INDUSTRIAL MANAGEMENT

POLITEKNIK
MALAYSIA
MUKAH

INDUSTRIAL
MANAGEMENT

1st Edition 2021

MOHD RAHIMI BIN RAMLI
FARIHANA BINTI A. RAHMAN
FAZIDA AKHTAR BINTI ABDULLAH

INDUSTRIAL
MANAGEMENT

MOHD RAHIMI BIN RAMLI
FARIHANA BINTI A. RAHMAN
FAZIDA AKHTAR BINTI ABDULLAH

1st Edition 2021

2

COPYRIGHT

All rights reserved. No part of this
publication may be reproduced. Stored in a
retrieval system, or transmitted in any form
or by any means, electronic, mechanical,
photocopying, photographs, recording, etc
without th prior permission of Politeknik
Mukah

1st Edition 2021

Author

Mohd Rahimi Bin Ramli
Farihana Binti A. Rahman
Fazida Akhtar Binti Abdullah

Published :
POLITEKNIK MUKAH SARAWAK

KM7.5, JALAN OYA
96400 MUKAH
SARAWAK

TEL : 084-874001
FAKS : 084874005
www,pmu.edu.my

3 Mohd Rahimi Bin Ramli, Farihana Binti A. Rahman, Fazida Akhtar Binti Abdullah

PREFACE

This course prepares students to the principles to the
principles of ergonomic design of occupations and products
in industrial and product users. Good design principles are
carefully investigated and examples of poor design are
given. The consequences of poor work and product design
are also emphasized. These topics will be discussed in this
subject such as introduction to ergonomics, elements of
anthropometry, physiology, anatomy, biomechanics and
CTD; workplace, seat hand tool design, manual material
handling; human-machine system interface, human
information processing, display and control, compatibility,
environmental factors; cognitive ergonomics, graphical user
interface design principles; human error, product safety and
product liability.

4

ABOUT
AUTHOR

MOHD RAHIMI BIN RAMLI
Pensyarah Politeknik Mukah
[email protected]

FARIHANA BINTI A. RAHMAN
Pensyarah Politeknik Mukah
[email protected]

FAZIDA AKHTAR BINTI ABDULLAH
Pensyarah Politeknik Mukah
[email protected]

5

TABLE OF
CONTENTS

CHAPTER 1 Objective -8
CHAPTER 2 Understand Concept of Industrial Engineering &
Management -9
Definition -10
Objectives of I.E -10
Techniques of I.E -11

Place of I.E in Organization -12
History & Development -13
Contributions to
Industrial Engineering -15
Identify Characteristic & - -16
Tools Of Management Science -17
Review of Different Schools of Thought or Various
Approaches to Study of Management -18

6

TABLE OF
CONTENTS

CHAPTER 3 Scientific Management -19
CHAPTER 4 Basics of Scientific Management (4 principles) -19
Administrative Management Theory -21
Human Relations Theory -23
Behavioral Approach -25
Quantitative Approach -27
Systems Approach -29
Contingency Approach -30

Identify Principles Of Management Based -31
On Henri Fayol -32
Fayol’s Fourteen Principles -35
Management Concepts -37
Describe concept of organization -39
Identify a few principles of organization -41
a. Line, military or scalar organization -43
b. Functional organization -45
c. Line and staff organization -45
d. Project organization -47
e. Matrix organization -49
Conclusion of Organization Structure

7

OBJECTIVE

1.1 Identify concept of industrial engineering and management.
1.1.1 Describe history and development of industrial engineering.
1.1.2 Identify characteristic and tools of management science.
1.1.3 Review of different schools of thought or various approaches

to study of management
1.1.4 Identify principles of management based on Henri Fayol.

Understand Concept of Industrial
Engineering & Management

Introduction:
Fierce Competition in Economy.
Customers demands are rising.
Challenge for industries to produce goods of right quantity, quality , in time and at minimum
cost.
Industrial Engineering plays a pivotal role in meeting these challenges.
We have various techniques in Industrial Engineering to analyse and improve the work
methods, to eliminate waste, proper allocation and utilization of resources.

 American Institute of Industrial Engineers (AIIE)
• defines Industrial Engineering as follows;
Industrial Engineering is concerned with the
DEFINITION design, improvement and installation of
integrated system of men, materials and
equipment. It draws upon specialized knowledge
and skills in the mathematical, physical sciences
together with the principles and methods of
engineering analysis and design to specify,
predict and evaluate the results to be obtained
from such system.

Objectives of I.E The prime objectives of I.E are :

To increase the productivity.
Eliminating waste and non-value added activities.
Improving the effective utilization of resources.

The basic objectives of I.E departments are :

1.To establish methods for improving the operations
and controlling the production costs.
2. To develop programmes for reducing these
costs.

Techniques of I.E

Following tools and techniques are used to improve productivity of the organization
by optimum utilization of resources.

1. Method Study.
2. Time Study (Work Measurement).
3. Motion Economy.
4. Financial and Non Financial Incentives.
5. Value Analysis.
6. Production, Planning and Control.
7. Inventory Control.
8. Job Evaluation.
9. Material Handling Analysis.
10. Ergonomics (Human Engineering).
11. System Analysis.
12. Operations Research Techniques.

Place of I.E in Organization

Managing
Director

General General General General General
Manager Manager Manager Manager Manager
Marketing Finance manufacturing Quality Personnel

Operating Material Manager Ind. Engg. Maintenance
system manager P.P.C manager Manager

Supt. Supt. Supt. Supervisor Supervisor Supervisor
I II III plant I plant II plant III

History
& Development

▪ It is linked with industrial revolution and passed through many phases to reach present advanced

stage.

▪ Frederick Taylor is named as father of scientific management and industrial engineering.
▪ But before Frederick Taylor, Adam Smith gave concept of Division of Labour through his book The

Wealth of Nations.

▪ Also James Watt, Boultin Mathew and Robinson obtained a place in the history of Industrial

Engineering because of their work related with improvements in the performance of machines and
industries

Period between 1882-1912 was the critical period in the history of Industrial Engineering.
Important works during this period are;

 Factory system, Owner, Engineer and Manager concept.
 Equal work, equal pay and incentives.
 Scheduling and Gantt Charts.
 Engineers interest in cost control and accounting.

History
& Development

The development of techniques like:

• Value Engineering
• Operation Research
• CPM and PERT
• Human Engineering (Ergonomics)
• Systems Analysis
• Advances in Information Technology and Computer Packages, and
• Mathematical and Statistical Tools.

Contributions to Industrial Engineering

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.

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 followi

-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.ng
actions;

Contributions to
Industrial Engineering

5- Henry L. Gantt (1993): His contributions are;
• Work in the area of motivation field, development of task and bonus plan.
• Measurement of management results by Gantt Charts.
• 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
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

Identify Characteristic &
Tools Of Management Science

INTRODUCTION:
-In 1967 Stafford Beer characterized the field of management science as "the business use of
operations research".
-However, in modern times the term management science may also be used to refer to the
separate fields of organizational studies or corporate strategy.
-Like operational research itself, management science (MS) is an interdisciplinary branch of
applied mathematics devoted to optimal decision planning, with strong links with economics,
business, engineering, and other sciences.
-The MS's mandate is to use rational, systematic, sciencebased techniques to inform and
improve decisions of all kinds.
-MS is concerned with developing and applying models and concepts that may prove useful in
helping to illuminate management issues and solve managerial problems, as well as
designing and developing new and better models of organizational excellence.
-In short, MS help businesses to achieve their goals using the scientific methods of
operational research.

Identify Characteristic &
Tools Of Management Science.

Some of the fields that have considerable overlap with MS include:
• Data mining
• Decision analysis
• Engineering
• Forecasting
• Game theory
• Industrial engineering
• Logistics
• Mathematical modeling
• Mathematical optimization
• Probability and statistics
• Project management
• Simulation Social network/Transportation forecasting models
• Supply chain management
• Financial engineering

Applications of MS:
• Applications of MS are abundant in industry as airlines, manufacturing companies, service

organizations, military branches, and in government.
• The range of problems and issues to which MS has contributed insights and solutions is vast. It

includes:

-Scheduling airlines, including both planes and crew

-Deciding the appropriate place to site new facilities such as a warehouse,

factory or fire station

-Managing the flow of water from reservoirs

-Identifying possible future development paths for parts of the telecommunications industry

-Identifying and understanding the strategies adopted by companies for their

information systems

Review of Different Schools
of Thought or Various
Approaches to Study of
Management

Development of Management thought Evolution of management thought can be studied in two
broad categories:
1. Early management approaches
- Scientific management,
- Administrative management theory
- Human relations movement

2. Modern management approaches
- Behavioral
- Quantitative
- Systems
- Contingency approaches.

Scientific Management

• Fredrick W.Taylor (1856-1915) – father of
scientific management

• An approach that emphasizes the scientific
study of work in order to improve worker
efficiency.

Contributions by Taylor: -
- Scientific task planning,
- Time and Motion study
- Standardization
- Differential Payment
- Functional foremanship.

Basics of Scientific Management (4
principles)

• Each task must be scientifically designed so that
it can replace the old, rule of thumb methods.

• Workers must be scientifically selected and
trained so that they can be more productive.

• Bring the scientifically designed jobs and
workers together so that there will be a match
between them.

• Division of labor and cooperation between
management & workers.

Scientific Management

Taylor summed up his approach in these words:

• Science, not rule of thumb
• Harmony, not discord
• Cooperation , not individualism
• Maximum output in place of restricted output
• Development of each man to his greatest

efficiency
• Equitable division of work

Limitations:
• Exploitative device
• Depersonalized work
• Unpsychological
• Undemocratic
• Antisocial
• Unrealistic

Administrative Management Theory

• Henry Fayol(1841-1925) developed this
theory.

• Focuses on principles that can be used
by managers to coordinate the internal
activities of organizations.

• Explains the process of managing an
organization from the top managerial
perspective.

• Five functions to be performed by
managers: planning, organizing,
Commanding, Coordination, Controlling.

Administrative Management Theory

Managers should apply 14 principles at the
operational level:

1. Division of work
2. Authority and Responsibility
3. Discipline
4. Unity of Command
5. Unity of direction
6. Subordination of individual interest to the common
good
7. Remuneration of Personnel
8. Order
9. Centralization
10. Scalar Chain
11. Equity 1
2. Stability of tenure
13. Initiative
14. Espirit de Corps

Administrative
Management
Theory

Limitations:

▪ Lack of empirical evidence
▪ Neglect of human factors
▪ False assumptions
▪ Pro-management bias
▪ Historical significance

Human Relations Theory

• Elton Mayo(1880-1949) contributed to this
theory.

• It is a movement in management thinking and
practice that emphasized satisfaction of
employees’ basic needs as the key to increased
worker productivity.

• Compensated the deficiencies in scientific
management and administrative management.

• Gained popularity after studies of human
behavior at work situations during 1924-33.

Human Relations Theory

Key Concepts:

▪ The individual-not only motivated by economic factors but also by social

& psychological factors.

▪ The work group-workers find satisfaction in the member ship of social groups.
▪ Work environment-to be conducive for both organizational and personal growth.
▪ The leader-should provide participative climate.

Figure1: The Human Relations Movement Pyramid

Human
relation
Movement

Philosopy of
industrial
humanism

Threats of Hawthorn
Unionization studies

Human Relations Theory Resources

Criticisms:
• Philosophy preaches collaboration not

competition-cow psychology
• Concerned only with operative employees
• Over concern on happiness – productivity link
• Anti individualistic
• Not a scientifically designed experiment.

Behavioral Approach

• Developed as a natural evolution to Hawthorne
Experiments.

• Hawthorne studies stressed on emotional
elements to explain human behavior and
performance.

• Behavioral approach emphasizes on scientific
research as the basis for developing theories
about human behavior in the organizations that
can be used to develop practical guidelines for
managers.

• Contributors: Abraham Maslow, Chris Argyris,etc
• Also called as Human Resources approach.

Behavioral Approach

Individual motivation,
Group behavior
Foundation to HRM Job enrichment
MBO
Positive reinforcement

Contributions: Limitations:

Self actualizing view
Compatibility of individual & organization
Discounted the non human aspects of
organization
Best of managing is humanizing
organizations

Quantitative Approach

Features

• Offers quantitative aids to decision making, develops quantitative
tools to assist in providing products and services.

• Managerial Choices depend on criteria such as costs, revenues, ROI,
etc

• Emphasis on computers and their assistance in decision making
alternatives.

• Promotes holistic view of factors influencing decision making
• Eliminates subjective thinking in decision making
• Minimizes bias in decision making Aids in objective rational decision

making.

Quantitative Approach

Limitations:

• All variables influencing decision can’t be identified.
• Less importance to human relationships
• Decision quality depends on the data inputted to the computer.
• Integrated approach to management problem solving and decision

making
• Advocates: Chester Barnard, George Homans

Key Concepts of this approach:

• System is a set of interdependent parts Concept of holism
• System can be open or closed
• System has a boundary

Systems Approach

• Tries to solve problems by diagnosing them with in a frame work of inputs,
transformation processes, outputs and feed back

• Good balance between the needs of various functional parts of the
enterprise and goals of the firm as a whole.

• Conceptual frame work to understand organization is too abstract.
• Does not identify situational differences and factors

A

B D

System Subsystem
Approach
C
Environment

Contingency Approach

• Also termed as Situational approach
• Based on the premise that situations dictate managerial action
• Advocates: Selznic, Woodward, James Thompson
• Appropriate managerial action depends on the particular parameters of the situation
• Spells out the relationship of the organization to its environment
• Concerned with structural adaptations of organizations to its task environment.
• More pragmatic and action oriented. Integrates theory and practice in a systems

framework
• Advocates the managers to develop skills for situational analysis

• Limitations:

• Paucity of literature & Complex
• Defies empirical testing
• Reactive
• Not holistic in nature

Identify Principles Of
Management Based On Henri
Fayol

Henri Fayol’s Background

• Graduated from the National School of Mines in Saint Etrenne in
1860.

• After graduation he went to work and spent his entire career at
Commentry-Fourchamboult

• Decazeville. He was named managing director in 1888 and
maintained that position until he retired in 1918.

• He is credited with saving the company from bankruptcy.
• During his career he lectured at Ecole Superievre de la Guerre.
• In his retirement he established the Center of Administrative

Studies.

Identify Principles Of
Management Based
On Henri Fayol

Fayol’s Big Contributions to Management

1. Universality of management: The same skills are needed to manage a
coal mine that are needed to manage a hospital, post office, university, etc..

2. Management is a field in and of itself: There were no schools of
management prior to Henri Fayol!!!
Fayol’s Fourteen Principles:

1.Division of Labor: Specialization increases output by making employees
more efficient.
2.Authority: Managers must be able to give orders. Authority and responsibility
go together.
3.Discipline: Employees must obey and respect the rules of the organization.
4.Unity of Command: every employee should receive orders from only ONE
superior.

Fayol’s
Fourteen
Principles

5.Unity of Direction: Each group of organizational activities that has
the same objective should be directed by one manager using one
plan.

6.Subordination of Individual Interests to the General Interests: the
greater good. The organization’s interests come first.

7.Remuneration: workers must be paid a fair wage for their services.

8.Centralization: degree to which subordinates are involved in decision
making. What works best for the organization? Centralized:
management-driven. Decentralized: subordinate-driven

9.Scalar chain: line of authority from top management to the lowest
ranks. Communications should follow this chain whenever possible.

Fayol’s Fourteen
Principles

10.Order: People and materials should be in the right place at the right time.
11.Equity: Managers should be kind and fair to their subordinates.
12.Stability of Tenure of Personnel: High employee turnover is inefficient.
13.Initiative: Employees who are allowed to originate and carry out plans will
exert high levels of effort.
14.Esprit de Corps: Promoting team spirit will build harmony and unity within
the organization.

Management Concepts

OBJECTIVES:

1.2 Define organization structures.

1.2.1 Describe concept of organization.
1.2.2 Analyze important of organization.
1.2.3 Identify a few principles of organization.
1.2.4 Choice types a structure of an organization and its functional such as :

a. Line, military or scalar organization.
b. Functional organization.
c,. Line and staff organization.
d. Project organization.
e. Matrix organization.
• An organizational structure consists of activities such as task allocation, coordination and
supervision, which are directed towards the achievement of organizational aims.
• An organization can be structured in many different ways, depending on their objectives.
• The structure of an organization will determine the modes in which it operates and performs.
• In short, Organizational Structure is how job tasks are formally divided, grouped, and
coordinated.

Management Concepts

• Organizational structure allows the expressed allocation of responsibilities for different
functions and processes to different entities such as the branch, department, workgroup
and individual.

• Organizational structure affects organizational action in two big ways:
 It provides the foundation on which standard operating procedures and routines rest.
 It determines which individuals get to participate in which decision-making processes, and

thus to what extent their views shape the organization’s actions.

1.2.1 Describe concept of organization.

MEN MEN MACHINE
MARKET MATERIAL
6 ’M’ of an
Organization

METHOD

Describe concept of organization

Introduction to Organization

SKILL Super STAFF
ordinate Goal STRUCTURE

7 “S”

SYSTEM

STRATEGY

Describe concept of organization

Meaning of Organization:

“An organization represents a group of people who work together for the
achievement of common objective.”
“An organization comes into existence when there are a number of persons
in communication and relationship to each other and are willing to contribute
towards a common endeavor.

Process of organization:

• Determination of objectives.
• Division of Activities.
• Fitting Individuals.
• Developing relationships.
• Co-ordination

3
8

Describe concept of organization

Important concepts:
1. Principles of span of control.
2. Departmentation:
By numbers, by time (shifts), by function, by territory, by product, by
customer segment, by maketing channels, by process (in manufacturing).
3. Line and staff relationships.
4. Delegation

Identify a few principles of organization

Principles of organization:
• Principle of objectives.
• Principle of division of work.
• Principle of unity of command.
• Principle of span of control.
• Principle of scalar chain.
• Principle of delegation.
• Principle of absoluteness of responsibility.

3
9

Identify a few principles of organization

Principles of organization

• Principle of parity of authority and responsibility.
• Principle of co-ordination.
• Principle of flexibility.
• Principle of efficiency.
• Principle of continuity.
• Principle of exception.

Types of organization structures

a. Line, military or scalar organization.
b. Functional organization.
c. Line and staff organization.
d. Project organization.
e. Matrix organization.

4
0

a. Line, military or scalar organization

Is a simple & oldest type of organization followed in an organization. Under line
organization, each department is generally a complete self-contained unit.
A separate person will look after the activities of the department & he has full control
over the department

- The same level executive do not give or receive any order among themselves. But
they receive order from their immediate boss and give order to their subordinates.
Hences, all the heads are responsible to the general manager, in turn, is responsible
to the shareholder who are the owners.

- This type of organization is followed in the army on the same pattern. So it is calles
military organization. Under type of organization, then line of authority flows from the
top to bottom vertically. So it is called line organization.

Characteristics: •
It consists of direct vertical relationships.
• Authority flows from top-level to bottom level.
• Departmental heads are given full freedom to control their departments.
• Each member knows from whom he would get orders & to whom he should
give his orders.
• A senior member has direct command over his subordinates.
• Operation of this system is very easy.
• Existence of direct relationship between superiors and subordinates.
• The superior takes decisions within the scope of his authority

4
1

a. Line, military or scalar organization

Advantages of line Organization
1. Simplicity
2. Division of authority and responsibility
3. Unity of control
4. Speedy action
5. Discipline
6. Economical
7. Co-ordination
8. Direct communication
9. Flexsibility

Disadvantages of line Organization

1. Lack of specification
2. Overloading
3. Lack of initiative
4. Scope for favouritism
5. Dictatorial
6. Limited communication
7. United administration
8. Subjective approach
9. Instability

4
2

b. Functional organization

The division of labor in an organization is grouped by the main activities
or functions that need to be performed within the organization -- sales,
marketing, human resources, and so on.

• Each functional group within the organization is vertically integrated
from the bottom to the top of the organization.

• For example, a Vice President of Marketing would lead all the marketing
people, grouped into the marketing department.

• Employees within the functional divisions of an organization tend to perform
a specialized set of tasks, for instance the engineering department would be
staffed only with engineers.

• This leads to operational efficiencies within that group.

• However it could also lead to a lack of communication between the functional
groups within an organization, making the organization slow and inflexible.

• As a whole, a functional organization is best suited as a producer of
standardized goods and services at large volume and low cost.

4
3

b. Functional organization

President

VP Finance VP VP VP
Marketing Manufacturing Engineering

New layout Project
robot line new Model

Proton

4
4

b. Functional organization

• The line officers have authority to take decisions & implement them to achieve the
objectives of the organization.

• The line officers may be assisted by the staff officers while framing the policies &
plans & taking decisions organization

• Set up like functional organization
• Adds a staff office to administer projects
• Used for small, short run projects

c. Line and staff organization

• The line officers have authority to take decisions & implement them to achieve the
objectives of the organization.
• The line officers may be assisted by the staff officers while framing the policies &
plans & taking decisions organization.

d. Project organization

Project is separated from the rest of the parent system. • Becomes self contained unit.
• The professionals are deputed for the project.
• The decision is taken in the project organization under pressure of the top controls
the staff in an organization.
• The top management does not extend its full co-operation for the effective
functioning of the project organization.

4
5

d. Project organization

Advantages

PM has full line authority over the project

• All project workforce directly responsible to the PM
• Lines of communication are shortened
• Maintain permanent group of experts
• High level of commitment
• Ability to make swift decisions • Unity of command
• Simple and flexible structure
• Support holistic approach to the project

Disadvantages
• Duplication of effort
• Stockpile equipment and technical assistance “just in case”
• Lack of expertise in high technology project • Foster
inconsistency and cutting corners
• Project takes on a life of its own
• Worry about “life after project ends

4
6

e. Matrix organization

• Combination of functional and pure project organizations
• Matrix project is not separated from parent organizations
• Individuals come from respective functions divisions and are assigned to the
project full time or part time

President

Manufacturin Program R&D Marketing
g Manager

PM1
PM2
PM3

4
7

e. Matrix organization

• Cross-functional team members
• Draw temporarily on technological expertise of relevant functions
• High technology areas – integrate functional specialties
• Iterations in adapting “over the wall” approach
• Systems approach – integrity of product design
• Close coordination and communication among all parties

Advantages
• The project is the point of emphasis
• Less anxiety about what happens after project completion
• Rapid response to client needs
• Access to administrative units of the parent firms
• Better balance of company resources in multiple projects
• Flexibility in control

Disadvantages
• Delicate balance of power
• Movement of resources – conflict
• Projects resist death
• Complex division of authority and responsibility
• Violates the principle of unity of command

Conclusion of Organization Structure
• A good organization structure is necessary to operate the
organization efficiently and organization must be structured
according to the type of the organization and situations.

4
9