ENGINEERING MANAGEMENT

LECTURE 2
 Managers of all kinds and types, inclusing
the engineer manager, are primarily
tasked to provide leadership in the quest
for attainment of the organizations
objectives.
If he is to become effective, he must learn
the intricacies of decision-making
The Engineer managers decision making
skiils will be very crucial to his success
as a professional. A major blunder in
decision making may be sufficient to
cause destruction of any organization.
Good decisions, on the other hand, will
provide the right environment for
continuous growth and success of any
organized effort.
 Decisions must be made in various level.
Decision making is a responsibility of the
engineer manager. It is understandable for
managers to make wrong decisions at times. The
wise manager will correct them as soon as they
are identified.
The bigger issue is the manager who cannot or
do not want to make decisions (Dangerous)
Management must strive to choose a decision
option as correctly as possible. Since they have
that power, they are responsible for whatever
outcome their decision bring.
The production manager of a certain company has
received a written request from a section head
regarding the purchase of airconditioning unit.
Almost simultaneously, another request from
another section was forwarded to him requiring
the purchase of forklift. The production manager
was informed by his superior that he can only
buy one of the two requested items due to
budgetary constraints. The production manager
must now make a decision. His choice, however,
must be based on sound arguments for he will
be held responsible, later on, if he had made the
wrong decision.
Decision Making may be defined as the
process of identifying and choosing the
alternative courses of action in a manner
appropriate to the demands of the
situation.
Engineer managers must adapt a certain
procedure designed to determine the
best option possible to solve certain
problems.
1. Diagnose Problem
2. Analyze Environment
3. Articulate Problem
4. Develop Viable Alternatives
5. Evaluate Alternatives
6. Make a choice
7. Implement Decision
8. Evaluate and Adapt Decision Results
If a manager wants to make an intelligent
decision, his first move must be to
identify the problem.

Identification of the problem is

tantamount to having the problem
solved..
A problem exist when there is a difference
between an actual situation and a desired
situation.
Example of internal or external limitation:
(due to environment)
1. Limited funds available for the purchase
2. Limited training on the part of employess
3. Ill-designed facilities
4. Patents are controlled by other
organizations
5. Very limited market for the companys
products and services exits
6. Strict enforcement of local zoning
regulations
When decisions are to be made, the
internal and external limitations must be
considered. It maybe costly, later on, to
alter a decision because of a constraint
that has not been previously identified.
The president of a new chemical manufacturing
company made a decision to locate his factory in a
place adjacent to a thickly populated area.
Construction of the building was made with
precision and was finished in a short period. When
the clearance for the commencement of operation
was sought from local authorities, this could not be
given. It turned out that the residents opposed the
operation of the firm and made sure that no
clearances is given.
The president decided to relocate the factory but not
after much time and money has been lost. This is a
clear example of the cost associated with
management disregarding the environment when
decisions are made. In this case, the president would
not consider what resident would do.
1. Internal Environment refers to
organizational activities within the firm
that surrounds decision making.
2. External Environment refers to
variables are outside the organization
and not typically within short run
control of top management.
 Problems may be solved by any of the
solutions offered.
Pick the best solution by using a
procedure with the following:
1. Prepare a list of alternative solutions
2. Determine the viability of each solutions
3. Revise the list by striking out those
which are not viable.
 An engineering firm has a problem of
increasing its output by 30%. This is the
result of a new agreement between the
firm and one of its clients.
 Improve the capacity of the firm by hiring
more works and building additional
facilities
Secure the services of subcontractors
Buy the needed additional output from
another firm
Stop serving some of the companys
costumer
Delay servicing some clients.
After determining the viability of the
alternatives and a revised list has been
made, an evaluation of the remaining
alternatives is necessary. This is
important because the next step involves
decision making.

Each alternative must be analyzed and

evaluated in terms of its value, cost, and
risk characteristics.
Another example of an evaluation of
alternatives is shown below:
An engineer manager is faced with
problem of choosing between three
applicants to fill up a lone vacancy for a
junior engineer. He will have to set up
certain criteria for evaluating the applicants.
If the evaluation is not done by a
professional human resource officer, then
the engineer manager will be forced to use
a predetermined criteria.
 TOTAL
APPLICANT EDUCATION TRAINING EXPERIENCE AGE
POINTS

1. JOSE SIBAYAN, JR. 40 35 4 10 89

2. MENANDRO RILLON 40 36 5 9 90

3. DANTE DELA CRUZ 40 38 6 7 91

 After the alternatives have been evaluated,
the decision-maker must now be ready to
make a choice. This is the point where he
must be convinced that all the previous
steps were correctly undertaken.
Choice making refers to the process of
selecting among alternatives representing
potential solutions to a problem.
To make the selection process easier, the
alternatives can be ranked from best to
worst on the basis of some factors like
benefit, cost, or risk.
 Implementation refers to carrying out the
decision so that the objectives sought will
be achieved.
At this stage, the resources must be made
available so that the decision may be
properly implemented.
In implementing the decision, the results expected
may or may not happen. It is therefore, important
for the engineer manager to use control and
feedback mechanisms to ensure results and to
provide information for future decisions.

Feedback refers to the process which requires

checking at each stage of the process to assure
that the alternatives generated, the criteria used
in evaluation, and the solution selected for
implementation are in keeping with the goals
and objectives originally specified.
In decision making, the engineer manager
is faced with problems which may either
be simple or complex. To provide him
with some guide, he must be familiar with
the following approaches.
 Refers to the evaluation of alternatives
using intuition and subjective judgement.
Managers use this when:
1. The problem is fairly simple.
2. The problem is familiar.
3. The costs involved are not great.
4. Immediate decisions are needed.
A factory operates on three shifts with the following schedule:
First Shift: 6:00 AM to 2:00 PM
Second Shift: 2:00PM to 10:00PM
Third Shift: 10:00PM to 6:00PM
Each shift consist of 200 workers manning 200 machines. On Sept.
16, 1996, the operations went smoothly until the factory manager,
an industrial engineer was notified at 1:00PM, that 5 of the
workers assigned to the second shift could not report for work
because of injuries sustained in a traffic accident while they were
on their way to the factory.
Because of the time constraints, the manager made an instant
decision on who among the first shirt workers would work to man
the five machines.
 Refers to the evaluation of alternatives
using any technique in a group classified
as rational and analytical.
 Types of quantitative techniques:
1. Inventory Models
2. Queuing theory
3. Network models
4. Forecasting
5. Regression analysis
6. Simulation
7. Linear programming
8. Sampling theory
9. Statistical decision theory
1. Economic order quantity model this one is
used to calculate the number of items that
should be ordered at one time to minimize total
yearly cost of placing orders and carrying the
items in inventory.
2. Production order quantity model economic
order quantity technique applied to production
orders
3. Back order quantity model inventory used for
planned shortages.
4. Quantity discount model used to minimize the
total cost when quantity discounts are offered
by suppliers
 Determines the number of service units
that will minimize both costumers waiting
time and cost of service.
Network Models: These are the models
where large complex task are broken
into smaller segments.
1. Program Evaluation Network Model
(PERT)
2. Critical Path Method