ENGINEERING ECONOMICS

Slides:



Advertisements
Similar presentations
4 TH TERM BATCH: 2010 LECTURE # 1 & 2 5/8/2011 Lec#1 & 21.
Advertisements

CISB444 - Strategic Information Systems Planning
1 Engineering Economic Decisions Lecture No.1 Professor C. S. Park Fundamentals of Engineering Economics Copyright © 2005.
Learning Goals Define marketing and the marketing process.
ALI SALMAN0 LECTURE - 02 ASST PROF. ENGR ALI SALMAN ceme.nust.edu.pk DEPARTMENT OF ENGINEERING MANAGEMENT COLLEGE OF E & ME, NUST DEPARTMENT.
Fundamental Economic Concepts The Problem – Human wants are unlimited but resources are not, therefore scarcity exists. Economics is the study of how people.
ECONOMICS IS SCIENCE OF CHOICE.  ECONOMIC AGENTS HAS TO MAKE THE CHOICE : (A) FIRM - PROFIT MAXIMISATION (B) HOUSEHOLD - SATISFACTION MAXIMISATION PROBLEM.
Chapter 1 What is Economics?.
The Balanced Score Card
SE 361 Lecture-03. Science is defined as: a department of systematized knowledge as an object of study; knowledge or a system of knowledge covering.
Amity School of Business Economics for Managers: Gaurav Shreekant 1.
Managerial Economics. What is Managerial Economics???  It is the integration of economic principles with business management practices  It is essentially.
ALI SALMAN1 LECTURE - 05 ASST PROF. ENGR ALI SALMAN ceme.nust.edu.pk DEPARTMENT OF ENGINEERING MANAGEMENT COLLEGE OF E & ME, NUST DEPARTMENT.
Economics 12 Chapter 1 Economics 12 Chapter 1. The examination of the behavior of entire economies: A) Economics B) Microeconomics C) Macroeconomics D)
E 101 Fundamentals of Engineering Abdulkadir Erden, Prof. Dr.
© 2011 Cengage South-Western. © 2007 Thomson South-Western Thinking Like an Economist Every field of study has its own terminology  Mathematics integrals.
Copyright © 2011 by Professor D.J. LEE, Kyung Hee University. All rights reserved. Chapter 1 Introduction.
1 Marketing Management Chapter 1. 2 What is Marketing? Marketing is the delivery of customer satisfaction at a profit.
Engineering Economic Analysis CHAPTER 1 1. What is Engineering Economy? Engineering economy involves the financial and economic evaluation of projects.
Chapter 1 marketing is all around us Section 1.1
Strategic Formation Process
Economics Ms. Curran August 17.
Chapter 1: What is Economics? Section 1
Strategic Information Systems Planning
Management Contemporary Gareth R. Jones Jennifer M. George
CH1 :The Scope and Method of Economics Asst. Prof. Dr. Serdar AYAN
Developing the Marketing Channel
Science, Technology, Technic
Thinking Like an Economist
The Economic Way of Thinking
The Management Process
INTRODUCTION TO ENGINEERING MANAGEMENT
DP Year 1- Economics.
Thinking Like an Economist
Thinking Like an Economist
© 2007 Thomson South-Western
CH1 :The Scope and Method of Economics Asst. Prof. Dr. Serdar AYAN
Asst. Prof. Dr. Serdar AYAN
Chapter 1 What Is Economics?
MGT 498 Education for Service-- snaptutorial.com.
MGT 498 TUTORIAL Education for Service--mgt498tutorial.com.
MGT 498 Teaching Effectively-- snaptutorial.com
MGT 498 EDU Education for Service-- mgt498edu.com.
ENGINEERING ECONOMIC DECISION CHAPTER 1
Engineering Design CIVE 4312 Hanadi Rifai.
Information Systems in Global Business Today
Thinking Like an Economist
Thinking Like an Economist
Thinking Like an Economist
ENGINEERING ECONOMICS
Thinking Like an Economist
Economics for Engineers Economic Decision Making
© 2007 Thomson South-Western
Concepts and Objectives of Cost Accounting
Thinking Like an Economist
Thinking Like an Economist
Thinking Like an Economist
Thinking Like an Economist
ENGINEERING ECONOMICS
The Basic Problem in Economics
Of Financial Management Traditional View Modern View Objective of Financial Management Scope of Financial Management Relationship of Finance with other.
Thinking Like an Economist
© 2007 Thomson South-Western
CH1 :The Scope and Method of Economics Asst. Prof. Dr. Serdar AYAN
What is Economics?.
The Basic Problem in Economics
© 2007 Thomson South-Western
Thinking Like an Economist
Introduction to STEM.
Presentation transcript:

ENGINEERING ECONOMICS LECTURE - 01 ASST PROF. ENGR ALI SALMAN alisalman@ ceme.nust.edu.pk DEPARTMENT OF ENGINEERING MANAGEMENT COLLEGE OF E & ME, NUST ALI SALMAN

Engineering Engineering is the profession in which a knowledge of the mathematical and natural sciences gained by study, experience and practice is applied with judgment to develop ways to utilize economically the materials and forces of nature for the benefit of mankind. This definition emphasizes the applied nature and economic aspects of engineering. Natural Sciences The sciences involved in the study of the physical world and its phenomena (developments) © Ali Salman

Economics Definitions The branch of social science that deals with the production, distribution and consumption of goods and services. The study of how limited resources are used to satisfy unlimited human wants. The study of how individuals and societies choose to use limited resources that nature and previous generations have provided. © Ali Salman

1. The system of production, distribution and consumption Social Science The branch of science that studies society and the relationships of individual within a society. Economy 1. The system of production, distribution and consumption 2. The efficient use of resources System A group of independent but interrelated elements comprising a unified whole. © Ali Salman

Engineering Economics Engineering Economics is a subset of economics for application to engineering. Engineers seek solutions to problems, and the economic viability of each potential solution is normally considered along with the technical aspects. Viability Capable of being done in a practical and useful way © Ali Salman

Why Study Engineering Economics? There is a traditional perception stating that engineers deal with technical part of projects and financial matters are left to economists and financial analysts. Nowadays, the situation is different. Engineers are not limited to their conventional (core) activities. Their role is expanding. They are actively involved in strategic and operational decision making processes of their companies. © Ali Salman

On top of that many engineers are expected to establish their own firms. In this scenario, they need to acquire broad knowledge to run their companies effectively and efficiently. Therefore, learning the concepts, techniques and methods of engineering economics can help them to analyze initiated projects from the economic point of view. In reality, any engineering project must be not only physically realizable but also economically affordable. © Ali Salman

However, there is not much of a market for thousand dollar tricycle. For example, a child tricycle could be built with an aluminum frame or a composite frame. Some may argue that the composite frame will be stronger and lighter, it is a better choice. However, there is not much of a market for thousand dollar tricycle. This scenario reinforces the idea that the economic factors of a design weigh heavily in the design process, and that engineering economics is an integral part of that process, regardless of the engineering discipline. © Ali Salman

Role in capital investment decisions Engineers play a major role in capital investment decisions based on their analysis, synthesis, and design efforts. The factors considered in making the decision are a combination of economic and non economic factors. Additional factors may be intangible, such as convenience, goodwill, friendship, and others. Fundamentally, engineering economics involves formulating, estimating, and evaluating the economic outcomes when alternatives to accomplish a defined purpose are available. © Ali Salman

Examples of Capital Investment Decisions for Engineering Activities: • Should a new bonding technique be incorporated into the manufacture of automobile brake pads? • If a computer-vision system replaces the human inspector in performing quality tests on an automobile welding line, will operating costs decrease over a time horizon of 5 years? • Is it an economically wise decision to upgrade the composite material production center of an airplane factory in order to reduce costs by 20%? © Ali Salman

• Should the current roadway through the city be expanded? • Should a highway bypass be constructed around a city of 25,000 people? • Should the current roadway through the city be expanded? • Will we make the required rate of return if we install the newly offered technology onto our medical laser manufacturing line? © Ali Salman

BI Enviromental Nature of Engineering Physical Environment : Engineers produce products and services depending on physical laws (e.g. Newton's laws). Economic Environment : Much less of a quantitative nature is known about economic environments -- this is due to economics being involved with the actions of people, and the structure of organizations. © Ali Salman

Satisfaction of the physical and economic environments is linked through production and construction processes. Engineers need to manipulate systems to achieve a balance in attributes in both the physical and economic environments, and within the bounds of limited resources. © Ali Salman

Figure 1.1 : Physical and Economic Components of an Engineering System Figure 1.1 shows how engineering is composed of physical and economic components. © Ali Salman

Physical and Economic Efficiency system output Physical (efficiency ) = ------------------- system input system worth Economic (efficiency) = ----------------- system cost © Ali Salman

Discussion