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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.

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Presentation on theme: "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."— Presentation transcript:

1 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 1 ISE 102 – Introduction to Systems Engineering Asst. Prof. Dr. Mahmut Ali GÖKÇE Faculty of Computer Sciences Department of Industrial Systems Engineering

2 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 2 of 52 Course Contact Information Instructor: Asst. Prof. Dr. Mahmut Ali GÖKÇE Office : A-409 Phone : Wednesday 15:30-16:30 Thursday 10:30-12:20 ( and by appointment) Office Hours:

3 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 3 of 52 Course Contact Information (Cont.) Teaching Asistant: Utku Guruşçu - Görkem Sarıyer and

4 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 4 of 52 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

5 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 5 of 52 Text Book(s) Main Textbook: Blanchard, B.S and Fabrycky W.J.,Systems Engineering and Analysis, (4th ed.) : NJ Prentice Hall, References Vollmann, T.E., W.L. Berry, and D.C. Whybark, Manufacturing Planning and Control Systems, 4th edition, Irwin/McGraw-Hill, Goldratt, E.M. J. Cox, The Goal - A Process of Ongoing Improvement, North River Press; 2nd Rev edition, 1992.

6 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 6 of 52 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.

7 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 7 of 52 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;

8 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 8 of 52 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

9 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 9 of 52 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

10 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 10 of 52 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.

11 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 11 of 52 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

12 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 12 of 52 Late 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. Disclaimer The 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.

13 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 13 of 52 Content Business Organizations Key Functions Manufacturing Systems Manufacturing Systems Engineering Manufacturing vs. Service Operations Operations Management Supply Chain Management

14 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 14 of 52 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.

15 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 15 of 52 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)

16 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 16 of 52 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.

17 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 17 of 52 Key Functions of Business Organizations Marketing Operations Finance

18 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 18 of 52 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

19 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 19 of 52 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.

20 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 20 of 52 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)

21 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 21 of 52 Definition of a Manufacturing Process* External Disturbances INPUTS A Manufacturing Process is a complex arrangement of physical elements characterized by measurable parameters Internal Disturbances Material Social-Political Environment Knowledge Demand Energy OUTPUTS Customer Physical Elements Machine Tools Tools Mat Handl. Equ. People Measurable Parameters e.g., Production Rate Percent on Time Delivery Manufacturing Lead Time Defects per Million Unit Cost *Adapted from Parnaby and Black Products Service Knowledge Return

22 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 22 of 52 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)

23 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 23 of 52 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.

24 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 24 of 52 Flows in Manufacturing Systems One distinguishes between three different types of flows in manufacturing systems:  Material.  Information.  Cost.

25 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 25 of 52 Flows in Manufacturing Systems

26 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 26 of 52 Material Flows in Manufacturing Systems

27 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 27 of 52 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.

28 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 28 of 52 Flow of Costs in Manufacturing Systems Cost 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.

29 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 29 of 52 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.

30 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 30 of 52 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…

31 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 31 of 52 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…

32 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 32 of 52 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?

33 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 33 of 52 …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…

34 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 34 of 52 Steel production Automobile fabrication House building Road construction Dressmaking Farming Auto Repair Appliance repair Maid Service Manual car wash Teaching Lawn mowing Low service content High goods content High service content Low goods content Increasing goods content Increasing service content Good-Service Continuum

35 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 35 of 52 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.

36 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 36 of 52 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.

37 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 37 of 52 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.

38 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 38 of 52 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.

39 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 39 of 52 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

40 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 40 of 52 Some Definitions: Productivity Productivity 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.

41 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 41 of 52 Added Value at Operational Level The 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.

42 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 42 of 52 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

43 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 43 of 52 Recall the Value Adding Process Value Adding (Transformation) Process Value Adding (Transformation) Process Product Service Workforce Knowledge Capital Material Inputs Outputs

44 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 44 of 52 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?

45 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 45 of 52 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.

46 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 46 of 52 Decision Making System Design – capacity – location – arrangement of departments – product and service planning – acquisition and placement of equipment

47 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 47 of 52 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

48 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 48 of 52 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

49 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 49 of 52 Typical operations performance measures Profit Cost Productivity Quality Delivery Customer service tradeoffs

50 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 50 of 52 Business Operations Reference Model SourceMakeDeliver Plan Material FlowInformation FlowFunds Flow SupplierSupplier CustomerCustomer

51 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 51 of 52 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…

52 Asst. Prof. Dr. Mahmut Ali GÖKÇE, Izmir University of Economics Spring, 2007 Week 1 52 of 52 A Supply Chain Example Material, Information and Funds Flow Raw Material and Semi- Finished Products Suppliers ConsumersManufacturing Centres Distributors and Warehouses


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