This question is all about job fit, and telling the interviewer what you like and don't like about certain things helps them determine if you are a good fit for the job and the company. Your answer allows them to gauge if you are interested and passionate about the position, and asking you about your favorite/least favorite projects is an excellent way to get that information out of you without overtly asking.

A good answer could concern change announcements you've handled. For the most part, people don't usually like change, and industrial engineers are change agents.
Here, you can say, 'As part of our 'Changement team,' I had to break the news to a department that their whole physical layout and way of working would be changing. Here are the steps I took for delivering that tough message:

1. Be Honest
2. Be clear in communication
3. Give space and time for responses
4. Allow people involved to express emotion
5. Share your own feelings

To say the reception wasn't universally accepted, was an understatement, though. Luckily, everything transitioned to smooth sailing shortly afterward. At the wrap-up, the department largely credited the way the message was delivered helped with their acceptance of everything and said that it made the transition a lot easier. They also thought the new floor layout, workstations, and tech made things easier. Win-Win!'