Engineering Economy Sullivian W.G, Wicks E.M and Koelling C.P (2012) Mohamad Sirin, R (2007) Blank, L.T, A.Tarquin (2012)

Engineering Economy Chapter 1: Introduction to At this point: 1. Introduce yourself - your students are likely to want to know something about your qualifications and interests - overall, where you are coming from. 2. Have students introduce themselves. Ask why they are taking this class. If you are fortunate enough to have a Polaroid camera, take pictures of each student for later posting on a class “board” so both they and you get to know each other. 3. Discuss both choice of textbook and development of syllabus. 4. If you are expecting students to work in teams, at east introduce the choice of team members. If at all possible, have students participate in a team building or team study exercise. It works wonders. Most student have been told to work in teams in prior classes, but have never examined exactly what a team is and how it works. One hour spent in a team building/examination exercise saves many hours and avoids many problems later on.

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

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. 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

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.

General Steps for Decision Making Processes Understand the problem – define objectives Collect relevant information Define the set of feasible alternatives Identify the criteria for decision making Evaluate the alternatives and apply sensitivity analysis Select the “best” alternative Implement the alternative and monitor results

Steps in an Engineering Economy Study