note-emp5100-2

Notes for EMP 5100

Introduction to Engineering Management

Total Quality Management Report

Date: Sept – Dec 2004

Author: César Becerril

Student No. 3636140

Professor Dhillon, B

Mid term Examination 20% Nov 1st

Report 40% Nov 29th

Final examination 40% Dec 6th

COURSE OUTLINE

1. Introduction to Management

- What is Management? - Historical Review - Management. Engineering Management

(late 70’s) first time 1980 pushed by DND

2. Engineering Organization charts of Modern companies

- Basic relationships in organization - Functions of the engineering dept. - Organization

of the engineering department. - Mathematical models

3. How to successful Engineering Administrator?

- The engineer as an executive. – What makes a good boss and a manager? – How to

work with others and efficiently. – Mathematical models.

4. Ho to develop key person in your organization?

- How to motivate key persons?. – Use of staff meeting. – Mathematical models.

5. Developing Engineering products.

- How new precuts can increase profit? – New product planning approach. – Product

Analysis techniques.

University of Ottawa of 70


6. Techniques for making better Engineering Management decisions.

- Linear programming. – Discounted cash flow analysis. – Fore casting. – Concurrent

engineering.

7. Methods to manage large Engineering projects.

- Critical path method (CPM) – Pert.

8. Creativity and Inventiveness

- How an Engineering Manager supports and encourages creativity? – Brain storming

techniques. – Creativeness principles.

9. How to estimate engineering and product costs?

- Break-even charts. – Life cycle cost-up.

10. Management of engineering drawings.

- How to release, control, file and number engineering drawings?

11. Engineering Maintenances management

- Inventory control and other models.

12. Reliability engineering and management



TABLE OF CONTENTS

COURSE OUTLINE 2

1 INTRODUCTION TO MANAGEMENT 5

1.1 What is management? 6

1.2 Management historical review 6

1.3 Characteristics of Management 7

1.4 Engineering Management 8

2 ENGINEERING ORGANIZATION CHARTS OF MODERN COMPANIES 9

2.1 Why have Organization diagrams? 9

Show basic relation ships and authority 9

Assign responsibility 9

Spots weak or indefinite control 9

Provides sense of security 9

Frame work for budgeting 9

2.2 Basic relationships in organization 9

2.3 Methods of Organization 10

2.4 Organization of the engineering department 11

Span of control 11

Lockheed’s Span of control model 11

2.5 Mathematical models 11

Man-Power Control model 11

3 HOW TO BE A SUCCESSFUL ENGINEERING ADMINISTRATOR? 12

3.1 Engineer as Executive 12

Engineering Manager 12

Engineering Consultant 13

The Liaison Engineer 13

3.2 What it is to be a boss? 13

3.3 Attributes Good Engineering Managers should possess 14

3.4 How to work with others and efficiently 14

4 HOW TO DEVELOP PEOPLE IN YOUR ENGINEERING ORGANIZATION? 15

4.1 How to motivate key persons in Engineering 15

4.2 Use of staff meetings to discover engineering executive potential. 16



5 DEVELOPING NEW ENGINEERING PRODUCTS 18

5.1 How new products can increase profit? 18

5.2 New product planning 19

6 TECHNIQUES FOR MAKING BETTER ENGINEERING MANAGEMENT DECISIONS 20

6.1 Linear Programming (LP) 20

6.2 Cash flow analysis techniques 22

6.3 Forecasting 26

6.4 Concurrent Engineering 27

7 METHODS TO MANAGE ENGINEERING PROJECTS 29

7.1 Critical Path Method (CPM) and Program Evaluation and Review Technique (PERT) 29

8 CREATIVITY AND INVENTIVENESS 33

8.1 How and Engineering Manager supports and encourages creativity? 33

8.2 Four Principles to guide the supervisor or Manger of Creative engineers 34

8.3 Brain storming technique group 35

9 HOW TO ESTIMATE ENGINEERING AND PRODUCT COST? 36

9.1 Product Costing 36

9.2 Break-even charts 37

9.3 Life Cycle Costing (LCC) 38

9.4 Life Cycle Costing Applied Equipment Selection 39

9.5 Estimating Corrective Maintenance Labor Cost 40

10 MANAGEMENT OF ENGINEERING DRAWINGS AND DESIGN REVIEWS 41

10.1 Release and Control procedures for engineering drawings 41

10.2 Type of Engineering Drawings 41

Layout Drawings 42

Test drawings 42

Manufacturing drawings 42

Drawing Changes 42

10.3 Design Review Committee 42

11 ENGINEERING MAINTENANCE MANAGEMENT 43

11.1 Objective – maintenance engineering 43

REFERENCES 44

REPORT FORMAT 44



Abbreviation and Acronyms 45



1 INTRODUCTION TO MANAGEMENT

Engineering Management

Of the many problems in industrial organization and management the most elusive and difficult

is the management of the engineering and design activities. The problem here is to establish a

frame of neatness, order, good housekeeping, and systematic procedures without destroying

the premises for imagination and creative work, which often prosper best in an atmosphere of

apparent disorder and confusion.

First of all we will discuss business and management as general then, the engineering

management.

North American business.

North American business is dynamic-perpetually evolving, perpetually developing into

something new. Old products are replaced by new ones. New industries are created, and old

ones fail. New methods of production and marketing are introduced and the old are discarded.

For each new method that is accepted, hundreds of alternatives are proposed and rejected.

This is the environment of modern enterprises. This is the changing, forward-moving, constantly

evolving economy in which North American business exists.

We can get some idea of the dynamic quality of North American business by looking briefly at

its history during the last fifty years. Fifty years is not a very long time in terms of history, yet the

past fifty years in North American business history have had more packed into them than the

previous two centuries.

During the five years preceding the great depression of the 30’s, the United States enjoyed an

almost unbroken prosperity.

In fact, many people today refer to this as the “Golden Age”. The nation felt sure of itself.

Business was good. Everyone was secure and confident of the future. In 1929, however, this

era of prosperity collapsed. It ended at different time for different industries, buy the most



dramatic turn was in the New York Stock Exchange. Almost overnight, the drops in stock prices

ended the business careers of thousands of individuals and corporations.

The depression that came in 1929 lasted for a long time. In fact, it wasn’t until World War II

started, that anyone could say with certainty that the depression was over. At the close of the

war in 1945, and uneasy peace followed. It was out of these two eras of depression and war

that the dominant theme of our time and of our business economy emerged: The team of

change.

Today’s Business.

Everything today is changed; everything today is new’ everything today is bigger.

There may be two main reasons for the business economy change:

1. The middle income group demands all sorts of good to make living easier, more

comfortable, and more leisurely. This group with its demands has transformed luxuries

of yesterday into necessities of today.

2. The second cause of our economic changes springs from our defence efforts and the

advent of space travel.

These two sources of business changes with their endless demands for civilian goods and war

materials have presented with new responsibilities and have made unprecedented demands on

its competence, knowledge, performance and sense of responsibility. With our economy thus

constantly evolving, management faces ever-increasingly complex and perplexing problems

which must be analyzed, evaluated, and solved.

1.1 What is management?

Management is defined in various ways depending upon the viewpoints, beliefs, and

comprehension of the definer. To illustrate, some define management as the force that runs a

business and is responsible for its success or failure. Others claim Management is getting

things done through others. However we will use the following definition:



Management is a distinct process consisting of planning, organizing, actuating, and

controlling performed to determine and accomplish stated objective by the use of human

beings and other resource.

1.2 Management historical review

Management, as we know it today, are out of the American Industrial Revolution. Not until

industry reached a certain level of sophistication was management necessary as a distinct

discipline.

The railroads represented the first big industry in terms of sophistication and capital

requirements. The railroads also acted as a catalyst in the development of other industries.

They provided rapid transportation of raw materials and finished goods, thus allowing

companies great flexibility taking advantage of the situation, men like Rockefeller, Duke and

Carnegie developed giant corporations in other industries by the end of 19th century. These new

corporate giants, along with the railroads required new methods of management. No longer

could business be run out of the home or on an informal basis.

It must be pointed out at this point that engineering profession made significant contributions to

the development of management thought. Challenging previous methods of managing a

business, Frederick Taylor (in 1895) devised and popularized scientific management. Although

often misunderstood, scientific management as presented by Taylor was a philosophy

concerning the relationship of people and work. The basis for this relationship was finding the

“one best way” for doing a job.



By 1930’s, the field of management had gained general acceptance as a discipline that could be

taught and learned. Professional societies and related organization had been formed and were

conributing to the development of the discipline.

Following this period of solidification during the 1920’s and early 1930’s, the human relations

movement made a significant impact on the management discipline. The Hawthorne (1924 –

plant site) studies focused attention on human relations and specifically the psychological and

sociological aspect of work. This study began in 1924 when the National Research Council of

the National Academy of Sciences undertook a project to determine the relationship between

physical working conditions and worker productivity. The Hawthorne plant of Western Electric in

Cicero, Illinois, was the study site.

Although his work was not readily available in English until 1949, Henry Fayol (1860-1918 ?)

was the first to present a functional approach to the study of management. Fayol was also one

of the first to develop “principles of management”.

By the mid 1950’s, there was general agreement that management should be taught using a

process or functional approach similar to that of Fayol.

However, this period of general agreement was short lived and was followed in the early 1960s

by a fragmentation era. During this fragmentation period, several different schools of thought

were pursued by management scholars.

In an effort to again unify management thought, a systems approach was developed. This

approach is an attempt to tie all of the various schools of thought together within an overall

“systems framework”

The contingency approach followed the systems approach. This approach theorizes that

different situations and conditions require different management approaches. Recent resources

shortages have rekindled interest in cost-saving and efficiency approaches

-200904-

1.3 Characteristics of Management

1. Management is purposeful or focused.



2. Management makes thinks happen.

3. Management effectiveness requires the use of certain knowledge, skill, and practice.

4. Management is an activity, not a person or group of persons.

5. Management is aided, not replace by computers.

6. Management is usually associated with efforts of group.

7. Management is an outstanding means for exerting real impact upon human life.

8. Management is intangible

9. Those practicing management are not necessarily the same as owners.

1.4 Engineering Management

Of the many problems in industrial organization and management the most elusive and difficult

is the management of the engineering and design activities. The problem here is to establish a

frame of neatness, order, good housekeeping, and systematic procedures without destroying

the premises for imagination and creative work, which often prosper best in an atmosphere of

apparent disorder and confusion.

The major element of the engineering departments responsibility is the general management

comprise, the preparation of the information required to manufacture the company products, to

keep it trouble-free in service, to maintain continuously all its performance criteria at a

competitive level, to reduce its costs, and to improve its sales.

Furthermore, the engineering management must also keep the company management informed

of technological advances so diligently that engineers recommendations for the inventions and

development of new products will be accepted as sound as based on fact.



2 ENGINEERING ORGANIZATION CHARTS OF MODERN COMPANES

Of is difficult to generalize in discussing engineering organization charts, they must vary with

size and product of the company, skills and personalities of the personnel, policy and

preferences of executives. Our intent here, therefore, is to present some basic characteristics of

engineering organizations.

2.1 Why have Organization diagrams?

Show basic relationships and authority

Assign responsibility

Spots weak or indefinite control

Provides sense of security

Frame work for budgeting

2.2 Basic relationships in organization

a) Basic relationships Line (direct authority)

The superior – subordinate authority relationship whereby a superior delegate authority

to a subordinate who in turn delegates authority to another subordinate and so on, forms

a line from the very top to the very bottom level of the organizational structure.



b) Group reporting c) Staff (advisory functions) d) Combination (line & Group

Together)

e) Group with staff f) Typical – A complex combination

2.3 Methods of Organization

a) Methods of Organization by functions

Advantages

1. Permits technical specialization

2. Distribute work load evenly

3. Consistent policy



4. More uniform products

Disadvantages

1. Slower flow work

Multiple supervision

2. Difficulty in shifting personnel

b) Methods of Organization by Project.

Advantages

1. Team work

2. Specialization by product

3. Faster workflow

4. etc

Disadvantages

1. Duplication of facilities and personal

2. Variation in policy

3. less uniformity

c) Methods of Organization combination



In this case we combined (a) and (b), this has most advantages of the other two types (a) and

(b), but requires more complex planning and supervision.

But there is no constant, or even common pattern, as would be expected, each organization has

been varied to suit conditions peculiar to company, its locations, product, and the skill and

personalities of its particular personnel.

2.4 Organization of the engineering department

Span of control

An old rule has it but one person should boss no more than five others, but this currently widely

disregarded.

In 100 large companies studies recently, the range was one to 24, with median eight or nine.

But 24 of the 100 companies had one executive handling 13 or more persons.

Lockheed’s Span of control model

- Geographical locations of subordinates and department managed.

- Natural of work performed by subordinates

- Similarity of functions performed by subordinates



- Organizational help give to the manager

- Coordination required

- Degree of direction and control needed by subordinators

- Etc.

1. JL. Meig, Some fundamental of general theory of management, Journal of Industrial

Economics, 1955, pp 10-32

2.5 Mathematical models

Man-Power Control model

According to the model, the total number of leaders, L, required by an organization is given by:

L = P∑k ___1__

i=1 Pc

P = denotes the total of workers in an organization

Pc = denotes the desired number of persons to be controlled by a leader.

k = denotes the total number of hierarchy levels in a company above the working level.

L = P/Pc+P/Pc2+P/Pc3+…+P/Pck

↑

L = P(Pck-1)/Pck(Pc-1) P/Pck=1 ≡ P=Pck

L = Pck-1/Pc-1 = (p-1)/Pc-1

ln P=K lnPc

:. K=lnP /lnPc

-270904-



3 HOW TO BE A SUCCESSFUL ENGINEERING ADMINISTRATOR?

3.1 Engineer as Executive

Engineers are expected to performances many of task. We see directive the work of other

engineers, technicians, analysts, and clerks.

Some perform highly abstract analysis.

What are the legitimate careers for engineers?. Three basic roads “up” for engineers are to the

positions of:

- Manager of Engineering

- Consulting Engineer

- Liaison Engineer

Engineering Manager



The engineer who climbs the management ladder is really and engineer-business executive.

He/ she must be concerned with the quality and the economics of the engineering work in terms

of company business objective. At the same time, he/she must provide some technical

leadership, he/she cannot be said to have ”laid down his/her slide rules” regardless of his/her

level in organization

Engineering Consultant

The engineer who elects to follow the career of consultant is actually a consultant-technical-

executive. He/she will always be a solver of technical problems.

The Liaison Engineer

The liaison engineers face the same problem as the consultant but to a much lesser degree.

3.2 What it is to be a boss?

Most engineers think sooner or later of switching from technical work to a managerial position.

Here is what you can expect.

In engineering you work with specifics-weight length, height, pressure, force, etc. In

management you work with generalities – supervision, arbitration, delegations, sales,

negotiation, etc.

In management you delegate work, settle disputes, approve expenditures for projects whose

outcome is a gamble.

Probably the most part of changing from engineering to management is learning to cope with

the irrational verbal and written demands of outside people.

Important factors

- Your reading will change - You will make speeches



- Your thinking will change - Your methods of thinking will change too

- Your will find that you must think of others first

- Think ahead of your present problems - Think of many alternatives

- Think in terms of selling - Thing while listening to others

- Thing to get to the core of problems quickly

- You will train people

Human relations

Many firms now have clinics in human relations for new management personnel.

Here are guideline rules of human relations that will help smooth your switch to management;

- Express and show interest in people and their problems

- Be impartial as you can in all dealings with people

- Treat everyone as an individual

- Show appreciation whenever it is deserver

- Be firm, fair, and consistent in dealing with others

- Look for what others can do, not for what you want

Learn how to Delegate

You build job pleasure and willingness in others in two ways.

(i) by genuinely feeling his/her way yourself, and

(ii) by being friendly to your associates at all times - not just when giving orders

A new creativity for you

Morale will mean more

3.3 Attributes Good Engineering Managers should possess



- Tolerance - Ability to reason

- Empathy - Good emotional control

- Readiness to give other credit - Willingness to listen

- Quick to praise and criticize - Quick to see good in others

- Lack of suspicion - Flexibility

- Fairness - Confidence and self-assurance

- Good sense of humour - Recognition of differing views

- Ability of self-evaluation - Consistency

- Communication - Motivation

- Etc

3.4 How to work with others and efficiently

One puzzling aspect about fatigue, which makes it difficult to overcome, is that its causes not

clearly understood.

Some clues on how to maximize your personal efficiency is provided by N.R.F. Macir, who has

studied the productivity of people at various times of the day.

Two characteristics

Fact is the warm up period in the morning, most people seen to require about an hour to build

up a full head of steam.

Second Characteristic is the fatigue drop the lower of workup efficiency during the fourth hour of

work during both morning and afternoon.

1. Chart your course

2. Rest periods

3. Work conditions (Human factors / Ergonomics)

- Lighting

- Distractions

- Seat up



Organization Size Model

Consider the situation of an organization who primary function are paper studies suchs as a

large applied research firm, for instance.

Notation

n = number of professional employees

u = number of report turned out per year

tw = average need time in days to complete a report (including investigation, analysis, writ up,

etc, but not counting time spent reading other reports

tr = average time in days to read a report

k = fraction of all reports received by the average professional employee – reports which he/she

is expected to read

Assuming that everyone reads km reports he/she receives in a year and assuming further that

there are 240 working days in a year, the net time that average employee has to do creative

work on his/her own is equal

(240 – kmtr) days. Thus, the number of reports that he/she himself/herself can turn out is equal

to

240 – kmtr

tw

m = n(240-kmtr)

tw

m= __ 240n__ = _____ 240___ = 240 when n → ∞

tw+ktrn tw/n+ ktr ktr

-041004-



4 HOW TO DEVELOP PEOPLE IN YOUR ENGINEERING ORGANIZATION?

4.1 How to motivate key persons in Engineering

People are the same the world over. Consider any key employee. Whatever great his/her talent

or ambition, he/she still needs inspiration and psychological support from his/her superior if

he/she is to perform at the peak of his/her ability 2 – 10 times

Here are five motivator you can apply to help you tap the talent productive power of your

employees. These are established by an insurances salesman who became millionaire at the

age of 27.

1. Uncover tools of self-motivation that work best for each employee.

Talk your key people. Ask question, study their reaction, Identify frustrations, whatever they are

groundless or not differentiate between those factors that fuel enthusiasm and those that sap

interest and initiative.

2. Get your people personally involved in the goal-setting act.

3. Flatter employees by consulting them on important matter.

4. Shoot for total understanding of policies and objectives.

If you ever experience this problem, there is a way to solve it. You can do these by feeding

information on a “control flow and response” basis. Communicate one measured portion of

information at a time. Then before proceeding, test the response in these three ways

1. Pay attention to the employee’s reaction if the message is not get thought, the

expression on his/her face will often tip you off.

2. Ask pertinent questions to check his/her understanding.

3. Get the employee to repeat your meaning in his/her own words

5. Set performance standards high but within grasp. Then give your people free rein to make the

grade on their own momentum.



4.2 Use of staff meetings to discover engineering executive potential.

Advantages of Meetings

1. The business meeting gives manager a chance to see their entire staff in action.

2. A meeting is the acid test of management capability if a person cannot hold his/her temper

when his/her ideas are challenged, sway opinion, move to definite conclusions at a meeting,

there is little chance he/she will do so at other times.

3. A meeting is an invaluable barometer of staff morale and attitudes.

4. An excellent test of a young executive’s ability to think quickly

5. A meeting is excellent for discovery of problem solvers. The person who comes to the

meeting to find answers to problems rather than report on what a sterling job he/she doing – is

the greatest find a manager can hope to uncover.

6. Most important the meeting is a guarantee manager won’t overlook talented executive’s

development under their noses.

Guidelines to conduct meetings effectively

1. Stimulate interest

First, create a positive attitude towards the value of meetings both to the individual and

company.

Point out how the meeting gives a person the opportunity to exchanges ideas with others, in

their own department – an excellent way of learning the total function of the department.

2. Control the group

3. Anticipate participation

4. Use visual aids

5. Examining performance

How to displace managers?

When a manger is removed from his/her job, the move must be calculated to avoid damaging

company morale, public relations, and the company’s prospects. According to Frank Bird, an

engineering manufacturing manager of a large US industrial company, there five ways to

displace a manager:



1. Moving the Job, not the person.

Advantage: accomplished thought retention of office and title, and the movement of a subgroup

out from under the individual. This is a difficult exercise and is used where it is important that the

displacement be concealed from the public.

Disadvantage: Low morale and the loyalty of the sub-group

2. West and out

Obviously are the simplest procedure and one that final in most cases. This direction can be

softened, of course, by the possibility of early retirement or disability leave of absence if the age

and health of individual provide an excuse for the action.

3. North and up

Often used because it is easiest, this step maybe disguised to the public and the organization

and even the affected individual as a promotion. Morale of both the executive and his/her group

may be maintained. This direction is particularly useful when the individual has developed

strong loyalty ties to customers, dealers, public, etc. That technique approach is the most

expensive since salaries are generally maintained and in some cases even increased.

If this does not work, it may be necessary to move the executive in a westerly direction.

4. Laterally East

There are five good reasons for using this method which involves moving the manager a staff or

special assistant position

a) It is relatively easy to carry out



b) The salary may be maintained at the same level

c) The individual is frequently agreeable

d) If conditions change, the individual may move back to the same or equal level without

less of prestige or inconsistency of policy.

e) The publicity risk is minimal

5. South and Down

The application of this method should be restricted to those individuals who are old enough, or

sick enough, and will up enough to go down, and take well.

This is not likely that a younger manager can accept the humiliation of a demotion and reduction

in salary and still maintain an attitude of loyalty to the company.

For more serious then his/her own productivity would be the effect on the morale of other

members of his/hers group.

A maneuver sometime used is moving the individual north, east or south in the hope that he/she

will move west and out of his/her own accord.

-181004-

5 DEVELOPING NEW ENGINEERING PRODUCTS

98 % failed to survive more than 2 years.

5.1 How new products can increase profit?

1. By filling out an existing product line and thus reducing over-all selling costs.

2. By advancing the technological knowledge’s

3. By increasing the sale ability of an existing product

4. By using the material generated or left over in the manufacture of another product.

5. By increasing public knowledge of company’s basic product.



6. A new product can contribute to a company’s profit by replacing a product which has become

tired or unprofitable.

Etc.

What are some of the causes of new product failures?

1. The marketing programs are not planned carefully enough

2. The price range is wrong.

3. Not enough care is given to design or engineering details.

4. The quality of manufacture is not good enough

5. Wrong time

6. Impatience – underestimating the time and money need for ordering market development and

growth.

7. Poor training to marketing people

8. Bad name in the market. Etc.

Recommendation to avoid product failures

To my opinion it is to have sales, research, manufacturing and finance work as a team from the

very beginning of the new product development, realistically and objectively facing up to the

basic problems involved.

Among other things:

a) There should be a feasibility study by research

b) A market research study by sales

c) A feasibility study by manufacturing.

d) A feasibility study by design

e) Economic and profitability study my finance

f) There should almost always be restricted market sale test before mass production.

5.2 New product planning

The following two checklists are always useful when you are planning a new product:

a) Marketing checklist



b) Technical and administrative checklist

note: see checklist *041018

Technical and administrative check list:

Patent problem or advantaged

No of sizes and types

Time to develop

Cost to develop

Problem in development

Availability of engineering equipment and personnel

Problems in manufacturing

Problem of materials

Rough estimate of capital required to put into production

Rough estimate of cost and selling prices

Profit generation

Time to reach break-even

Time to development cost

Return on investment

Profit margin in the relation to development cost and capital requirement

Possibility of establishing t hold on new technology

Etc

Method for choosing the right new product Idea

This method stands all ideas though the development mile on an equal basis. But at seven

distinct stages you force a formal re-evaluation of the idea in terms of the company’s criteria of

acceptability of it passes fine. Send it on to the next stage. If it does not file the idea for future

reference – times change and the candidate might look altogether different in five or ten years.



C1=b1-a1

Note that this system adds hours and dollars, but it reduces risk so much so that successful

products pay for all their own development, and for all the drop-outs as well.

Decision Criteria

At each stage the basic question asked is “will it make money?” Various test can be applied the

significance of each depends on the type of company and its policies. Three factors that always

interest perspective investors are:

a) Ratio of gain to risk. Will profit exceed expense by enough to make the risk

worthwhile? (Generally about 2.5:1)

b) Estimate annual dollar volume

c) Break-even time

note: see seven steps of analysis *2 041018

Cost-Capacity Model

Kn = K0 ∞y

Kn = denotes the cost of the new plan / system

K0 = denotes the const of the old (but similar) plant / systemy = is the cost – capacity factor. The generally used value of y is 0.6



∞= cn / c0, cn is the new plant / system capacity

c0 is the old (but similar) plant / system capacity

Reference:

1. Chilton, C.H., Six tenths Factor Applies to Complete Plant Cost. Chem. Eng, Vol. 57, pp 112-

114, April 1950.

2. Williams, R., Sis tenths Aids in Approximating Costs, Chem. Eng, Vol. 54, pp 124-125, Dec.

1847

Example

A thermal 2000 MW generating power station cost $400 millions to build. However, the utility

management wishes to build a 3500 MW thermal power generating plant. Find the cost of the

proposed power station if cost –capacity factor is 0.6.

Kn = 400 (3500 / 2000)0.6 - $ 559.6 million

6 TECHNIQUES FOR MAKING BETTER ENGINEERING MANAGEMENT DECISIONS

6.1 Linear Programming (LP)

-George B Dantzig – 1947 – simplex method

LP is the simplest and most widely used technique. This is a method for designing how to meet

some desired objective such as minimizing the cost or maximizing the profit, subject to

constraints on the amounts of commodities required or resources available the term laity implies

proportionality.

Generally, of course, the functions to be optimized, and the expressions for constraints with very

complicated. In simplest form in which the problem can occur, however, the objective function

and constraints are linear.

The linear problem would be (typical example) to Maximize:



Z=C1X1+C2X2+C3X3+…+CnXn (objective function)

Subject to constraints:

a11X1+a12X2+…+a1nXn ≤ b1

a21X1+a22X2+…+a2nXn ≤ b2

“ “ “ “

“ “ “ “

“ “ “ “

am1X1+amX2+…+amnXn ≤ bm

X1 ≥ 0

X2 ≥ 0

X3 ≥ 0

-251004-

Z = ∑nCfXf (objective function)f=1

Subject to constraints

∑n aifXf (≤≥=) bi for i=1,2,…,n

Example,

Let us assume that we are making flags which use RED, WHITE, and BLUE cloth that we have

15 yards of red cloth, 17 yards of white cloth and 16 yards of blue cloth. We can make two types

of flags.

Flag A requires 3 yards of red and 3 yards of white cloth, Flag B requires 4 yards of blue cloth

and 2 yards of white cloth.

Each flag A makes a profit of $5 and each flag B makes a profit of $3 dlls. Maximize profit.



If we make x flags of type A and y flags of type B them our profit

Z=5x3y

But we use

3x yards of red cloth

3x-2y yards of white cloth

4y yards of blue cloth

We are limited in our resources to $ 15, $17 and $16 yards of red, white, and blue cloth

3x ≤ 15

3x+2y ≤ 17

4y ≤ 16

Maximize

Z=5x+3y

Subject to

(1) 3x ≤ 15

(2) 3x+2y ≤ 17 2y+17-3x y+17/2 – 3/2x

(3) 4y ≤ 16 x = 0, y = 17/2

y = 0, x = 17/3 = 5 2/3 (a)

Z=5x+3y Z=5x+3y

20=5x+3y 30=5x+3y

X=0, y=20/3 x=0, y=10

y=0, x=4 y=0, x=6



Maximize

Z=5x+3y

X=5, y=1

Z=$28

6.2 Cash flow analysis techniques

Simple Interest

This is interest computed on the original principal for the time during which the money is being

used. The simple interest I on the principal P for t years at a rate of interest i per year is given by

I=Pit

Amount

A=P+I = P+Pit = P(1+it)

If an individual borrows $800 at 4% to be paid in 2 ½ years, the interest is

I=800(0.04)(5/2)=80

A=P+I=800+80+880

Compound Interest

Suppose the interest due at the end of the first of a specified number of equal intervals of time is

added to the original principal and that this amount acts a second principal for the second

interval, the process being continued for a given time.

If “P” is the original principal, “I” the rate of interest per conversion period and “n” the number of

conversion periods, the composed amount “A” at the end of these “n” conversion periods is

given by:

1 st period 2 nd period 3 rd period



A1=P+Pi A2=A1(1+i) A3=A2(1+i)

= P(1+i) =P(1+i)(1+i) =P(1+i)(1+i)(1+i)

A=P(1+i)n

The component of interest I=A-P

Present Value P=A/(1+i)n

=A(1+i)-n

Example:

A=$1000, i=1.5%, n=12

P=1000/(1+0.015)12= $836.39

Annuity

An annuity is a sequence of equal periodic payments

Pay period

The length of time between two successive payments is called the payment period or payment

interval

Term of the Annuity

The length of time between the beginning of the first payment period and the end of the last

payment period is called the term of annuity.

Annual Rent

The sum of payments made in one year is the annual rent

The Amount of an Annuity



This is the sum of the compound of amounts which would be obtained if each payment when

due were kept at interest until the end of the specified term

Amount A at the end of the first year will be zero until the depositor adds an amount A.

At the end of the second year the total amount will be AT=A(1+i)+A where A is the annuity and I

is the interest rate per period to this depositor adds an amount A

AT=[A(1+i)+A](1+i)+A

Principal Depositor adds this after the 3rd year

AT=A(1+i(1+i)+A(1+i)+A

AT=A(1+i)2+A(1+i)+A

Proceeding in the same way, at the end of n years, assuming an amount A has been deposited

annually and the last one just been made, the total amount will be

AT+A(1+i)n-1+….+(A1+i)+A

The first term is the value of $A on deposit for (n-1) years, the second term is the value of $A on

deposit for (n-2) years, etc. and the last term is the value of $A which has just been deposited

AT =A[1+(1+i)+(1+i)2+…+(1+i)n-1] 1

Geometric Series

Multiply both sides of 1 by (1+i)

AT(1+i) = A[(1+i)+(1+i)2+…(1+i)n] 2

Subtract 1 from 2 to get



AT(1+i)-AT=A[(1+i)n-1]

AT=A[(1+i)n-1]/i

Example

Find the amount of an annuity of $100 per year at the end of each year for 5 years at 3%

compounded annually

AT=100[(1+0.03)5-1 ]/0.03= $530.91

The present Value of Annuity

This is the sum of the present values of all payments.

Consider now the problem of a computing the present value of a payment of amount A to be

made at the end of the next n years (or terms).

The present value of the first payment is A (1+i)-1 because it will be received one year from now;

the present value of the second payment is A/(1+i)2, because it will be received two years from

now, and finally the last payment is worth A/(1+i)n because it will be received n periods from

now. The present value of all the payments is the geometric series:

PV = A/(1+i)+A/(1+i)2+…+A/(1+i)n 1

Multiply 1 with 1/(1+i) to get

PV/(1+i) = A[1/(1+i)2+1/(1+i)3+1/(1+i)4+…+1/(1+i)n+1] 2

By subtracting 2 from 1 we get:

PV/(1+i) – PV = A/(1+i) n+1-A/(1+i)



PV = A[1-(1+i)-n]/i

Example

Decision to purchase a machine

Suppose a firm is considering buying a certain system which has a cost of c dollars. Use of the

system will result in saving of R dollars per year for next n years. After n years the machine will

have a salvage value of L dollars. Interest rate is i. Assume that the purchase price is paid in full

immediately and that the saving are all obtained at the end of each year. Should the system be

purchased?

Present value of the saving R dollars per year, for n years is:

R[1-(1+i)-n]/i

Present value of salvage, L, is:

L/(1+i)n

The net present value, PV, of buying the machine is equal to the sum of those two quantities

less the cost of the machine

↑

NP = [R(1-(1+i)-n]i + [L/(1+i)n] - C

The machine should be purchase if PV is positive.

Sometime the question answers in a different form: What level of annual savings would make

the investment worthwhile?

What level of annual saving would make the investment worthwhile; make the present value

greater than zero.

To solve for the value of R, we write



R = (C-L)[i(1+i)n/(1+i)n-1]+Li

From this formula a minimum value of R can be computed. If the anticipated saving are greater

than this value, the present value will be greater than zero and the machine should be

purchased.

Example

Assume that the cost of the system is $10000. After 10 years it will have a salvage value of

$1000 and the interest rate is 5%. How much should annual saving amount to if the system is to

“pay for itself”

R =(C-L)[i(1+i)n/(1+i)n-1]+Li

=(10000-1000)[0.05(1+0.05)10/(1.05)10-1]+(1000)(0.05)

=1166+50

=$1216

The machine, therefore, most offer an annual saving of $1216 in order to break even.

-011104-

BOOK

I.S. Makridakis, S.C. Wheelwright, Forecasting: Methods and Applications, Wiley,

New York, 1978

6.3 Forecasting

A forecast (of future demand) has to be available for making major engineering investment

decision, in preparing production plans, or replenishing stocks. The problem, therefore, is how

to forecast not whether to do so.

A way of placing greater emphasis on the more recent demand data is simply to weight recent

experience more heavily in computing the moving average.



Exponential Smoothing

This is a useful method for forecasting one period ahead.

Notation

d’1 = the forecast for the next period

d0 = actual consumption for the period just ending

d’0 = forecast for the period just ending

d-1 = actual consumption for the first preceding

d’-1 = forecast for the first preceding period

d’-n, d-n = forecast and consumption for the nth preceding period.

d’1 = ad0+(1-a)d’0

Where a is a smoothing constant or weighting factor, with 0<a<1 (commonly used values of

0.01 to 0.3)

d’0 = ad-1+(1-a)d’-1

d’-1 = ad-2+(1-a)d’-2

d’1 = ad0+a(1-a)d-1+a(1-a)2d-2+…+a(1-a)nd-n+…

d’1 = a[d0+(1-a)d-1+(1-a)2d-2+…+(1-a)nd-n+…]

I turns out that the new forecast is a weight average of all previous observations. But the

weights attached to each observation are not the same, they decrease by the fraction (1-a) as

observations become more remote. It is because the weight attached to the successively older

observations decrease by this constant factor that the method is referred to as exponential

smoothing.

If a=1, the consumption in the last period is the forecast for the next; if a is near zero, the result

is to give almost equal weights to all past results.

Example



The following is the usage of the certain engineering part by month for the year 2004.

Month J F M A M J J A S O N D

Usage 43 55 62 71 73 73 62 54 49 41 47 48

The forecast for January 2004 was 52 units. Prepare a schedule of forecasts as they would

have been for every month of 2004, using exponential smoothing with a=0.8. Forecast usage

January 2005

d’1 =ad0+(1-a)d’0

=(0.8)(43)+(1-0.8)52

= 44.8

d’1 =(0.8)(55)+(1-0.8)(44.8*

≈ 53

Month Actual usage dn Forecast d’n

January 43 52

February 55 44.8

Mar 62 53

April 71 60.2

May 73 70.4

June 73 72.5

July 62 72.9

August 54 64.2

September 49 56.0

October 41 50.4

November 47 42.9

December 48 46.2

January 47.6



=======================Up above covers mid term exam========================

6.4 Concurrent Engineering

(Simultaneous engineering)

Various Definitions

Concurrent engineering is the simultaneous interactive, and interdisciplinary involvement of

professionals belonging to areas such as design, manufacturing, and field support to decrease

product development cycle time while ensuring factors such as performance, reliability, quantity,

and support responsiveness.

History

1982 – car model – Ford Motor company

Project initiated by Defense Advanced Research Projects Agency (DARPA) – to enhance

concurrency in the product design process (1982)

1986 – term “Concurrent Engineering – a report by Institute for Defense Analyses (IDA)

Past Application Results

Reduction in the cost of developing new constructions equipment by 30% and development

time 60% (John Deere & Co)

50% reduction in time to develop an electronic switching system (AT&T)

85% reduction in assembly (lắp ráp) times 75% in parts, and 71% reduction in number of

steps during the redesign of a complex infrared equipment (Texas Instrument)

Typical concurrent Engineering Objective

- Reduce product development cost.

- Reduce manufacturing cost.

- Reduce marketing costs

- Improve product quality



- improve competitiveness of manufactured products

Etc…

Concurrent Engineering Approach Introduction – Related factors (information)

It is not that simple to introduce the concurrent engineering approach in an organization. A

careful consideration and groundwork is necessary. It is advisable to seek answers to general

factors such as listed below when contemplating concurrent engineering introduction.

- Starting date of the concurrent engineering (CE) activity.

- Location of the CE activity

- Approach to be followed to manage the CE team.

- Degree of reliance (su tin tuong) on external (i.e. outside the company) expertise with respect

to CE

- Procedure (thu tuc) to be followed in evaluating concurrent design project results.

- Degree of training required for team members (to able) to work as a group.

- Reporting of the team within the company

- Team members’ physical location.

- Ways and means to be followed in weighting conflicting objectives.



- Management’s expectations with respect to project.

- Etc…

Concurrent Engineering Team (Typical)

- Concurrent engineering mentor.

- Team leader (engineering)

- Marketing manager

- Engineering manager

- Design engineer

- Manufacturing engineer

- Information technology specialist

- Service engineer

- Software engineer.

- Quality control engineer.

- Safety engineer.

- Reliability engineer

- Vendor / Customer representative

- Human factors / environment specialist

- Etc…

1990 – Component design team

Electronic industry:

United States - team members – 8 people

Japan - Team members - 18 people

Same suggestions to manage CE team

- The team should perform its function under its own leadership.

- Maximize team collaboration

- Establish goals for the team to achieve

- Maximize organizational support

- Review and measure the team contribution



- Hold meeting regularly

- Brainstorm as appropriate among team members to overcome difficulties

- Prepare team meetings agendas as clear as possible and distribute among all concerned

people 3 to days prior to the meeting

- Record minutes of meetings and distribute to all concerned people soon after each meeting

- Develop trust among team members

- Etc…

7 . METHODS TO MANAGE ENGINEERING PROJECTS

7.1 Critical Path Method (CPM) and Program Evaluation and Review Technique (PERT)

Critical Path Method (CPM) and Program Evaluation and Review Technique (PERT) are used

for planning engineering project.

These reduce the examination of a large project to three stages:

(i) Breaking down the project into a set of individual jobs or events and arranging them into a

logical network.

(ii) Estimating the duration of each job, drawing up a schedule and finding which jobs control the

completion of the engineering project.

(iii) Re-allocating money or other resources to improve the schedule.

Example

The designer has to design a system which can be delivered when it is required. Usually, in fact,

he/she must predict the delivering date so be requires a means of predicting and a means of

monitoring the time taken from the placing of an order to meeting the order.

There are two commonly used methods:



a) PERT (Program Evaluation and Review Technique) – 1959 – Developed by the U.S

Navy to control Polaris project.

b) CPM (Critical Path Method) - 1959 – Released to public – Developed by DuPont and

Sperry Rand Corporation to control maintenance at DuPont chemical plants.

1. Malcolm, D.G, et al, Application of a technique for research and development program

evaluation, operation research, Vol.7, 1959, pp 646-649

In basic theory, CPM and PERT are the same. The arrow diagram is the graphic model for both

systems, and the mathematics too essentially similar.

When duration estimates of activities are subject to much uncertainty, such as research and

development work, the PERT is used.

The PERT scheme calls for three estimates (e.g. activity time) which might be the judgments of

three individuals or reflect the range of time judged proper by a single estimator.

The lowest time estimate, a, is called optimistic, the highest one, b, is pessimistic, and m, the

one in between, is called the most likely.

The expected time, te, is then given by a weighted average:

te = (a+4m+b) / 6

Clark, C.E, The PERT Model for the distribution of an activity time, Operation research Vol.10,

1962, pp 405-406

When duration estimates of activities are reasonably predictable, such as in the construction

industry CMP is used.

Again when the activity durations are known with a fair degree or certainty, the entire system is

called CPM. When activity duration are subject to uncertainty, the system is called PERT.

Example



An optimistic estimate = 0.5 hours

A most likely estimate = 1.5 hours

A pessimistic estimate = 6.5 hours

te = 0.5+4(1.5)+6.5 / 6 = 2.2 hours

Finally, when duration estimate are reasonably predictable, such as in the construction industry,

CPM is used.

===========================After midterm exam==============================

Terms, Symbols , and Definitions

a) Event or Node – An unambiguous point in time in the life of a project. It is denoted by a

circle.

○

b) Activity – Technological operation which consumes time, money, and manpower. Each

activity is characterized by specific initial event and terminal event

→

c) Network – A visual presentation of events and activities which depicts interdependencies.

d) Dummy activity – Graphic representation – dotted arrow

- - - >

It represents a restraint. It should be considered as an imaging any activity which can be

accomplished in zero time.

- which is used only to show the proper relationship between activities.

Example



2q4

Activities A and B must be completed before activity C can start. However, only activity B must

be completed before activity D can start

Example

Activity

modification

Activity

Description

Immediate

predecessor

Time to perform

activity (Days)

A Forcasting unit

sales

- 14

B Survey

competitive

pricing

- 3

C Pricing A,B 3

D Preparing

production

scheduling

A 7

E Creating the

production

D 4

F Preparing the

Budget

C,E 10



A-D-E-F (14+7+4+10) = 35 days

A-C-F (14+3+10) = 27 days

B-C-F (3+3+10) = 16 days

Critical path in the longest path through the network. Its length determines the duration of the

project. The word critical is used because any delay in the completion of activities along the

critical path can delay the completion of the entire project.

In the example given, activities A, D, E, and, F constitute the critical path

Critical Path Determination

Definition

Earliest Event Time (EET). This is the earliest time at which an event occurs. If all the activities

before the event of interest have been carried out without any delay whatsoever within their

prescribed duration times, then the event will be reached at its earliest event time.

Latest Event Time (LET) This is the latest time that an event may be reached without delaying

the completion of the project.

Steps for CPM Network



1. Construct CPM Network

2. Calculate earliest Event Time (EET)

Make a forward pass of the network, using:

For any event j

EET(j)= Maximum of all preceding i of [EET(i) + D(i,j)]

EET (first event)=0

3. Calculate latest Event Time

Make a backward pass of the network, using:

For any event i, LET(i) = Minimum of all succeeding j of [LET(j) - D (i,j)]

Arithmetic check: you should get LET (fist event)= 0

LET (last event) = EET (last event)

4. Critical Path Criteria

(i) Select events with EET=LET (necessary but not sufficient condition for path to be critical). If

this results in only one path from the beginning to the end, then this path is critical. If it results in

two or more paths then:

(ii) Calculate the total float for each activity on each of the paths satisfying criteria (i). The path

which results in the least sum of the total floats is the critical path.

Example



Example

Additional Formulas for activity (i,j)

Free Float = EET (j) - EET (i) – D(i,j)

Earliest start time = EET (i)

Earliest finish time = EET (i) + D (i,j)

Latest start time = LET (j) – D (i,j)

Latest finish time = LET(j)

Total float = LET(j) – EET (i) – D (i,j)

= 35 -25 -10 = 0



8 CREATIVITY AND INVENTIVENESS

8.1 How and Engineering Manager supports and encourages creativity?

Creativity is basically the ability to produce new and interesting ideas result from nature.

Real creativeness apparently occurs most often in the un-convential event eccentric individual.

He/She has intense in himself / herself and a willingness or desire, to work alone. He/she is

impatient with conventionality, whether, it be rules and regulations, working conditions, or

mentalities.

Top age

- Theoretical physicists -> 30 to 35 years

- Experimental physicist -> 35 to 40 years

- Biological and medical scientist -> 40 to 45 years

The setting

There is evidence, also, that the creative person should not have too familiarity with the field,

nor should people with when he/she associates.

How to Evaluate Creativity

- Journal publications

- Patents

- Books

Most measures of creativity thus far offered seem rather to be measures of productivity; they

are largely quantitative.



8.2 Four Principles to guide the supervisor or Manger of Creative engineers

Principle No.1: Strive to build an atmosphere which encourages ideas and changes.

1. Openly urge your people to be alert constantly for improvement possibilities in their own and

others’ jobs.

2. Personally be alert for improvements and put them into effect whenever possible.

3. Urge your people to cooperate with each other in developing and trying out new ideas.

4. Carefully explain changes and new ideas to all those affected by them ad shell the benefits of

these changes.

5. Present department problems to the members of your group, as opportunities for creative

action.

Principle No. II: Design a positive approach to stimulate and encourage creativity in each

individual.

1. Study the drivers that stimulate creative activities. Put this knowledge to use in dealing with

the employee, particularly the creative one.

2. Attempt to maintain interest in worthwhile ideas, should such interest begin to lag.

3. Provide all of your people with the opportunity to solve their own problems before you, or

others, step in to “help out”

4. Provide as much opportunity as possible for an individual actually to try out his idea.

5. Contribute to an idea from your own knowledge and experience where it will help.

Principle No. III: Be a good listener.

1. Be sympathetic and have a sincere interest in understanding a person’s idea.

2. Be open-mined on ideas ad avoid biases or prejudices, either related to the individual or the

idea.

a. Always keep in mind that conditions change; yesterday’s impractical idea may be

practical today

b. Avoid personal antagonism or preference.

c. Don’t allow a person’s performance in other areas or his level or responsibility to

influence your reception.



d. Don’t judge a given idea by the quality (or lack thereof) of previous ideas a person

may have submitted.

3. Give each person with an idea as much personal time and attention as possible (and as is

practical).

4. Learn to treat complaints as suggestions and show appreciation for them.

5. Indicate by your mood and manner that you are genuinely interested in the person’s idea.

Principle No. IV: give recognition for all new ideas and further commendations when deserved.

1. Recognize and commend the person privately by:

a. A special conference, meeting, or conversation.

b. Appropriate memo, certificate, note, etc.

c. Entries on permanent records (employment, suggestion, etc)

2. Commend the individual publicly by:

a, Announcing or presenting the idea before groups

b. Appropriate articles in papers, journals, or periodicals.

3. Recognize and commend the group or department as a whole when deserved.

a. By publicity in various media

b. By the supervisor in group meeting

c. By banners, posters, signs, in the department

8.3 Brain storming technique (group)

Brainstorming is the name Alex Osborn (author of the much-quoted book Applied Imagination)

gives the uninhibited group approach to idea-getting.

Brainstorming sessions are always less than an hour as shortest 15 minutes. But concentration

is intense. Best results seen to come when 8 to 12 people sit-in-people with similar interest but

with varied backgrounds.

Goal of the brainstorm is to get a least 50 ideas per session.

Rules



1. Do not criticize ideas.

2. Welcome free wheeling – The wilder the idea, the better.

3. Strive for quantity.

4. Combine and improve.

Other Pointers.

1. Be sure ideas are recorded – on a blackboard, or by tape, or secretary

2. Keep rank of participants fairly equal.

Other brainstorming techniques

Method I (known as Tear down method)

Two men pick an operating practice to brainstorm.

Man no. 1 takes the attitude that everything above the present way is wrong, and then suggests

another way (not necessarily better, just different). Man no. 2 is forbidden to agree with him. He

must, in turn, suggest another way. Man no. 1 disagrees, suggests still a third way. This

continues. Eventually one suggestion clicks. The two men get together, engineer their idea

down to earth.

Method II (…And – Also method)

Same problem as above, but this time each must agree with the other’s suggestion, then add to

it.

For example, man no. 1 suggests a way to improve scheduling Man no. 2 says “good idea. And

also we could improve upon it by ….”, and he adds to the idea this goes on until they reach a

sound solution.

Method III (…17 solution method)



To be used by one man working alone. Before a conference, the problem under study is written

out and sent to each departmental supervisor concerned. Ticket of admission to the meeting is

a list of 17 solutions. By the time duplications and impossible solutions are struck out of 100 or

more answers, there may be only five or six good ones left.

9 HOW TO ESTIMATE ENGINEERING AND PRODUCT COST?

9.1 Product Costing

Reasons

1. Establish the selling price of a product for a quotation or contract.

2. Ascertain whether a proposed product can be manufactured and marketed profitably.

3. Find whether parts or assemblies can be more cheaply fabricated or purchased from a

vendor.

4. Determine the most economical method, process, or material for manufacturing a product.

5. Determine how much must be invested in tools and equipment to manufacture a product.

6. Study the economy of making revisions in existing production facilities and practices to initiate

means of cost reduction.

7. To perform life cycle cost studies.

Etc.

9.2 Break-even charts

In basic from, such a chart is a plot of anticipated income from sale of product vs. the cost of

developing and manufacturing it.

The information required to develop break-even charts is follows:

1. Projected selling price based on market potential and the competitive situation. It might also

prove advantageous to establish minimum and maximum limits.



On the charts $26.50 per unit

2. Sales potential based on competitive considerations such as market conditions, quality of

product, and selling points.

Range between minimum and maximum expectations should be included.

On the chart: 1,500 units minimum, 2,000 units maximum

3. Development cost

a. Development engineering

b. Development drafting

c. Pilot model(s)

d. Preliminary testing

e. allowances for modifications of drawings and models

f. other re-production costs exclusive of tools.

Etc

On the chart $7,500

4. Cost of new tools and expansion of facilities

On the chart: $3,400

5. Manufacturing costs

On the chart: $15.85 per unit



Other Users for Charts

Equipment selection

Machine A Machine B

1. Price $ 1,500 $ 6,000

2. Unit Production cost $ 0.75 $ 0.15

9.3 Life Cycle Costing (LCC)

1965 – “Life cycle costing in equipment procurements” LOGISTICS Management Institute,

Washington, D.C, April 1965



Definition

The life cycle cost of a product is the sum of all cost to the government of procurement and

ownership of that product over its entire life spam

Life Cycle Cost Model

LCC= α+ β

Where

α denote equipment non-recurring costs

β denote equipment recurring costs

Non-recurring costs

α = Σ9i=1 NCi

Where

NCi Is the ith non-recurring cost: (i=1) training, (i=2) support, (i=3) transportation, (i=4)

acquisition, (i=5) test equipment, , (i=6) installation, (i=7) research and development, (i=8) LCC

management (i=9) reliability and maintainability improvement

Recurring costs:

β = Σ5i=1 Ci



Where

Ci is the ith recurring cost: (i=1) inventory, (i=2) manpower, (i=3) maintenance, (i=4) operation,

(i=5) support.

Life cycle cost model II:

LCC = Σ4i=1 Ci

C1: represents research and development cost

C2: represents production and construction cost

C3: represents operation and support cost

C4: represents retirement and disposal cost

Canadian Services Cost Model

The Canadian Services have made use of simple model for costing high value tubes

(magnetrons) involving the tube cost (CT), support cost (CS), and meantime to failure (MTTF), as

follows:

CT+CS / MTTF = Cost / Operating hour

Example

Manufacturer (CT+CS) MTTF (Hours) Cost/Operating hour

A $ 3,000 1,000 $ 3

B $ 2,000 1,500 $ 1.3

C $ 4,000 2,000 $ 2

9.4 Life Cycle Costing Applied Equipment Selection

No Description Manufacturer A’s

System

Manufacturer B’s

System

1 Selling price $100,000 $120,000

2 Constant failure rate 0.04 failures / year 0.05 failures / year



per year

3 Cost of money 10% 10%

4 Expected operating

life

10 years 10 years

5 Expected cost of a

failure

$ 10,000 $ 12,000

6 Expected annual

operation cost

$ 6,500 $ 3,000

Manufacturer A’s System

ECA = (0.04)(10,000) = $400

PVA = ECA [(1-(1+i)-m)/i]

= 400[(1-(1+0.1)-10)/0.1]

= $2,457.83

PV0A = 6500[(1-(1+0.1)-10)/0.1]

= $39,939.69

LCCA = 100,000+2,457.83 + 39,939.69

= $142,397.52

Manufacturer B’s System

ECB = (0.05)(12,000) = $600

PVB = ECB [(1-(1+i)-m)/i]

= 600[(1-(1+0.1)-10)/0.1]

= $3,686.74

PV0B = 3000[(1-(1+0.1)-10)/0.1]

= $18,433.70



LCCA = 120,000+3,686.74 + 18,433.70

= $142,120.14

9.5 Estimating Corrective Maintenance Labor Cost

CMC = TSO (MLC)[MTTR/MTBF]

CMC is the annual cost of corrective maintenance

MTTR is the mean time to repair

MTBF is the mean time between failures

TSO is the scheduled operating hours

MLC is the maintenance labor cost per hour

Example

TSO = 2400 hours

MBF = 600 hours

MTTR = 30 hours

MLC = $10 per hour

CMC = (400)(10)[30/600]

= $ 1,200

10 MANAGEMENT OF ENGINEERING DRAWINGS AND DESIGN REVIEWS

10.1 Release and Control procedures for engineering drawings



Each drawing is recorded and forwarded to the engineering checking group who check for

production design, accuracy of change incorporation, dimensional exactness, correctness of

material, conformance to drafting standards, etc.

These special checkers include stress analysts, who examine each drawing to insure that all

parts have necessary strength, weight engineers who ascertain the weight of each part and

make certain that no part is heavier than necessary for the required strength and rigidity.

10.2 Type of Engineering Drawings

- Layout drawings

- Test drawings



- Manufacturing drawings

Layout Drawings

Define basic structure or mechanical designs, and servers as the basic of subsequent

manufacturing drawings.

Test drawings

Are prepared when it is desired to make a mechanism or structure for functional test or

structural test

Manufacturing drawings

Drawing Changes Reasons:

- Necessary during fabrication and assembly to reduce cost

- Facilitate production or simplify manufacture

- To correct engineering errors

- To rectify unsatisfactory operating conditions by customers

- Etc…

==================================================26 November 2007=======

10.3 Design Review Committee

Example – Design review committee (Mechanical design review)

- Chairman

- Mechanical design engineer

- Lead mechanical engineer

- Mechanical engineering supervisor

- Senior mechanical engineer

- Project engineer

- Drafting supervisor

- Addition: Human factor engineer, reliability, quality control, etc.

- Customer engineer (if any)



- Etc..

Type of Design Reviews

RCA

Concept review

Pre-release review

Large quantity review

Miscellaneous Reviews

Final Review

10 Averages where review pays off

- Reliability

- Maintainability

- Adherence to specifications

- Value engineering (value analysis)

[Value Engineering: Is an organized, creative approach to the achievement of required

function at the lowest cost.]

Standardization

Reproducibility

Safety of the design of product

Finishing of the product

Human engineering

Drafting

Maintenance

Etc…

11 ENGINEERING MAINTENANCE MANAGEMENT

$300 billion dollars (US) per year



11.1 Some of the contributing objectives of maintenance engineering:

1. Reduce the amount and frequency of maintenance

2. Improve maintenance operations

3. Establish optimum frequency and extent of preventive maintenance to be performed

4. Reduce the maintenance skill required

5. Reduce the volume and improve the quality of maintenance publications

6. Provide information and improve maintenance

7. Educational programs

8. Improve the maintenance organization

9. Improve and ensure maximum utilization of maintenance facilities

11.2 Questions for Self-Evaluation Maintenance activity

1. Do I know what equipment and work activity are consuming the lion’s share of the

maintenance dollar?

2. In term of job costs, am I able to compare the “should” with the “what”?

3. Do I know how my craftsman are spending their time, i.e., travel, delays, etc?

4. Do I know how much time my foreman spends at the desk and at the job site?

5. Are we providing the craftsman with the right quantity and quality of material where they need

it, when they need it?

6. Do I know the craftsman using the correct tools and methods to do a job?

7. Do I make sure that maintainability factors are considered in the design of new or modified

facilities?

8. Have I balanced my spare parts inventory in the terms of carrying costs versus expected

down time losses?

9. Am I sure that sound safety practices are being followed?

10. Do I have a solid base to measure productivity and is it improving?

If an unqualified “yes” is the answer to each question, the management program is well on the

way to meeting the objectives of the organization in question.



The maintenance management by Objectives

Upgrading a maintenance management program is a continuous process requiring progressive

attitudes and active involvement. Eight elements constitute the heart of the program.

1. Identify deficiencies

2. Establish objectives

3. Determine priorities

4. Establish performance measurement parameters

5. Develop short and long range plans (1 year and 3-5 years)

6. Document

7. Implement

8. Review annually

Elements of effective maintenance management :

1. Maintenance Policy to provide continuity of operations and a clear of understanding of

the maintenance management program. Each maintenance organization regardless of

size should have a written document covering: policies, programs, objectives,

responsibilities and authorities for all levels of supervisions, reporting requirements, and

a description of various procedures employed to control job costs and measure

maintenance performance against them.

2. Work order system:

At minimum, works order should include the requested completion date and planned start

and completion dates, labor and material cost, a brief description and reason for performing

the work, item or items to be affected and necessary approval signatures.

The coding of the work order should permit the categorization of the type of work to be

performed, Prevented Maintenance, repaired, installation…etc…

3. Material control:

On the average, material cost will account for 30%-40% of total direct maintenance

expenditures. Material coordination has a key impact on the efficient utilization of

manpower.



False starts, excess travel time, delay and unmet due dates are largely a result of

material problems.

Some of the factors to be considered in carrying spares in inventory are:

1. Procurement lead time

2. Criticality of the item/system supported

3. Reliability of the item/system supported

4. Available backup or alternative capacity

5. Cost of the spare equipment

6. Ability of the vendor or manufacture to provide spare parts in the future

The classical inventory model:

See chart in the Note



REFERENCES

1. Shannon, RE, Engineering Management. John Wiley & Sons, NY, 1980.

2. Ullman, J.E, Editor, Handbook of Engineering Management, Wiley, NY, 1986

3. Dorf, R, The technology Management, Handbook, CRC press, Boca Ratón, 1999

4. Dhillon, B., Engineering and Technology Management Tools and applications, Artech

house, Boston, 2002

REPORT FORMAT

Title

-Name

-Summary

1. Introduction

a. Xxxx

b. xxxxx

2. Main Body

a. Xxxx

b. Xxxx

3. Conclusions

4. Reference

a. Book,

i. Author, title, editorial, place, year

b. Journal Article

i. R. Williams, Engineering Design, Journals Mechanical Engineering, Vol. 10,

1982, pp 16-20

c. Conference procedures

i. H. Riche, Reliability Management, Report No. 1038, 1986, Available from the

dept. of Mechanical Eng, University of Ottawa, Ontario Canada

ii. Author, Title, Report #, year

d. Report



i. S. Gorman, Technical Management, Report No. 1038, 1986. Available from

the Dept. of Mechanical Eng, University of Ottawa, Ontario, Canada



ABBREVIATION AND ACRONYMS

TQM Total Quality Management

IS Information System

MIS Management Information System

HSO Human Service Organization

CQI Continuous Quality Improvement

Questions and Answers:

Q1. Suppose you are a member of the engineering design review committee. List and discuss

briefly at least 10 areas that review committee may through questions at the design engineer

during his/her equipment design review?

Answer:

The following ten areas where the review pays off:

1. Reliability- Concerns whether people can rely on quality and functionality of the

equipment. It is the probability that the equipment will continue to function under

specified cyonditions for a stated period of time.

2. Maintainability- It is the ability of the equipment to be maintained. The equipment

should be designed such that it can be maintained without large investments of time and

resources (e.g., personnel, materials, test equipment, facilities, data), at minimum cost

while still fulfilling its designated mission. Preventive and corrective maintenance.

3. Adherence to specifications – Maintaining the required specifications at design stage is

very important for the equipment to function properly. So, it is necessary to investigate

how accurately the specifications were developed and maintained.

4. Value engineering - is a systematic method to improve the "Value" of the equipment by

using an examination of FUNCTION. It is an organized creative approach to the

achievement of required function at the lowest cost. Value, as defined, is the ratio of

Function to Cost. Value can therefore be increased by either improving the Function of



the equipment or reducing its cost. It is a primary rule of Value Engineering that quality

not be reduced as a consequence of pursuing Value improvements.

5. Standardization – is the development of designs to achieve and maintain the required

levels of compatibility, interchangeability or commonality in the operational and

technical field.

6. Reproducibility – is a measure of relative ease and economy of producing the

equipment. The characteristics of design must be such that the equipment can be

produced easily and economically, using conventional and flexible manufacturing

methods and process without sacrificing function, performance, effectiveness, or quality.

7. Safety – “Safety First” is the key consideration in workplace, so it is necessary to

consider safety factor in designing the equipments. Safety is the condition of being

protected against failure, damage, error, accidents, or harm.

8. Human engineering – This is the area of human factors considerations that makes use of

scientific facts in designing to produce effective man-machine integration and utilization

effectively.

9. Finishing aspect – This is question may be asked to know about the status of the design

activities, and required time to finish, the accuracy etc.

10. Drafting – Mechanical drawings where design layout, details illustrations, etc. are done.

11. Flexibility

12. Economic feasibility

13. Logistics


note-emp5100-2

Documents

engineering manager

engineering department

reliability engineering

engineering products

concurrent engineering

engineering consultant

characteristics of management

number engineering drawings