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Transcript of 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)
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
1-2
Chapter 1:Chapter 1: Introduction to
Engineering Economy
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 economy…
involves the systematic evaluation of the economic merits of proposed solutions to engineering problems.
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
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
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 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.
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
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
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
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
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
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.
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
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
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
1-10
Steps in an Engineering Economy Study
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
Quiz 1
• Find one (1) problem issues related on construction activities.
• Solve the problem follows the decision making process.