B.TECH.

6th SEM
MECHANICAL ENGINEERING
DEPARTMENT

(RAS--601
(RAS 601))

INDUSTRIAL MANAGEMENT
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 SYLLABUS
• Unit-1 - Introduction: Concept and scope of Industrial Management.
Productivity: Definition, measurement, productivity index, types of production
system, Industrial Ownership.
• Unit-II - Functions of Management, Taylor’s Scientific Management Theory, Fayol’s
Principles of Management, Social responsibilities of Management,
Introduction to Human resources management: Nature of HRM, functions and
importance of HR.
• Unit-III - Work Study: Introduction, definition, objectives, steps in work study,
Method study: definition, objectives, steps of method study, Work Measurement:
purpose, types of study — stop watch methods — steps — allowances — standard
time calculations — work sampling, Production Planning and Control
Inventory Control: Inventory, Cost, Models of inventory control: EOQ, ABC, VED
• Unit-IV - Quality Control: statistical quality control, Control charts for variables and
attributes, Acceptance Sampling- Single sampling- Double sampling plans,
Introduction to TQM.
• Unit-V - Project Management: Project network analysis, CPM, PERT and Project
crashing and resource Leveling
 UNIT-1
• Introduction: Concept and scope of Industrial Management.
• Productivity: Definition, measurement, productivity index, types of production
system
• Industrial Ownership.

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 PART--1
PART
Introduction
to
Industrial Management

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 INTRODUCTION

• Rapid Increase in Global Competition

• Technological Changes
• Dimensions for competitiveness of any company- Cost,
Quality, Delivery, Innovation, Flexibility to adapt in changing demand.
• To improve organizational performance- effective use of production
capability and technology, Total Quality Management(TQM), Quality Function
Development (QFD), Six Sigma, Business Process Re-Engineering(BPR), Just in
Time(JIT), Benchmarking, Performance Measurement
• Company have to satisfy internal & External Customers.

Industrial Management
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 INDUSTRIAL ENGINEERING

The American Institute of Industrial Engineers (AIIE) has defined the

special field of Industrial Engineering as
“ Concerned with design, improvement and installation of
integrated system of people, materials, equipment and energy.

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 INDUSTRIAL MANAGEMENT

IM involves guidance, co-ordination & control or

efforts of a group of individuals towards
optimum utilization of men, materials,
machinery & money through improved design,
analysis & implementation in order to achieve
common objectives of the industry.

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The goal of industrial engineering is to ensure that
goods and services are being produced or
provided at the right quality at the right time at the
right cost.

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 Concept of Industrial Engineering

• Applied to highly organize modern methods of carrying on

industrial, especially manufacturing and operations
• Establish a desirable allocation of management resources through
the use of technologies
• Industrial management concept includes the planning, controlling
and organizing the system
• The industrial engineer had to focus on only one concept to
describe his field of interest and objective, it would have to be
PRODUCTIVITY IMPROVEMENT.

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 Productivity Improvement implies
(i) a more efficient use of resources,
(ii) less waste per unit of input supplied,
(iii) higher level of output for fixed levels of input supplied and
so on.

The inputs may be

(i) human efforts,

(ii) energy,
(iii) materials,
(iv) invested capital etc.

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 ROLE OF INDUSTRIAL ENGINEER
Decision-Maker Expert
• Develops and uses • Help in Decision-making
decision tools • Helps in designing the system
• Uses MIS and • Expert in new technology like
computers BPR, TQM, MRP etc.

Trainer Advisor
• Motivates Industrial
• Helps in work study Engineer • Review and interpret data
• Train the workers in methods • Advises for improvement
and motion study • Suggests productivity tool
•Applies new technologies • Negotiator

Analyst of System

• Identifies system faults

• Analyses job at micro level

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 EVOLUTION OF INDUSTRIAL MANAGEMENT

a. The Rise of Factories:

a. Before the Industrial Revolution
b. Third quarter of the 18th century steam power was applied to machinery
c. In the next hundred years factories grew rapidly in size, in degree of mechanization,
and in complexity of operation - much waste and inefficiency
d. first sustained effort made by Frederick Winslow Taylor , an assistant foreman in the
Midvale Steel Company, who in the 1880s undertook a series of studies to
determine whether workers used unnecessary motions and hence too much time in
performing operations at a machine.

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a. Industrial Management of the Machine:
a. studying the performance of machines as well as people
b. keep machines in good working condition and to ensure the quality of their
production
c. Charts are used for recording the accomplishment of both workers and machines

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 EVOLUTION OF INDUSTRIAL MANAGEMENT

1. Adam Smith (1776): through his book titled Wealth of

Nations laid foundation to scientific manufacturing.
Through his concept of division of labour which
included the skill development, time savings and the
use of specialized machine was able to influence.
2. James Watt (1864): Steam Engine advanced the use
of mechanical power to increase productivity.
3. Charles Babbage worked on the same line as Adam
Smith.

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4- Frederick Taylor (1859-1915): was a mechanical
engineer and initiated investigations of better work
methods and develop an integrated theory of
management principles and methodologies. He
proposed following actions;
 Data Collection and standards for workers.

 Scientifically training of workers.

 Cooperation between management and labour for

better production.
 Divide work between management and labour and
assigning to those who are best suited.

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5- Henry L. Gantt (1993): His contributions are;
 Work in the area of motivation field, development of
task and bonus plan.
 Measurement of results by Gantt Charts for
management.
 Recognition of social responsibility of business and
industry.
 Advocated training of workers by management.

6- Frank and Lillian Gilbreth (1917): developed method

study as a tool for work analysis.
 He developed micro-motion study, a breakdown of
work into fundamental elements called therbligs.

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7- Harrington Emerson(1913): Developed his managerial
concepts simultaneously with Taylor, Gantt and
Gilbreth.
 Amongst his contributions is the Emerson’s Efficiency
Bonus Plan, an incentive plan which guarantees the
base day rate and pays a graduated bonus.
 He also proposed twelve principles of efficiency.

8- L.H.C Tippet (1937): Developed the concept of work

sampling to determine the equipment and manpower
utilization and setting performance standards for long
cycle, heterogeneous jobs involving team work.

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EVOLUTION OF INDUSTRIAL MANAGEMENT

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 NEED OF ENGINEERS IN MANAGEMENT
• There are three basic management skills: technical, human and
conceptual.
(i) A technical skill is the ability to use tools, techniques, and
specialized knowledge to carry out a method, process, or
procedure.
(ii) Human skills are used to build positive interpersonal relationships,
solve human relations problems, build acceptance of one’s co-
workers, and relate to them in a way that their behavior is
consistent with the needs of the organization.
(iii) Conceptual skills involve the ability to see the organization as a
whole and to solve problems in a way that benefits the entire
organization.

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 Scope of Industrial Management

Management
Function

Productivity Production
Measurement Planning

Scope
of IM
Inventory Quality
Control Control

Supply Chain
Management
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 Application of Industrial Management
1. Product Designing: which is commercially viable & can be accepted by
customers

2. Developing efficient methods of production: Maximize output & reduce

input

3. Exploring reliable suppliers: Uninterrupted & reliable supply of raw material

4. Fund Management: Lowest cost & higher return

5. Plant Designing: Considering certain factors like workers & material

movement, safety, efficient utilization of space etc.

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• Recruitment & Training: Best human resources

• System Co-ordination: With other dept.. like marketing ,IT, HR, Finance, etc

• Leadership & Motivation: To enhance their performance

• System Control : Inventory , quality & environmental pollution control .

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 PART--2
PART

Production Productivity &

Production System

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 PRODUCTION

• It is a process of creating or enhancing utility by transforming a

set of inputs such as men machinery, material & money into a
specific set of output such as finished goods or services

• It is a value addition process.

• It is a process by which goods & services are created

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 Transformation Outputs:
Inputs: Process:

•Men •Product Design •Products

•Machinery •Process Planning •Services
•Material •Production Control
•Money •Maintenance

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 PRODUCTIVITY
• It may be defined as the ratio between output & input

• Output means the amount or numbers of items produces &

inputs are the various resources employed such as men
machinery, material & money

• It is the measure of the quantity of output per unit of input

Productivity = Amount of Output/Amount of Input

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 PRODUCTIVITY INDEX
Labor productivity = Raw material productivity =
No. of Units of Output Output value at standard price
No of Labour employed Cost of raw materials

Direct labor cost productivity = Direct cost productivity =

Output value at Standard Price Output Value at standard price
Amount of wages paid Sum of all direct costs

Capital productivity = Material productivity =

Value Added Output value at standard price
Capital Employed Cost of
(Raw Material+ Packaging material+ Supplies)

Energy productivity = Total Factor Productivity =

Amount of output produced Output (Value Added) at standard price
No. of Units of power used Labour+ Capital Invested

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 CLASS MATERIAL
• Disadvantages of productivity index
• Total productivity measure
• Total function productivity

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 FACTORS AFFECTING PRODUCTIVITY
National factor:-
1. Human resources
2. Technology and Capital Investment
3. Government Regulation
Organizational factor:-
1. Product (or system) design
2. Machinery and Equipment
3. Skill and Effectiveness of the worker
4. Production Volume
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 PURPOSE TO INCREASE PRODUCTIVITY

FOR MANAGEMENT
• To produce good earning (profit)
• To clear the debt or loans acquired from different sources
• To sell more
• To stand better in the market
FOR WORKERS
• Higher wages
• Better Working Conditions
• Higher standard of living
• Job Security and Satisfaction
FOR CUSTOMER
• To reduced price of the article

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 PRODUCTIVITY IMPROVEMENT TECHNIQUES

1. Technology based
(a) CAD/CAM are computer techniques and have profound influence on human
productivity
(b) Modern maintenance techniques
(c) Flexible manufacturing system (FMS).
2. Employee based
(a) Incentives (financial/non-financial) at individual and group level
(b) Promotion
(c) Worker participation

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3. Material based
a. Material planning and control
b. Purchasing
c. Material storage
d. Source selection for quality
e. Waste elimination
f. Recycling and reuse of waste material
4. Process based
(a) Methods Engineering and work simplification
(b) Process design
(c) Human factors engineering

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5. Product based
(a) Value analysis/value engineering .
(b) Product variation
(c) Simplification/standardization
(d) Reliability engineering

6. Management based .
(a) Communication in the organization
(b) Work culture
(c) Motivation
(d) Promoting group activity.

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TYPES OF PRODUCTION METHODS /
SYSTEMS
1. Continuous
• Mass production
• Process or continue flow type

2. Intermittent
• Batch production
• Job Production

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• Continuous Production
The production activity continues for 24 hours or on three shifts a day basis.
• Mass production:
I. a large number of identical items is produced, however, the equipment need not be
designed to produce only this type of items
II. Both plant and equipment are flexible enough to deal with other products needing
the same production processes
Ex- a highly mechanized press shop that can be utilized to produce different
types of components or products of steel metal without the need of major
changes.
• Flow production:
I. the plant, its equipment, and layout have been chiefly designed to produce a
particular type of product
II. Flexibility is limited to minor modifications in layout or design of models
Ex- automobiles, engines, house-hold machinery, chemical plants, etc.

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 INTERMITTENT PRODUCTION
• Job Production
• One-off production - each item might have particular
specifications
Ex- manufacturing of aircrafts, ships, space vehicle, bridge and
dam construction, ship
• This system has a lot of flexibility of operation, and hence
general purpose machines are required.
• It deals with ‘low volume and large variety’ production. It can
provide to specific customer order, or job of one kind at a time.

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Advantages
• Low risk of loss to the factory adopting this type of production. Due to
flexibility, there is no chance of failure of factory due to reduction in
demand. It can always get one or the other job orders to keep it going.
• Requires less money and is easy to start.
• Less or no management problem because of very small work force.
Disadvantages
• For handling different types of jobs, only workers with multiple skills
are needed. This increases the labor cost.
• Low equipment utilization.
• As the raw materials are purchased in less quantity, the cost of
material procurement is more.

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• Batch Production
• Batch production is bigger in scale than job production, but
smaller than that of mass production.
• Material handling may be automated by robots as in case of
CNC machining centers.
• A medium size lots (5 to 50) of same items is produced in this
system. Lot may be produced once in a while or on regular
interval generally to meet the continuous customer demands.
• Plant capacity generally is higher than demand.

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Advantages
• It is flexible in the sense that it can go from one job to another
with almost zero cost. It needs general purpose machine having
high production rate.
• If demand for one product decreases then production rate for
another product may be increased, thus the risk of loss is very
less.
Disadvantages
• As the raw materials to be purchased are in smaller quantity
than in case of mass production, the benefits of discount due to
large lot purchasing is not possible.
• It needs specially designed jigs and fixtures.

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 PLANT LAYOUT
• It is a physical arrangement of machinery, equipment, facilities
and staff within a plant

• It is floor plan indicating distances between different work

stations and departments in a plant

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 OBJECTIVES OF A PLANT LAYOUT

• Minimization on material handling.

• Optimum utilization of floor space.
• Balancing of plant capacities.
• Easy supervision and better production control.
• Elimination and improvement of objectionable operations.
• Elimination of physical efforts required by workers.
• Avoiding industrial accidents.
• Effective utilization of labor by elimination of idle time.
• Better working conditions like light, ventilation, control of noise.
• Improvement in quality of output.

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 ESSENTIALS OF A GOOD LAYOUT
• Integration of factors and interdependence
• Minimum movement and handling
• Continuous flow
• Optimum utilization of available space
• Maximum visibility
• Maximum accessibility
• Flexibility
• Safety requirements

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 TYPES OF LAYOUT

There are mainly four types of plant layout:

(a) Product or line layout
(b) Process or functional layout
(c) Combined or group layout
(d) Fixed position layout

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1. Product or line layout - upon the sequence of
operations required for the product- i.e. the output of
one machine becomes input of the next machine
2. Process or functional layout - operations of a similar
nature or function are grouped together, not based on
product
3. Combined or group layout - A combination of process
& product layout
4. Fixed position layout - the movement of manpower
and machines to the product which remains stationary

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 PART -3

Industrial Ownership

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 INDUSTRIAL OWNERSHIP

• To start a business enterprise the most important thing

required is the capital
• If the capital is provided by single individual, it is known
as Individual ownership,
• If the capital is supplied by two or more persons, it
refers to partnership organization.
• If the capital is provided by many persons in the form of
shares to an institute with a legal entity, it is called a
Joint Stock Company.
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 TYPES OF OWNERSHIP
The different types of ownership are:-
• Single ownership (Private Undertaking).
• Partnership.
• Joint Stock Companies.
• Cooperative organization.
• Public and private sector company.

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 SOLE PROPRIETORSHIPS (INDIVIDUAL
OWNERSHIP)
A business that legally has no separate existence from its owner
• The vast majority of small businesses start out as sole
proprietorships.
• These firms are owned by one person, usually the individual
who has day-to-day responsibilities for running the business.
• Sole proprietors own all the assets of the business and the
profits generated by it. They also assume complete
responsibility for any of its liabilities or debts .

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 Advantages of a Sole Proprietorship

• Easiest and least expensive form of ownership to organize

• Sole proprietors are in complete control, and within the
parameters of the law, may make decisions as they see fit
• Sole proprietors receive all income generated by the
business to keep or reinvest
• Profits from the business flow directly to the owner's
personal tax return
• The business is easy to dissolve, if desired

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 DISADVANTAGES OF A SOLE
PROPRIETORSHIP
• Sole proprietors have unlimited liability and are legally
responsible for all debts against the business.
• Their business and personal assets are at risk.
• May be at a disadvantage in raising funds and are often
limited to using funds from personal savings or consumer
loans.
• May have a hard time attracting high-caliber employees.
• Some employee benefits such as owner's medical
insurance premiums are not directly deductible from
Business income (only partially deductible as an
adjustment to income).

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 PARTNERSHIPS
• A partnership is a type of business entity in which partners
(owners) share with each other the profits or losses of the
business
• The partners should have a legal agreement that states-
I. how decisions will be made,
II. profits will be shared,
III. disputes will be resolved,
IV. how future partners will be admitted to the partnership,
V. how partners can be bought out, and
VI. what steps will be taken to dissolve the partnership when
needed.
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 Advantages of a Partnership

• Partnerships are relatively easy to establish; however time should

be invested in developing the partnership agreement.
• With more than one owner, the ability to raise funds may be
increased.
• The profits from the business flow directly
• The business usually will benefit from partners who have
complementary skills.

Disadvantages of a Partnership

• Partners are jointly and individually liable for the actions of the
other partners.
• Profits must be shared with others.
• Since decisions are shared, disagreements can occur.
• The partnership may have a limited life; it may end upon the
withdrawal or death of a partner. 2/5/2020 53
 Types of Partnerships that should be
considered
1.General Partnership
• Partners divide responsibility for management and liability
• shares of profit or loss according to their internal agreement.
Equal shares are assumed unless there is a written
agreement that states differently.
• In a general partnership, each partner has full agency powers

2. Limited Partnership and Partnership with

limited liability
• Limited means that most of the partners have limited liability
(to the extent of their investment) as well as limited input
regarding management decisions,
• for short-term projects or for investing in capital assets.
• Limited partner have limited liability
• Forming a limited partnership is more complex and formal
than that of a general partnership. 2/5/2020 54
 JOINT VENTURE (JOINT
( STOCK
COMPANY)
• Acts like a general partnership, but is clearly for a
period of time or a single project.
• In a joint stock company the shareholders are free to
transfer their ownership interest at any time by selling
their stockholding to others.

TYPES OF JOINT STOCK COMPANIES:-

• Private limited companies.
• Public limited companies.

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 Private limited companies

The capital collected from private partners. Private limited

companies restrict the right to transfer shares, avoid
public to take up shares or debentures. The numbers of
members is between 2 and 50 excluding the employees
and ex-employees shareholders.
Actually, a private joint stock companies resembles much
with partnership and has the advantages that this big
capital can be collected that could be done so in
partnership.

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 Public limited companies

• In public limited company, the capital is collected from the public

by issuing shares having small face value (Rs 50, 20, 10). The
number of shares holders should not be less than seven, but
there is no limit to their maximum number
• There is no restriction on transfer of shares.
• A public company has to issue a prospectus to the public.
• It has to allot shares within 180 days from the date of
prospectus.
• It can only start after receiving the certificate to commence
business

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• ADVANTAGES OF JOINT STOCK COMPANIES:-
• A huge sum of money can be raised.
• It associates limited liability with it.
• Shares are transferable.
• Companies life is not affected by the death of shareholders.
• Risk of loss is divided among many shareholders.
• The company associates with it stability, efficiency and flexibility of
management.

• DISADVANTAGES OF JOINT STOCK COMPANIES:-

• It is difficult to keep secrecy as in partnership.
• Team sprit with which partnership works is lacking .

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 CORPORATIONS/ COOPERATIVE
ORGANIZATION/ SOCIETIES
• It is a form of private ownership which contains features of large
partnership as well as some features of the corporation and is a
form of private ownership.
• The owners of a corporation are its shareholders
• The shareholders elect a board of directors to oversee the major
policies and decisions
• The corporation has a life of its own and does not dissolve when
ownership changes.
• The main aim of the cooperative is to provide goods and services
to the members of the cooperative at cost
• Members pay fees or buy shares of the cooperative, and profits
are periodically redistributed to them
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Advantages of a Corporation

• Shareholders have limited liability for the corporation's debts or

judgments against the corporations
• Generally, shareholders can only be held accountable for their investment
in stock of the company. (Note however, that officers can be held
personally liable for their actions, such as the failure to withhold and pay
employment taxes.)
• Corporations can raise additional funds through the sale of stock
• A corporation may deduct the cost of benefits it provides to officers and
employees

Disadvantages of a Corporation

• The process of incorporation requires more time and money than other
forms of organization
• Corporations are monitored by federal, state and some local agencies,
and as a result may have more paperwork to comply with regulations
• Incorporating may result in higher overall taxes
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 PUBLIC SECTOR
• The public sector is a part of the state that deals with the
delivery of goods and services by and for the government,
whether national, regional or local/municipal.

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OBJECTIVES OF PUBLIC SECTORS
• To provide basic infrastructure facilities for the growth of
economy.
• To promote rapid economic development.
• To avoid concentration of economic power in a few hands.
• To look after well-being and welfare of public.

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 ADVANTAGES OF PUBLIC SECTORS
• Profits earned by public sector may be used for the general
welfare of the community.
• Public enterprise encourages industrial growth of under-
developed regions in the country.
• Capital ,raw material, fuel, power and transport are easily made
available to them.
• Public sector offers equitable opportunities to all.

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 DISADVANTAGES OF PUBLIC
SECTOR
• Delay in decisions is a very common phenomena in public
enterprises.
• Incompetent persons may occupy high levels.
• There is too much interference by the Government and
Politicians in the internal affairs.

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 LIST OF PUBLIC SECTOR
UNDERTAKING
• Bharat Electronics Limited (BEL)
• Rail India Technical and Economic Services (RITES)
• Hindustan Aeronautics Limited (HAL)
• Indian Oil Corporation Limited (IOCL)
• Oil and Natural Gas Corporation (ONGC)
• Bharat Heavy Electricals Limited (BHEL)
• National Thermal Power Corporation(NTPC)
• Power Finance Corporation Limited(PFC)
• Airports Authority of India (AAI)
• Steel Authority of India Limited (SAIL)
• Bharat Sanchar Nigam Limited (BSNL)
• Bharat Petroleum Corporation Limited(BPCL)
• Hindustan Petroleum Corporation Limited (HPCL)
• Gas Authority of India Limited (GAIL)
• Mangalore Refineries and Petrochemicals Limited( MRPL )
• State Bank Of India (SBI) 2/5/2020 65
 PRIVATE SECTOR
• Private sector serves personal interests and nongovernment
sector. It constitutes mainly consumer’s goods industries where
profit possibilities are high.
• Here profit is the main objective.
• A private sector does not undertake risky ventures or those
having low-profit margin.
• Private enterprises are run by businessmen; capital is collected
from the private partners.

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 ADVANTAGES OF PRIVATE SECTOR
• The magnitude of profits incurred is high.
• The efficiency of the private enterprise is high.
• Wastage of material and labour is minimum.
• Decision-making is very prompt.
• There is no interference in its internal affairs by politicians or
Government.
• Competent persons occupy high levels.

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 DISADVANTAGES OF PRIVATE SECTOR
• There is exploitation motive, the workers and the consumers
may not receive fair deal.
• There is shortage of capital to expand the business.
• Private enterprise leads to concentration of wealth in the hands
of a few.
• Private enterprises lead to unbalanced growth of industries.

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