IELM 2010

Industrial Engineering and Modern Logistics

Instructor: Ajay Joneja, room: 5537, phone: 7119

Course materials: www://lmes.ust.hk
TA:

Terence Cheung Chong Mo

References: Notes (posted on web-site)

Readings (posted on website)
Grading: HW (10%); Reading report (10%);
Exam 1 (40%); Exam 2 (40%);
Bonus for class participation: 3%

What is Industrial Engineering

Mechanical Engineers make machines,
Electrical engineers make electronics,
Civil engineers make buildings, bridges,
Industrial engineers make decisions

The Engineering of making smart decisions

Decisions about what?
The design, installation and operation of integrated systems

Examples of Systems

Production systems

Supply chains and Logistics systems

Service systems

Financial systems

Some Industrial Engineering graduates

Tim Cook, CEO of Apple Inc.

Mike Duke, CEO of Wal-Mart

B.S. IE, Auburn University, 1982

B.S. IE, Georgia Institute of Technology, 1971

Chad Holliday, Chairman of Bank of America

B.S. IE, University of Tennessee, 1970

Former Chairman and CEO of DuPont

Industrial Engineering practice at Walt Disney

http://www.youtube.com/watch?v=krCjsxDhNyM

Industrial Engineering in Hong Kong

In the 2002/03 Budget Speech, the Hong Kong Government

identified four pillar industries:

Financial service
Trading and logistics
Tourism
Producer and professional services

In the 2014 Policy Address, Chief Executive C. Y. Leung

highlighted the following IE-related industries

Financial service
Logistics industry
Innovation and technology Industries

Industrial Engineering in Hong Kong

In 2010, the four industries generated value added of

HK$988.4 billion (or 58% of GDP), employed
1,690,200 persons (or 48.2% of total employment)
Financial
service

Trading
logistics

Tourism

Services

value added
(HK$m)

262,000
(15.4%)

434,500
(25.5%)

74,600
(4.4%)

217,200
(12.8)

employment

219,500
(6.3%)

785,900
(22.4%)

218,100
(6.2%)

466,700
(13.3%)

1.19

0.55

0.34

0.47

per capita VA
(HK$m)

Agenda for the course

Week

Topic (technique)

Introduction & background

Planning of systems (spanning trees)

Transportation (shortest paths)

Logistics planning (maximum flows)

5-6

Production and operations planning (LP, MILP)

Mid-term

Random variations (probability basics)

Managing quality (statistics)

10

Supply Chain Management basics (inventory)

11

Managing inventory (EOQ)

12

Managing inventory (Newsvendor

13

More randomness (queues)

Expected learning outcomes

Upon successful completion of the course, you will be able to:

Identify the main components of modern logistics systems and

why/how they developed to their current state

Model and solve operations decisions problems

Model and solve decentralized decision problems

Reading

You are required to read at least one book from the reading list

Write a two-page report on the book (all submissions will be

checked by Turnitin for plagiarism prevention)

The reading report is due on midnight, April 29

Reading list

The Goal
By Eliyahu M. Goldratt
A novel on process improvement and Theory of
Constraints
An IE classical

Predictably Irrational
By Dan Ariely
An easy reading book on behavioral economics
and human decision biases
A more advanced book is Daniel Kahnemans
Thinking, Fast and Slow

Reading list

Outliers: The Story of Success

By Malcolm Gladwell
To understand how outliers become outliers
A great book and New York Times best seller

The Machine that Changed the World

By Womack, Jones and Ross
On Japanese manufacturing systems, called lean
production
An IE classic

Reading list

The World Is Flat

By Thomas Friedman
A book that analyzes globalization in the early
21st century and, in particular, global supply
chains.

Some book on big data

You may suggest a popular book related to big
data
Your suggested book must be approved by the
instructor before the end of add/drop period
Example: Choices, values, frames by Kahneman & Tversky

Early history of IE
1730-1800s: Industrial Revolution

organized factories

James Watt
The BBC animation of Watts single acting engine is here.

Historical Landmarks
1730-1800s: Industrial Revolution

organized factories

James Watt
The BBC animation of Watts single acting engine is here.

Historical Landmarks..
1776: Adam Smith

specialization of labour

- Advocated free trade

- Fair prices set automatically
in markets under competition,
(the Invisible hand)

Historical Landmarks...
1832: Charles Babbage division of labour
organization of work

Reconstruction of Babbages Difference Machine

(precursor of the modern computer)

Historical Landmarks.
1800s: Henry Maudslay

Interchangeability

- Interchangeable components for manufacture of rigging blocks

- Also introduced standard sized screws-nuts
Main requirement: Repeatable, Precision machining

Historical Landmarks..
1900s: Frederick Taylor
mass production
Frank and Lillian Gilbreth time and motion study

Taylor
Taylors principles of Scientific Management:
1. Divide each task into parts, develop the best way to do each part;
2. Select the best person to do the each part;
3. Train, teach and develop the worker;
4. Provide financial incentives to follow the methods;
5. Managers plan the activities, and workers execute the tasks.

Historical Landmarks
1905-1920: Henry Ford mass production

Ford Model T

Historical Landmarks.
1900-1920: Andrei Markov
Markov chains
Agner Erlang
Queueing Theory
Basis for:

Markov

queues, inventory control,

stock prices, forecasting,

[source: www.darbyhudson.com]

Historical Landmarks..
~1950: George Dantzig Simplex Method
to solve Linear programs
Applications

Production planning, Schedules,

George Dantzig

Historical Landmarks
1924: Dr. Walter A. Shewhart Statistical Quality Control
1950s: Deming
1950s: Genichi Taguchi

Quality management
Design of experiments

Applications: Controlling the quality of a process/product

Shewhart

Taguchi

Historical Landmarks.
1945-1950:

Toys Hazards :
Choking (marbles etc.)
Injury from sharp edge
Poisoning

Ergonomics

Keyboard designs

Historical Landmarks..
1960s: Ford motor company
Ford Mustang
(Mass customization)

Further readings

-N/A-

Next topic: facilities planning (graph techniques, minimum spanning trees)