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Culture Documents
Chapter 1 and 2
Chapter 1 and 2
Kinfe F. Weldetnsae
Samara University,
College of Engineering and Technology,
Department of Mechanical Engineering
April 2022
OUTLINE
1 Basics of Management
Introduction to Management
Functions of Management
Manager’s Roles
Exercises
2 Inventory Management
Introduction to Inventory Management
Types of Inventory
Functions of Inventory
Inventory Models
3 Forecasting
Introduction to Forecasting
Kinfe F. Weldetnsae (Samara University, College of Engineering
Industrial
andManagement
Technology,and
Department
Engineering
of Mechanical
Economics Engineering) April 2022 1 / 76
Introduction to Management
What is Management?
A set of activities (including planning and decision making, organising, leading and
control) directed at an organisation’s resources (human, financial, physical and
informational) with the aim of achieving organisational goals in an efficient and
effective manner.
The creation of conditions that allow the effective use of resources (human,
financial, material, equipment, technical and etc.) to achieve a specified goal.
Organizational resources (5M):
Men
Money
Machines
Materials and
Methods
Kinfe F. Weldetnsae (Samara University, College of Engineering
Industrial
andManagement
Technology,and
Department
Engineering
of Mechanical
Economics Engineering) April 2022 2 / 76
Major Premises
Technology and business savvy (know-how) represents a very powerful combination
of great demand in society.
Market environment is rapidly evolving (changing marketplace complexities,
web-based technologies, globalization).
Leaders with understanding of technology and management perspectives are needed.
Engineers with proper management and leadership training have great opportunities
to add value.
Interpersonal role
Figurehead: ethical guidelines and the principles ofbehavior employees are to
follow in dealings withcustomers and suppliers.
Leader: give direct commands and orders to subordinatesand make decisions.
Liaison: coordinate between different departments andestablish alliances between
different organizations.
Kinfe F. Weldetnsae (Samara University, College of Engineering
Industrial
andManagement
Technology,and
Department
Engineering
of Mechanical
Economics Engineering) April 2022 22 / 76
Manager’s Roles
Informational Role
Monitor: evaluate the performance of employees in different functions.
Disseminator: communicate to employees the organization’s vision and purpose.
Spokesperson: give a speech to inform the local community about the
organization’s future intentions.
Decision Role
Entrepreneur: commit organization resources to develop innovative goods and
services.
Disturbance handler: to take corrective action to deal with unexpected problems
facing the organization from the external as well as internal environment.
Resource allocator: allocate existing resources among different functions and
departments.
Negotiator: work with suppliers, distributors and labor unions.
Kinfe F. Weldetnsae (Samara University, College of Engineering
Industrial
andManagement
Technology,and
Department
Engineering
of Mechanical
Economics Engineering) April 2022 23 / 76
Manager’s Roles
(1) A company that makes shopping carts for supermarkets recently purchased new equipment, which reduced the
labor content needed to produce the carts. Information concerning the old system (before adding the new
equipment) and the new system (after adding the new machines)includes:
(A) Compute labor productivity for both the Old System and the New System.
(B) Compute total factor productivity for both the Old System and the New System.
(C) Suppose production with old equipment was 30 units of cart A at a price of $100 per cart, and 50 units of cart B
at a price of $120. Also suppose that production with new equipment is 50 units of cart A, at a price of $100 per
cart, and 30 units of cart B at a price of $120. Compare total-factor productivity for the old and the new systems.
Kinfe F. Weldetnsae (Samara University, College of Engineering
Industrial
andManagement
Technology,and
Department
Engineering
of Mechanical
Economics Engineering) April 2022 36 / 76
Exercises
EX-2
A company has introduced a process improvement that reduces the processing time for each unit and increases
output by 25% with less material but one additional worker. Under the old process, five workers could produce 60
units per hour.Labor costs are $12/hour, and material input was $16/unit. For the new process, material input is
now $10/unit and overhead ischarged at 1.6 times direct labor cost. Finished units sell for $31 each.
(A) Compute single factor productivity of labor in the old system. (Compute it in four possible ways.)
(B) Compute all factor productivity for both old and new systems.
A milk factory seeks advice from an external consulting company concerning its business and production processes.
The final consulting report describes several steps to increase productivity including implementation of
cutting-edge processing techniques through more powerful filtering systems.
(A) Calculate the labor productivity for the existing as well as the proposedsystem.
(B) Find the Total-Factor Productivity for both systems.
(C) Assume that current processing includes 700 gallons of Grade-A milk sold at $2.40/gallon and 300 gallons of
Grade-B milk at $1.90/gallon.Furthermore, assume that under the proposed system, processing will include 600
gallons of Grade-A milk at $2.40/gallon and 400 gallons of Grade-B milk at $1.90/gallon. Compare all-factor
productivity for both the existing and the new system.
(D) Is the proposed system acceptable? Why?
Kinfe F. Weldetnsae (Samara University, College of Engineering
Industrial
andManagement
Technology,and
Department
Engineering
of Mechanical
Economics Engineering) April 2022 38 / 76
Introduction to Inventory Management
Inventory:
An inventory is an idle stock of material in store used to facilitate production or to
satisfy customer needs.
Inventory is any stored resource that is used to satisfy a current or future need.
Inventory Management:
Scientific method of finding out how much stock should be maintained in order to
meet the production demands and be able to provide right type of material at right
time,in right quantities and at competitive prices.
Work-in-process
Undergone some change but not completed
Maintenance/repair/operating (MRO)
Replacement parts, tools, and supplies
Finished goods
Completed product awaiting shipment
Goods-in-transit to warehouses or customers
B Items:
Typically an additional 30% of the items accounting for 15% of the inventory value
(moderate).
C Items:
Typically the remaining 50% - 60% of the items accounting for only 5% - 10% of
the inventory value (Trivial many).
D Q
TCEOQ =( ∗ S) + ( ∗ H)
Q 2
Where
TC Total Annual Cost
D Annual Demand
H Annual Holding Cost
S Ordering or Set up Cost
D IMax
TCEPQ =( ∗ S)( ∗ H)
Q 2
d
IMax =Q(1- )
p
v
u 2DS
EPQ=u
u
d
H(1 − )
t
p