Introduction to Industrial Engineering
and Operations Research
Example: Package carriers
 How
would you beat the competition in the
package carrier industry?
UPS – 2003 INFORMS Prize Winner
 Operations
research techniques have been instrumental
since the 1950s in UPS’s successful growth to a $32
billion company by 2003:
– to structure its organization of
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360,000 people,
1,800 facilities,
90,000 vehicles, and
580 aircraft,
– to facilitate the daily decisions that guarantee the prompt
delivery of 10,000,000 parcels each day.
– While providing myriad cost savings, operations research is
indeed a strategic lynchpin and a significant source of
competitive advantage for UPS.
Schneider National, Inc. –
2006 INFORMS Prize Winner
 Engineering
and Research Department at Schneider
National has demonstrated history of using OR/MS to
provide benefits at strategic, tactical, and operational
levels.
 Applications in
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shipment and driver planning,
revenue management,
dedicated fleet management and
operational decision support.
 These
OR/MS applications have improved annual
earnings by over $10 million at Schneider.
Let’s start at the beginning…
 1913
Henry Ford creates
the assembly line
What is IE? In words of a senior student…
I
really enjoy the major and had no idea what it actually
entailed until my internship this summer.
 If I could give my briefest explanation of what Industrial
Engineering is:
– Industrial Engineers Engineer Industries. We use math and
applied sciences to mass produce anything and everything.
We can design a factory, create assembly lines, or make a
work area more comfortable and safe for an employee. We
use analytical skills and our own intuition to help organize
Corporate America.
 Alex,
Senior ‘08
What is Industrial Engineering?
 Industrial
engineering is the engineering discipline that
concerns the design, development, implementation, and
evaluation of integrated systems of people, knowledge,
equipment, energy, and material. Industrial engineering
draws upon the principles and methods of engineering
analysis and synthesis, as well as mathematics, physical,
and social sciences. Industrial engineers work to
eliminate wastes of time, money, materials, energy, and
other resources.
en.wikipedia.org/wiki/Industrial_engineering
Discussion Questions
 How
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does IEOR impact
an airline?
Wal-Mart?
Disney World?
government?
Hospitals?
The military?
As an ME…
Why should I care about IE?
1.
Designing a great product is just the first step
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Then it must be produced at a reasonable cost,
defect-free, and delivered to the customer at the
right time and price
These two steps are not sequential!
» Cost, quality in production, and logistics aspects must be
considered at the design stage
2.
Understanding uncertainty and variability is
key to making good engineering decisions
Exercise: Drug Testing
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Major league baseball is concerned about the use of steroids by
players.
Suppose that a blood test to detect the use of steroids is
– 97% reliable so that if an athlete has used steroids, the test result will be
positive 97% of the time.
– For athletes who have not used steroids, the test results are slightly less
reliable and will indicate a negative result 95% of the time.
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This means that the rate of false negatives is 3% and the rate of
false positives is 5%.
In an initial voluntary screening, Major League Baseball found
6% usage amongst their players.
If a major league baseball player tests positive for the use of
steroids, what is the probability that he actually used steroids?
Exercise: Glass Manufacturing Facility
 Considering
to buy testing equipment to detect
extraneous gases in furnace.
– These gases lead to major quality defects (bubbles in glass)
and are present in the furnace 1% of the time
 The
test has been shown to detect extraneous gases in
99% of cases.
 However, it also turns out positive when extraneous
gases are not present in 5% of the cases.
 Should
the company invest in the testing equipment?
In a nutshell…
 IE’s
engineer processes instead of products.
 They are thus key to making complex systems work 
systems engineering
 At the intersection between management, computer
science and engineering.
 Fields closely linked to it:
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Operations research/Operations management
Management sciences
Decision sciences
Systems engineering
Information engineering