts and determine how much to produce? Scheduling the production When and how to maintain the equipments,tools, etc. Pricing.

Manufactures goods!

Think about a bicycle factory…

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Consists of airplanes, airport facilities, maintenance facilities,

Key management tasks include; Where to locate the facilities Lease or buy airplanes Manage the inventory of foods, beverages, and parts of

planes Forecasts seat demand and determine required capacity Scheduling flight crew and airplanes Maintain the facilities etc. Pricing.

Provides services…

What About an Airline company?

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…operations are common for both manufacturing and service companies.

The problems are similar, You either schedule flight crew or your machinery You route the planes or trucks those carries finished goods Decide the price of the seat for a specific flight or the

bicycles you produce Decide to rent a plane or outsource some of your parts

from your supplier Decide how much “coke” you have to keep at each airport

facilities, or how much bicycles at which warehouse Etc.

Either goods or services…

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Steel productionAutomobile fabrication

House buildingRoad construction

DressmakingFarming

Auto RepairAppliance repair

Maid ServiceManual car wash

TeachingLawn mowing

Low service contentHigh goods content

High service contentLow goods content

Increasinggoods content Increasing

service content

Good-Service Continuum

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Manufacturing vs. Services

They are similar often in terms of what is done but they are different in terms of how it is done. E.g. there is often more customer contact for

service organizations then manufacturing ones

Read the differences between two types of organizations from the text book or other sources.

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Recall Business Organizations Business organizations are devoted to producing

good and/or providing services. Three basic functions are Operations-Marketing-

Finance The focus of this course is Operations. We have just seen that either the organization

produces goods or services the operations are similar.

In ISE program of FCS at IEU, we study how to make good decisions that aims to manage optimally the operations of all kinds of organizations with respect to the objectives of the firms.

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Some Definitions: Objectives of a Firm

Firms are established to create value for all its stakeholders. Shareholders of the firm, personnel of the firm, companies and individuals doing business with the firm, customers, society directly affected and society at large constitute the stakeholders of the company.

Firm Objectives Profit objective. Social objective.

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Some Definitions: Objectives of a Firm Profit objective. Profit is defined here as the

difference between the revenue and the expenses of a firm before taxes and investment. Profit is needed by a firm for its stability and survivability. It provides the firm with the necessary resources to redefine itself.

Social objective. A firm should also try to contribute to the welfare of the society. This is particularly expected from a firm of a reasonable size. A firm cannot exist in isolation from the society in which it operates. Thus, social objectives are related to the long term survivability of the firm.

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How to Measure Added Value?The added value* generated by a manufacturing firm is defined as the difference between the output and the input, where:

Input: The value of input is calculated by subtracting the total value of stock of material and fuel at the end of the year and goods purchased to be resold without any further processing from the total value of purchases of goods and services, and stock of material, and fuel at the beginning of the year.

Output: The value of output is calculated by subtracting the total value of stock of trade goods at the beginning of the year and goods purchased to be resold without any further processing from the total value of sales of goods and services, stock of trade goods at the end of the year and production value of fixed assets produced by the firm’s own staff.

* State Institute of Statistics, Turkey

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Some Definitions: ProductivityProductivity is defined as the ratio of output to input.

Kinds of Productivity: Factor productivity (output is related to one of the

resources of production, such as labour, capital, land, raw material, etc.)

Total factor productivity (an overall measure expressing the contribution of the resources of production to the efficiency attained by a firm.)

Both types of productivity can be expressed as physical productivity with output being measured in physical units and as well as value productivity with output being measured in monetary units.

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Added Value at Operational LevelThe aim of the business organization should

be to add value at each component of the production system. All non-value adding operations need to be carefully screened and eliminated. A non-value adding operation is an operation that does not add value directly transferable to the customer, i.e., if it is eliminated, the benefit accrued by the customer from the product does not diminish.

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What is Operations Management?

Operations Management – the design, operation, and improvement of the production systems that create the firm’s products or services

operations management is primarily concerned with transformation processes:

Inputs Transformation Processes Outputs

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Recall the Value Adding Process

Value Adding (Transformation)

Process

Value Adding (Transformation)

Process

ProductProduct

ServiceService

WorkforceWorkforce

KnowledgeKnowledge

CapitalCapital

MaterialMaterial

InputsOutputs

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Examples of OM Decisions Intel needs to construct a new fabrication plant

to produce its next generation of computer chips. Where should it build the facility? What should the capacity of the facility be?

United Airlines needs to allocate resources to meet all of its customer demand for air travel next month. How should it assign different-sized aircraft to flight

routes? How should it assign crews to flights while adhering

to government regulations and union agreements? How should it schedule aircraft maintenance?

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Examples of OM Decisions

Charter Cable needs to plan tomorrow’s service visits. Which customers will get serviced? How should customer site visits be

assigned to service personnel?

All decisions in operations management involve trade-offs.

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Decision Making

System Design–capacity– location–arrangement of departments–product and service planning–acquisition and placement of

equipment

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Decision Making

System operation– personnel– inventory– scheduling– project

management– quality assurance

Note that in most cases system design determines the system operations parameters! Hence system design decisions are crucial and vital

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Responsibilities of Operations Management

Products & services

Planning– Capacity– Location–– Make or buy– Layout– Projects– Scheduling

Controlling– Inventory– Quality

Organizing– Degree of centralization– Subcontracting

Staffing– Hiring/laying off– Use of Overtime

Directing– Incentive plans– Issuance of work orders– Job assignments

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Typical operations performance measures

Profit Cost Productivity Quality Delivery Customer service

tradeoffs

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Business Operations Reference Model

Source Make Deliver

Plan

Material FlowInformation Flow Funds Flow

Suppl

ier

Cus

t

ome

r

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Systems of Processes

Operations management involves making decisions about the entities and activities within systems of processes

Beyond the central transformation process, a business can be seen as a collection of processes to be designed, managed, and improved

Furthermore there is the concept of Supply Chain Management…

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A Supply Chain Example

Material, Information and Funds FlowMaterial, Information and Funds Flow

Raw Material and Semi-Finished Products Suppliers

ConsumersManufacturing Centres

Distributors and Warehouses