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ENGINEERING MANAGEMENT Edited by Fausto Pedro García Márquez Benjamin Lev ENGINEERING MANAGEMENT Edited by Fausto Pedro García Márquez and Benjamin Lev Engineering Management http://dx.doi.org/10.5772/45648 Edited by Fausto Pedro García Márquez and Benjamin Lev Contributors Margaret Olubunmi Afolabi, Omoniyi Ola-Olorun, William Fox, Fausto Pedro García Márquez, Mahelet Fikru, Jose- Ignacio Munoz-Hernandez, Jose-Ramon Otegi-Olaso, Alejandro Gutierrez-Lopez, Julen Rubio, Marta Ramos Martín Nieto, Benjamin Lev, Wenjing Shen, Xinxin Hu, Yi Liao, Joaquín López Pascual Published by InTech Janeza Trdine 9, 51000 Rijeka, Croatia Copyright © 2013 InTech All chapters are Open Access distributed under the Creative Commons Attribution 3.0 license, which allows users to download, copy and build upon published articles even for commercial purposes, as long as the author and publisher are properly credited, which ensures maximum dissemination and a wider impact of our publications. After this work has been published by InTech, authors have the right to republish it, in whole or part, in any publication of which they are the author, and to make other personal use of the work. Any republication, referencing or personal use of the work must explicitly identify the original source. Notice Statements and opinions expressed in the chapters are these of the individual contributors and not necessarily those of the editors or publisher. No responsibility is accepted for the accuracy of information contained in the published chapters. The publisher assumes no responsibility for any damage or injury to persons or property arising out of the use of any materials, instructions, methods or ideas contained in the book. Publishing Process Manager Iva Lipovic Technical Editor InTech DTP team Cover InTech Design team First published March, 2013 Printed in Croatia A free online edition of this book is available at www.intechopen.com Additional hard copies can be obtained from [email protected] Engineering Management, Edited by Fausto Pedro García Márquez and Benjamin Lev p. cm. ISBN 978-953-51-1037-8 Contents Preface VII Chapter 1 Heuristic Approaches for a Dual Optimization Problem 1 Fausto Pedro García Márquez and Marta Ramos Martín Nieto Chapter 2 Comparisons of Lateral Transshipment with Emergency Order Policies 23 Yi Liao, Wenjing Shen, Xinxin Hu and Benjamin Lev Chapter 3 Modeling Engineering Management Decisions with Game Theory 43 William P. Fox Chapter 4 Managing Pharmacy Operations with People and Technology 69 Margaret O. Afolabi and Omoniyi Joseph Ola-Olorun Chapter 5 Improving Mandatory Environmental Data Reporting for Comparable and Reliable Environmental Performance Indicators 95 Mahelet G. Fikru Chapter 6 Technology Assessment in Software Development Projects Using a System Dynamics Approach: A Case of Application Frameworks 119 José Ignacio Muñoz Hernández, José Ramón Otegui Olaso and Alejandro Gutiérrez López Chapter 7 Technical Performance Based Earned Value as a Management Tool for Engineering Projects 143 José Ignacio Muñoz Hernández, José Ramón Otegui Olaso and Julen Rubio Gómez VI Contents Chapter 8 The Investment in Hedge Funds as an Alternative Investment 167 Joaquín López Pascual Chapter 9 Modeling and Linear Programming in Engineering Management 181 William P. Fox and Fausto P. Garcia Preface The Engineering Management book synthesises the engineering principles with business practice, i.e. the book provides an interface between the main disciplines of engineering/ technology and the organizational, administrative, and planning abilities of management. It is complementary to other sub-disciplines such as economics, finance, marketing, decision and risk analysis, etc. This book is intended for engineers, economics and researchers who are developing new advances in engineering management, or who employ the engineering management disci‐ pline as part of their work. The authors of this volume describe their pioneering work in the area or provide material for case studies successfully applying the engineering management discipline in real life cases. The first chapter describes a real life case study with dual optimization. It consists of finding the optimal routes in the called principal and capillary routes. The problem has been consid‐ ered a vehicle routing problem with time windows. A recurrent Neural Network approach is employed to solve the problem, which involves unsupervised learning to train neurons. A Genetic Algorithm is utilized for training neurons so as to obtain a model with the least error. Comparisons of lateral transshipment with emergency order policies are done in the second chapter. It is difficult for a retailer to predict the exact amount of stock. When stock-outs occur, retailers often submit emergency orders to their supplier or transship goods from partner stores to lessen the potential loss of sales or missed orders. This chapter explores and compares these two policies in a general model, where unsatisfied customers may choose to request retailer’s emergency order/transshipment arrangement, switch to other re‐ tailers or give up shopping. The purpose of this research is not only to analyze each policy in a practical business setting, but also to provide a handful of policy-choosing criteria. A single-period model with one supplier and two centralized retailers in a symmetric scenario is considered. The study finds the optimal replenishment decision and demonstrates that emergency order policy dominates transshipment policy in supply chain’s overall profit un‐ der certain conditions. Through numerical analysis, the impacts of customer switching and customer requesting behaviors on profitability are examined, as well as the optimal replen‐ ishment inventory level. Chapter three presents modeling engineering management decisions with game theory. The process of gaining insight into possible courses of action from each player, assuming the players are rational, is considered in the game theory where the objective is to maximize their gains. In many business situations, two or more decision makers simultaneously and without communication choose courses of actions, and the action chosen by each affects the payoff or gains earned by all other players. Game theory is useful in analyzing decisions in VIII Preface cases where two or more decision makers have conflicting interest. Most of what we present here concerns only a two person game, but we will also briefly examine an n-person game. Healthcare operations management is considered in chapter four as the quantitative analysis of supporting business systems and processes that transform resources (inputs) into health care services (outputs). Pharmacy operations are carried out within the healthcare system and have a mix of both intangible and tangible characteristics. Appropriate resources are transformed to create the pharmaceutical services which form intangible components of the operations. These services are knowledge-based and have high levels of customer interac‐ tions. The services accompany health commodities which are tangible products; the logistics and supply of which are major functions of operations management. The objectives are to describe the scope of operations management in health care, identify the need for technolo‐ gy and automation in pharmacy operations, highlight some types of technology employed in pharmacy operations, identify human resource issues of operations and technology in the pharmacy, highlight process workflow of prescription filling in a pharmacy, and describe process improvement approaches to optimise patient flow in a pharmacy. The recently introduced Europe-wide mandatory environmental data reporting regulation (known as E-PRTR) has not yet been reviewed nor evaluated to increase its value to re‐ searchers as well as policymakers. The purpose of chapter five is to explore this relatively new database, identify limitations and inconsistencies, and recommend areas of improve‐ ment. The chapter also introduces a new methodology to aggregate and normalize facility- level environmental data obtained from the E-PRTR. Normalized values are used to construct an environmental performance indicator which captures a facility’s abatement efforts through waste recycling and pollutant treatment techniques. The indicator can easi‐ ly be used to compare industrial facilities across time, industry and country. Project and technology managers need to make important decisions concerning the technol‐ ogies that will be used in their projects and organizations. However, evaluating the impacts of introducing a new technology is not an easy task. In software development, projects are integrated by several interrelated elements forming a system riddled with complex rela‐ tions. This makes it difficult to perceive how the system will perform if an improvement action, such as introducing a new technology, is implemented. With system dynamics it is possible to analyze the impacts of introducing a technology in a software development sys‐ tem. System dynamics is one of the techniques used to perform a technology assessment. Chapter six explores system dynamics in the field of software development to assess the adoption of technologies. A case study of a system dynamic model used to analyze the im‐ pact of implementing an application framework technology is presented. It is important during a project life cycle to compare the project´s status against the planned parameters. This allows a project manager to evaluate the project’s progress and take correc‐ tive actions as needed. An efficient controlling requires an integrated supervision of project performance, scheduling and costs. The Earned Value Management (EVM) is a method that integrates these three issues in a quantifiable form, and therefore its use has been extended both in private companies and in public companies, such as in the U.S. Department of De‐ fense which originally formulated the method. Much research has been carried out to im‐ prove the EVM in the last ten years and is outlined in this chapter. Among them is Performance Based Earned Value (PBEV) which helps to consider specifically the technical performance in the EVM. PBEV is a suitable system to control engineering projects where Preface IX the technical targets are a priority like in engine development projects for energy generation. Chapter seven presents two real life engine engineering projects which have been analyzed with PBEV and resulted in significant savings. Chapter eight describes a synthesis of investing in hedge funds or an explanation of the complexities of investing in hedge funds. It presents a general overview of the field of alter‐ native investments and its complexities of hedge funds. It assesses the challenges of analy‐ sing and selecting hedge funds. Alternative investment vehicles have taken an important role not only in the diversification of portfolios but also as standalone investments. Captur‐ ing the entire risk dimensions implied in hedge fund investment strategies is paramount in understanding alternative investments. A lot of attention has been given to the hedge fund industry as a paradigm of alternative investments. The final chapter describes the use of linear optimization in engineering management. The concepts of linear programming in an applied format are presented. Several formulations in areas of engineering management are employed together illustrating both graphical simplex and the simplex algorithm. Different examples of solving problems with software are shown, concluding with data envelopment analysis as a linear program. Fausto Pedro García Márquez Universidad Castilla-La Mancha, Spain Benjamin Lev Drexel University, USA