Introduction to Industrial Engineering and Operations Research

Example: Package carriers u How would you beat the competition in the package carrier industry?

UPS – 2003 INFORMS Prize Winner u Operations research techniques have been instrumental since the 1950s in UPS’s successful growth to a $32 billion company by 2003: –to structure its organization of »360,000 people, »1,800 facilities, »90,000 vehicles, and »580 aircraft, –to facilitate the daily decisions that guarantee the prompt delivery of 10,000,000 parcels each day. –While providing myriad cost savings, operations research is indeed a strategic lynchpin and a significant source of competitive advantage for UPS.

Schneider National, Inc. – 2006 INFORMS Prize Winner u Engineering and Research Department at Schneider National has demonstrated history of using OR/MS to provide benefits at strategic, tactical, and operational levels. u Applications in –shipment and driver planning, –revenue management, –dedicated fleet management and –operational decision support. u These OR/MS applications have improved annual earnings by over $10 million at Schneider.

Let’s start at the beginning… u 1913 Henry Ford creates the assembly line

What is IE? In words of a senior student… u I really enjoy the major and had no idea what it actually entailed until my internship this summer. u If I could give my briefest explanation of what Industrial Engineering is: –Industrial Engineers Engineer Industries. We use math and applied sciences to mass produce anything and everything. We can design a factory, create assembly lines, or make a work area more comfortable and safe for an employee. We use analytical skills and our own intuition to help organize Corporate America. u Alex, Senior ‘08

What is Industrial Engineering? u Industrial engineering is the engineering discipline that concerns the design, development, implementation, and evaluation of integrated systems of people, knowledge, equipment, energy, and material. Industrial engineering draws upon the principles and methods of engineering analysis and synthesis, as well as mathematics, physical, and social sciences. Industrial engineers work to eliminate wastes of time, money, materials, energy, and other resources. en.wikipedia.org/wiki/Industrial_engineering en.wikipedia.org/wiki/Industrial_engineering

Discussion Questions u How does IEOR impact –an airline? –Wal-Mart? –Disney World? –government? –Hospitals? –The military?

As an ME… Why should I care about IE? 1. Designing a great product is just the first step –Then it must be produced at a reasonable cost, defect-free, and delivered to the customer at the right time and price –These two steps are not sequential! »Cost, quality in production, and logistics aspects must be considered at the design stage 2. Understanding uncertainty and variability is key to making good engineering decisions

Exercise: Drug Testing u Major league baseball is concerned about the use of steroids by players. u Suppose that a blood test to detect the use of steroids is –97% reliable so that if an athlete has used steroids, the test result will be positive 97% of the time. –For athletes who have not used steroids, the test results are slightly less reliable and will indicate a negative result 95% of the time. u This means that the rate of false negatives is 3% and the rate of false positives is 5%. u In an initial voluntary screening, Major League Baseball found 6% usage amongst their players. u If a major league baseball player tests positive for the use of steroids, what is the probability that he actually used steroids?

Exercise: Glass Manufacturing Facility u Considering to buy testing equipment to detect extraneous gases in furnace. –These gases lead to major quality defects (bubbles in glass) and are present in the furnace 1% of the time u The test has been shown to detect extraneous gases in 99% of cases. u However, it also turns out positive when extraneous gases are not present in 5% of the cases. u Should the company invest in the testing equipment?

In a nutshell… u IE’s engineer processes instead of products. u They are thus key to making complex systems work  systems engineering u At the intersection between management, computer science and engineering. u Fields closely linked to it: –Operations research/Operations management –Management sciences –Decision sciences –Systems engineering –Information engineering