Slide 1

Introduction to Production System

Arif Rahman, ST MT

Arif Rahman – The Production Systems 1

 Industrial Engineering
..is concerned with the design, improvement,
and installation of integrated systems of
men, materials, information, energy, and
equipments. It draws upon specialized
knowledge and skill in the mathematical,
physical and social sciences together with
the principles and methods of engineering
analysis and design to specify, predict and
evaluate the result to be obtained from such
systems

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 Knowledge & Skill

Physical Sciences

Mathematical

Industrial
Engineering
Specify
Engineering
Predict

Social Sciences Evaluate

Optimal
Result

Design

Integrated
Systems

Improvement Installation

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 Industrial Engineering Challenges

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 Learning Outcomes
By the end of the lecture the students should be able to:
۞make a capacity requirement planning for material
requirement planning.
۞make a operation scheduling and shop floor control
۞design assembly line
۞apply the pull system and determine the number of
kanban
۞identify bottleneck and apply theory of constraints
۞learn the science and technology development of
Industrial Engineering enthusiastically, especially in The
Production Systems.

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 Subjects
۞ Overview of production systems: manufacturing and services
۞ Manufacturing operations and production system facilities
۞ Material transport and storage systems
۞ Single Station Manufacturing Cells
۞ Group Technology and Cellular Manufacturing
۞ Assembly Line Balancing : Concepts, Methods, and Performance
۞ Push System : Shop Floor Control and Procurement Control
۞ Pull System : Just in time principles, kanban, heijunka, lean
manufacturing principles
۞ Theory of Constraints and Drum-Buffer-Rope Techniques

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 References
۞ Mikell P. Groover, Automation, Production Systems, and Computer Aided
Manufacturing
۞ Donald W. Fogarty, John H. Blackstone, Thomas R. Hoffmann,
Production and Inventory Management
۞ David D. Bedworth, & James E. Bailey, Integrated Production Control
Systems: Management, Analysis, Design
۞ Andrew Kusiak, Computational Intelligence in Design and Manufacturing
۞ James A. Rehg, & Henry W. Kraebber, Computer Integrated
Manufacturing
۞ Ronald G. Askin, Charles R. Standridge, Modeling and Analysis of
Manufacturing Systems
۞ Ronald G. Askin, & Jeffrey B. Goldberg, Design and Analysis of Lean
Production Systems

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 References
۞ Taiichi Ohno, Toyota Production System: Beyond Large-Scale Production
۞ Yasuhiro Monden, Toyota Production System: An Integrated Approach to
Just In Time
۞ Hiroyuki Hirano, JIT Implementation Manual: The Complete Guide to
Just-In-TimeManufacturing (six volume set)
۞ Shigeo Shingo, The Shingo Production Management System: Improving
Process Functions
۞ Shigeo Shingo, Fundamental Principles of Lean Manufacturing
۞ Eliyahu M. Goldratt, & Jeff Cox, The Goal
۞ H. William Dettmer, Goldratt’s Theory of Constraints: A Systems
Approach to Continuous Improvement
۞ William A. Levinson, Beyond The Theory of Constraints: How To
Eliminate Variation & Maximize Capacity

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 References

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 References

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 References

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 Definition of
PRODUCTION SYSTEM

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 What is SYSTEM ?
۞ A set of interdependent things (parts or elements) forming a unified
whole and performing a set of rules to carry out a specific purpose.
۞ An organized, purposeful structure that consists of interrelated and
interdependent elements (components, entities, factors, members,
parts etc.). These elements continually influence one another
(directly or indirectly) to maintain their activity and the existence of
the system, in order to achieve the goal of the system.
(http://www.businessdictionary.com/definition/)
۞ A regularly interacting or interdependent group of items forming a
unified whole (https://www.merriam-webster.com/dictionary/)
۞ A set of things working together as parts of a mechanism or an
interconnecting network; a complex whole
(https://en.oxforddictionaries.com/definition/)
۞ A set of connected things or devices that operate together
(http://dictionary.cambridge.org/dictionary/english/)
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 What is SYSTEM ?
Entitites / Subsystems
Boundary
Interaction / Cennection

Input / Output /
Factors Impacts

System

Feedback

Environment
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 What is PRODUCTION ?
۞ The processes of producing value added products (goods / services)
۞ The processes and methods used to transform tangible inputs (raw
materials, semi-finished goods, subassemblies) and intangible
inputs (ideas, information, knowledge) into goods or services.
Resources are used in this process to create an output that is
suitable for use or has exchange value.
(http://www.businessdictionary.com/definition/)
۞ The act or process of producing
(https://www.merriam-webster.com/dictionary/)
۞ The action of making or manufacturing from components or raw
materials, or the process of being so manufactured.
(https://en.oxforddictionaries.com/definition/)
۞ The process of making or growing goods to be sold
(http://dictionary.cambridge.org/dictionary/english/)

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 What is PRODUCTION ?
Processes
Sequence

Input Output

Production

Resources

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 Production System
۞A set of interdependent resources (people and
equipments) performing a set of processes and
methods to transform tangible/intangible inputs
(materials, energy, information) into valuable
goods or services
۞A collection of people, equipment, and
procedures organized to accomplish a set of
operations.

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 Production System
The production system consists of facilities
and manufacturing support systems.
¤ The facilities of the production system consist of the factory, the
equipment in the factory, and the way the equipment is
organized.
¤ The manufacturing support systems is the set of procedures
used by the company to manage production and to solve the
technical and logistics problems encountered in ordering
materials, moving work through the factory, and ensuring that
products meet quality standards. Product design and certain
business functions are included among the manufacturing
support systems.

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 Production System

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 Products :
Goods and/or Services

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 What is PRODUCT ?
۞An output of the production system that
can be offered to a market for attention,
acquisition, use, or consumption that might
satisfy a need or want. It could be physical
goods and services.

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 Product Classification
۞Convenience products are products that the customer
usually buy frequently, immediately, and with a minimum
comparison and buying effort.
۞Shopping products are products that the customer
compares carefully on suitability, quality, price, and style.
۞Specialty products are products with unique
characteristics or brand identification for which a significant group of
buyers is willing to make a special purchase effort.
۞Unsought products are products that the consumer does
not know about or knows about but does not normally think of
buying.

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 Product Classification

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 Product Classification

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 Products : Goods
Goods are the tangible or physical products.
They can be seen, touched, smelled, tasted,
heard, or felt before purchase.
۞Grocery store—groceries
۞Clothing store—clothing
۞Jewelry store—jewelry
۞Restaurants—food
۞Toy store—toys
۞Book store—books
۞Gas store—fuel

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 Products : Services
Services are the intangible or nonphysical
products. That only can be perceived after
purchase.
۞Laundry & Dry cleaners—clothes cleaning service
۞Janitorial service—building cleaning service
۞Lawn Care business—lawn fertilizing and cutting service
۞Pet sitting business—pet feeding and walking
۞Banks—money holding and check cashing
۞Auto repair business—fixes cars
۞Day care—child care

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 Relationship Between Goods and Services
۞No rigid distinction can be made between “goods”
industries and “service” industries
۞The outputs (products) of most companies have both
goods and services attributes in different combinations
¤ There are tangible or physical evidences in service industries
¤ Many services can be found in goods industries
۞Customers view the outputs of a company as a package,
and their satisfaction is determined by the total
performance of the elements of this package

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 The Differences of Goods versus Services
GOODS
• Tangible
• Standardized Quality
• Production separate from
consumption
• Non-perishable
• It can be stored
• It can be displayed
• It can be returned / resold
• It can be transferred
Arif Rahman – The Production Systems
SERVICES
• Intangible
• Variability in Quality
• Simultaneous production
and consumption
• Perishable
• It can’t be stored
• It can’t be displayed
• It can’t be returned / resold
• It can’t be transferred
28
 Service vs Services
۞Service
¤ Process of using one’s resources for the benefit of another entity
¤ A business transaction that takes place between a service
provider (donor) and a customer (receiver) in order to produce
an outcome that satisfactorily meets the customer’s needs
۞Services
¤ Regarded as a supportive drive to the production of goods
¤ Viewed as activities that are done in combination with products
as a value-added tool
¤ Seen as an intangible type of product

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 Service-Based Competitive Strategy
۞Definition
¤ An approach taken by a firm to increase its profitability by
developing a reputation for excellence in its interactions
with customers, and by designing the processes that are
needed to support these interactions.
۞Evokes Customers Loyalty
¤ Clearly understanding the service performance levels
desired by customers
¤ Committing the consistently and reliably meeting or
exceeding these service levels
¤ Spending the required time, effort and resources to
develop the service infrastructure that can deliver this
performance
¤ Delivering the performance at a cost that allows the firm to
remain profitable and satisfy its obligations to its
stockholders
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 Goods or Service Dominant Logic
The hierarchies of exchange Goods
Dominant (G-D) logic and Service Dominant
(S-D) logic

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 Goods or Service Dominant Logic
Conceptual Lexicon of Goods Dominant
(G-D) logic and Service Dominant (S-D)
logic

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 Goods or Service Dominant Logic
Transition of pratitioners in Goods Dominant
(G-D) logic and Service Dominant (S-D)
logic

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 Normative Guidelines for Pratitioners
1. The firm should be transparent and make all
information symmetric in the exchange process.
Because the customer is someone to collaborate
with, anything other than complete truthfulness will
not work.
2. The firm should strive to develop relationships with
customers and should take a long-term perspective.
3. The firm should view goods as transmitters of
operant resources (embedded knowledge); the firm
should focus on selling service flows.
4. The firm should support and make investments in the
developments of specialized skills and knowledge
that are the fountainhead of economic growth.

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 Value of Product
in PRODUCTION SYSTEM

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 Value as Product Attributes
۞The company conducts a set of processes
for creating, communicating, and
delivering value to customers and for
managing customer relationships in ways
that benefit the organization and its
stakeholders

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 What is VALUE ?
۞ A ratio between what customer gets and what customer gives
۞ The extent to which a good or service is perceived by its customer to
meet his or her needs or wants, measured by customer's willingness
to pay for it. It commonly depends more on the customer's
perception of the worth of the product than on its intrinsic value.
(http://www.businessdictionary.com/definition/)
۞ A fair return or equivalent in goods, services, or money for
something exchanged
(https://www.merriam-webster.com/dictionary/)
۞ The regard that something is held to deserve; the importance, worth,
or usefulness of something.
(https://en.oxforddictionaries.com/definition/)
۞ The amount of money that can be received for something
(http://dictionary.cambridge.org/dictionary/english/)

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 What is VALUE ?
۞Tradeoff between the quality or benefits they
perceive in the product relative to the sacrifice
they perceive by paying the price
۞The difference between the prospective
customer’s evaluation of all the benefits and all
the costs of an offering and the perceived
alternatives.
۞The net gain meaning all the benefits over costs
۞A comparison of outcomes relative to costs

Arif Rahman – The Production Systems

 What is VALUE ?
The consumers’ overall assessment of utility
based on what are received and what are afforded

(Benefits X Satisfactions) + (Chances X Expectations)

Value = (Costs X Sacrifices) + (Risks X Suspenses)

۞ Benefits are consist of functional benefit and emotional benefit.

۞ Costs are consist of monetary cost, time cost, energy cost and psychic
cost.
۞ Chances are consist of lottery chance, reward chance and merit chance.
۞ Risks are consist of risk of loss, punishment risk and sin risk.

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 Stake Holder Perspectives on VALUE
A comparison of outcomes relative to costs
۞Customers : functional benefit relative to price
۞Labors : salary relative to physical effort
۞Managers : reward relative to mental effort
۞Investors : return relative to investment
۞Enterprise : sustainability relative to capital
۞Community : welfare relative to impact
۞Government : income relative to policy

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 Value Hierarchy of Product
Three constitute value hierarchy of product.
۞Core Customer Value: the fundamental functional
benefits represent what the buyer is really buying.
۞Actual Product : the performance benefits represent
what the buyer wants to buy
۞Augmented Product : the additional benefits represent
what the buyer likes to buy

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 Value Hierarchy of Product
Delivery
Product
Installation support
Design
Training Ergonomic Appearance Accesories
Eco- Unique- & Add-ons
friendly ness
Credits &
Quality CORE Features Channels
Insurance Relia- CUSTOMER Packa-
bility VALUE ging
Customer
Warranty Dura- Brand Care
bility ACTUAL Name
After-sale PRODUCT Member
Services Benefits
AUGMENTED
PRODUCT

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 Value Hierarchy of Product
Five constitute value hierarchy of product.
۞Core Customer Value : the benefits that must be found
on product. They represent core user requirements.
۞Basic benefits : the benefits that have to be found on
product. They represent user important needs.
۞Expected benefits : the benefits that should be found on
product. They represent user expectations.
۞Augmented benefits : the benefits that could be found
on product. They represent user excitements.
۞Potential benefits : the benefits that might be found on
product. They represent user latent delighters.

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 Value Hierarchy of Product

CORE
CUSTOMER
VALUE

ACTUAL
PRODUCT

AUGMENTED
PRODUCT

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 Production System as Value Chain
A value chain is a set of activities that a firm
operating in a specific industry performs in order to
deliver a valuable product or service for the market

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 Value for-from customer

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 Value for-from customer

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 Value Co-Creation

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 It’s end of slides…

… Any question ?
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