chapter_1_introduction to eng economy.ppt

Copyright ©2012 by Pearson Education, Inc.Upper Saddle River, New Jersey 07458

All rights reserved.

Engineering Economy, Fifteenth EditionBy William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling

Engineering EconomyEngineering Economy

Sullivian W.G, Wicks E.M and Koelling C.P (2012)

Mohamad Sirin, R (2007)

Blank, L.T, A.Tarquin (2012)




1-2

Chapter 1:Chapter 1: Introduction to

Engineering Economy




Engineering economy…

involves the systematic evaluation of the economic merits of proposed solutions to engineering problems.




1-4

Why Engineering Economy is Important to Engineers

Engineers design and create Designing involves economic decisions Engineers must be able to incorporate economic

analysis into their creative efforts Often engineers must select and implement from

multiple alternatives Understanding and applying time value of money,

economic equivalence, and cost estimation are vital for engineers

A proper economic analysis for selection and execution is a fundamental task of engineering




Engineering economic analysis can play a role in many types of situations.

• Choosing the best design for a high-efficiency gas furnace.

• Selecting the most suitable robot for a welding operation on an automotive assembly line.

• Making a recommendation about whether jet airplanes for an overnight delivery service should be purchased or leased.

• Determining the optimal staffing plan for a computer help desk.




There are seven fundamental principles of engineering economy.

• Develop the alternatives

• Focus on the differences

• Use a consistent viewpoint

• Use a common unit of measure

• Consider all relevant criteria

• Make uncertainty explicit

• Revisit your decisions




1-7

Engineering Economy• Engineering Economy involves

– Formulating– Estimating, and – Evaluating

expected economic outcomes of alternatives designed to accomplish a defined purpose

• Easy-to-use math techniques simplify the evaluation

• Estimates of economic outcomes can be deterministic or stochastic in nature




Electronic spreadsheets are a powerful addition to the analysis

arsenal.• Most engineering economy problems can be

formulated and solved using a spreadsheet.

• Large problems can be quickly solved.

• Proper formulation allows key parameters to be changed.

• Graphical output is easily generated.




1-9

General Steps for Decision Making Processes

1. Understand the problem – define objectives

2. Collect relevant information

3. Define the set of feasible alternatives

4. Identify the criteria for decision making

5. Evaluate the alternatives and apply sensitivity analysis

6. Select the “best” alternative

7. Implement the alternative and monitor results




1-10

Steps in an Engineering Economy Study




Quiz 1

• Find one (1) problem issues related on construction activities.

• Solve the problem follows the decision making process.

Documents

chapter_1_introduction to eng economy.ppt