1. NE 364 Engineering Economy
Lecture 1
Introduction
NE 364 Engineering Economy

2. Course Objectives
Introduction to the basic cost concepts and economic environment.
Familiarization with the principles of money- time relations and basics of investments opportunities assessment and evaluation.
NE 364 Engineering Economy

3. Course Info www.halafarouk.info Lecturers: Textbook:
Dr. Salah Mosaad
Dr. Hala Farouk Office: 418
Dr. Mootaz Ghazy Office: 323
Textbook:
William G. Sullivan, E.M. Wicks, J.T. Luxhoj,
Engineering Economy, the 15th Edition, 2010
Lecture notes & Assignments:
NE 364 Engineering Economy

4. Introduction
NE 364 Engineering Economy

5. What is Engineering Economy?
Engineering Economy involves the systematic evaluation of the economic merits of proposed solutions to engineering problems.
NE 364 Engineering Economy

6. Where can Engineering Economy provide answers?
Choosing the best design for a high efficiency gas furnace ? ?
NE 364 Engineering Economy

7. Where can Engineering Economy provide answers?
Selecting the most suitable robot for a welding operation on an automotive assembly line.
NE 364 Engineering Economy

8. Where can Engineering Economy provide answers?
Ex 2-11: Total Cost in material selection
Material:
1112 screw machine steel?
Or Brass screw stock?
Economic selection among materials cannot be based solely on the costs of materials. Change in material may affect the design, processing cost, and shipping costs.
NE 364 Engineering Economy

9. Where can Engineering Economy provide answers?
Ex 2-13: selecting alternative machine speeds
Speed??
Increasing machine speed higher output rate
BUT different machine downtime for maintenance.
NE 364 Engineering Economy

10. Where can Engineering Economy provide answers?
Ex 2-16: Trade-offs in energy efficiency studies
Energy efficiency affects the annual expense of operating an electrical device such as pump or motor.
More energy-efficient device extra capital investment
BUT  annual savings in electrical power expenses
NE 364 Engineering Economy

11. Principles of Engineering Economy
1. Develop the Alternatives
2. Focus on the Differences
3. Use a Consistent Viewpoint
4. Use a Common Unit of Measure
5. Consider All Relevant Criteria
6. Make Uncertainty Explicit
7. Revisit Your Decisions
NE 364 Engineering Economy

12. Engineering Economy & the Design Process
A sound engineering economic analysis procedure incorporates the basic seven principles .
The seven-step procedure is also used to assist decision making within the engineering design process.
NE 364 Engineering Economy

13. NE 364 Engineering Economy

14. Course Outline Introduction and Overview Cost Concepts
Time – money Relationships & Equivalence
Simple Interest
Compound Interest
Cash flow Diagrams (Single cash flows, annuity, uniform series, uniform gradient
Nominal & Effective interest rates
Applications of Money-Time Relationships (PW, AW, FW)
Comparing Alternatives
Benefit-to-Cost Analysis
Depreciation
NE 364 Engineering Economy

15. Course Material
NE 364 Engineering Economy

16. Grading System 7th Week Assessment 12th Week Assessment
Exam (20pt.) + Quizzes (10pt)
Exam on Tuesday 08 April, 2014 at 4 PM and the location will be announced at exam time.
Quizzes in the tutorial.
12th Week Assessment
Exam (15 pt.) + Quizzes (5 pt.)
Exam on Tuesday 13 May, 2014 at 4 PM and the location will be announced at exam time.
Continuous Assessment (10 pt.)
Participation in Lecture + Attendance
NE 364 Engineering Economy