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Engineering Economics & ManagementDecision Making processIdentifying a Problem:Identifying Decision Criteria:Allocating Weights to the Criteria:Developing Alternatives:Analyzing Alternatives:Selecting an Alternative:Implementing the Alternative:Evaluating decision Effectiveness:

Identifying a problemEvery Decision start with a problem. Swedish college students need new computer for lab because their old ones are not perfect working and increase number of computer. Now we have a problem purchase new computer.Identifying Decision CriteriaFirst of identified a problem , he or she must identifying the criteria that are important or relevant to resolving the problem. So administration decides after careful consideration that Memory and Storage Capabilities Battery , Warranty, display Quality. Allocating Weights to the CriteriaMemory Storage 10Battery Life 8Carrying Weights 6Warranty 4Display Quality 3Allocating weights To The Criteria

Memory storage B/L W Display/QHP 10 3 8 5Dell 10 7 6 10Apple 8 7 8 7Developing AlternativesThe forth step in the decision-making process requires the decision maker to list alternatives that could resolve the problem.Analyzing AlternativesMemory storage B/L W Display /Q TotalHP 100 24 32 15 171

Apple 80 56 32 21 189

Dell 100 56 24 21 201

Selecting AlternativesThe six step in the decision-making process is choosing the best alternative or the one that generated the highest total. So best alternatives is Dell. So administration decided to purchase dell computer. Implementing the AlternativeIn the decision making process, after assessment all feature select best alternative is Dell computer. So purchase the Dell computer. Evaluating Decision EffectivenessThe Last step in the decision-making process involves evaluating the outcome or result of the decision to see whether the problem was resolved. If the evaluation shows that problem still exists, then administration needs to assess what went wrong.Strategic Management processIdentifying the Organization's Current Mission, Goals, and Strategies:Doing an External AnalysisDoing an internal AnalysisFormulating StrategiesImplementing StrategiesEvaluating ResultsIdentifying the organization current Mission, Goals, and StrategiesEvery organization needs a mission a statement of its purpose. Defining the mission forces managers to identify what its business to do. In this step organization set the current mission, goals and strategies.Doing an External AnalysisAnalyzing the external environment including all competitors, distributers, buyers, suppliers ,Location , demographic, Political/Legal, social, technology and Global Components.Doing an Internal AnalysisThe internal analysis, which provides important information about an organizations specific resources and capabilities. An Organizations resources are its assets include financial, physical, human and intangible that it use to develop, manufacture, and deliver product to customer.Formulating StrategiesAs managers formulate strategies They should consider the realities of the external environment and their available resources and capabilities in order to design strategies that will help an organization achieve its goals.Implementing StrategiesOnce strategies is formulated and the must be implemented. No Matter how effectively an organization has planned its strategies, performance will suffer if the strategies are not implement properly.Evaluating ResultsThe final step in the strategic management process is evaluating results. How effective have the strategies been at helping the organization reach its goals. After assessment management understand strategy is good or bad.Components of a Mission StatementCustomerMarketsConcern for survival, growth, and profitability: financial StabilityPhilosophy: What are the firm basic belief, values.

Product or servicesTechnology

Components of a Mission StatementSelf Concept: Major competitive advantage and core competencies.Concern for Employees: Are employee a valuable asset of the firm.

Types of OrganizationSole Proprietorship organizationPartnership OrganizationJoint Stock OrganizationPrivate Limited CompanyPublic Limited Company

Sole Proprietorship OrganizationA single person own it. In this type of organization the individual owner supplies the capital needed to run the organization. He alone enjoys the profit and is responsible to pay all the losses or Liabilities. Advantages/DisadvantagesAvailability of capital for investment is limitedThe proprietor acts strictly to his decisions

Disadvantages:Limited amount of capital can be invested.In case of loss, investor has to bear it alone.

PartnershipA partnership organization is one, which is formed by a group of persons with mutual understanding and confidence. The maximum number of shareholders is 20.Advantages:-Liabilities are dividedCapital is much greater than in the sole proprietorship organization. Disadvantages:-The major disadvantage lies in the situation when the partners do not trust each other.

Joint Stock CompaniesThese companies have limited liabilities. In this system the capital is contributed by a large number of persons. It is voluntary association of individuals for profit, have a capital share divided into transferable shares of different values. Each share has equal value. The person who purchase the share is called shareholders. The managing body known as Board of Directors is elected by these shareholders. Advantages / DisadvantagesAdvantages:Liabilities are LimitedGreat potentials of expansionGood managing capabilities can be exercisedDisadvantages:Large numbers of legal formalities are to be fulfilledDecision Taken is very difficult.

Private Limited CompaniesTwo or more persons can form this type of company. The maximum number of membership is 50. The government does not interfere the working of the system.Public Limited CompanyThe public limited company authorized by after the approval of Governments. Check and balance .The public limited company is subjected to grater control and supervision of the Government, which is necessary protect the interest of the people's. The shares of these companies are offered in the stock exchange.Types Of ShareThere are two types of shares (a) Common Shares (b)Preferred SharesCommon stocksCommon Stocks: As the name suggests, this type of stocks are quite common. It is the basic stock a corporation issues. Buying a common stock will give you an advantage of owning the equity in the company. It has varied dividends/ or returns. Not only this, as one of the shareholders in the company, you have your say in voting for the board members as well.

Preferred StocksPreferred Stocks: These stocks are usually between Common stock and bond. These stocks represent some degree of ownership in a company but usually dont come with the same voting rights. Each share of preferred stock is normally paid a guaranteed dividend which receives first priority over common stock holders in the event of liquidation. Preferred shareholders always receive their dividends first and, in the event the company goes bankrupt, preferred shareholders are paid off before the common stockholders.Preferred Stocks TypesThe Preferred Stocks are further sub-divided into 4 categories:Cumulative Preferred Stocks: This is more of a savings stock. In the case of cumulative stocks, if for some reason the dividends cannot be paid out one year, it is added to the dividends the following year and paid out in one larger amount.Non-cumulative Preferred Stocks: In this case, the dividends skipped one year are not added to the following years dividends.Callable/ Participating Preferred Stocks: These shares may receive higher than normal dividend payments if the company turns a larger than expected profit.Convertible Preferred Stocks: This type gives you (stockholder) the right to convert your stocks into a fixed number of common stocks irrespective of market price.Joint ventureAn association of two or more individuals or companies engaged in a business enterprise for profit without actual partnership or incorporation; also called a joint adventure.Stock ExchangeDefinition:Organizedand regulatedfinancialmarketwheresecurities(bonds,notes,shares) areboughtand sold atpricesgoverned by theforcesofdemand and supply. Stockexchangesbasically serve as (1)primary marketswherecorporations,governments,municipalities, and other incorporated bodies can raisecapitalbychannelingsavingsof theinvestorsinto productive ventures; and (2)secondary marketswhere investors canselltheir securities to other investors forcash. stock exchangealllistedandtradingparties.Tradesin the older exchanges are conducted on thefloor(called the 'trading floor') of the exchange itself, by shoutingordersandinstructions(calledopenoutcry system). On modern exchanges, trades are conducted overtelephoneoronline. Almost all exchanges are 'auctionexchanges' where buyersentercompetitivebidsandsellersenter competitive orders through a tradingday. Some European exchanges, however, use 'periodic auction'methodin which round-robin calls are made once a trading day. The first stock exchange was opened in Amsterdam in 1602; the three largest exchanges in the world are (in the descending order)New York Stock Exchange (NYSE),London Stock Exchange (LSE), and theTokyo Stock Exchange (TSE). Called alsostock market.Theory of ProductionProduction theoryis the study of production, or the economic process of converting inputs into outputs.Productionusesresourcesto create agoodorservicethat is suitable for use,gift-giving in agift economy, orexchangein amarket economy. This can includemanufacturing, storing,shipping, andpackaging. Some economists define production broadly as all economic activity other thanconsumption.Theory of ProductionThey see every commercial activity other than the final purchase as some form of production.Production is a process, and as such it occurs through time and space. Because it is aflow concept, production is measured as a rate of output per period of time. There are three aspects to production processes.Factor Of productionDefinitionSave to FavoritesSee ExamplesResourcesrequiredfor generation of productorservices, generallyclassifiedinto fourmajorgroups: (1)Land(includingallnatural resources), (2)Labor(including allhuman resources), (3)Capital(including all man-made resources), and (4)Enterprise(whichbringsall thepreviousresources together forproduction).Thesefactorsare classified also asmanagement,machines,materials, andmoney(this, the 4 Ms), or other suchnomenclature. More recently,knowledgehas come to be recognized as distinct from labor, and as afactor of productioninitsownright.

LandLand including all natural resources. Land is a natural & primary factor of production. Land is not created by mankind but it is a gift of nature. So it is called as natural factor of production. Land mean surface of earth.On the surface (Agricultural land)Below the Surface (Mineral, resources, rocks, ground water etc)Above the surface (climate, rain , space monitoring etc)Characteristics and Feature of LandLand is free gift of nature: Land is free gift of nature to mankind. It is not a man-mad factor but it is a natural factor.Land is primary factor of production:Land has perfectly inelastic supply: Fixed in quantity. Neithe it can be increased nor decreased. Simply, you can not change size of the earth. But from individual point of view, its supply is relatively elastic. Characteristics and Feature of LandLand has site of Location Value.Land earns rent a reward for its useLand has no social cost :- Land is no created by society by putting any efforts and paying and price.LabourWhat is Labour and Labourer ? Meaning Usually, the term 'Labour' is used for 'worker'. But, technically, it is not correct. Labour and Labourer (worker) are two different things.

Labour is an ability to work. Labour is a broad concept because it includes both physical and mental labour (as per above picture). Labour is a primary or human factor of production. It indicates human resource.Labourer is a person who owns labour. So labourer means worker. It is a person engaged in some work.

Characteristics and Feature of Labour DepreciationDepreciation is computed at the end of anaccounting period(usually a year),usingamethodbest suited to the particular asset. When applied tointangible assets, the preferred term isamortization.2.Commerce: The decline in themarket valueof an asset.3.Economics: The decrease in the economic potential of an asset over its productive oruseful life.4.Foreign exchange: The reduction in theexchange valueof acurrency, either by agovernmentor due to weakening of the underlyingeconomyin afloating exchange rate

Depreciationdepreciationnoun1.decreaseinvalueduetowear,decay,declineinprice ,etc.2.suchadecreaseasallowedincomputingthevalueofproperty fortaxpurposes.3.adecreaseinthepurchasingorexchangevalueofmoney.4.aloweringinestimation.

BankAnestablishmentauthorized by agovernmentto acceptdeposits,payinterest, clearchecks, makeloans,actas anintermediaryinfinancial transactions, andprovideotherfinancial servicesto itscustomers.BankDefinition of 'Bank'A financial institution licensed as a receiver of deposits. There are two types of banks: commercial/retail banks and investment banks. In most countries, banks are regulated by the national government or central bank.

BankingA company's financial dealings with an institution that provides business loans, credit, savings and checking accounts specifically for companies and not for individuals. Business banking is also known as commercial banking and occurs when a bank, or division of a bank, only deals with businesses. A bank that deals mainly with individuals is generally called a retail bank, while a bank that deals with capital markets is known as an investment bank.

Commercial Bank Definition of 'Commercial Bank'A financial institution that provides services, such as accepting deposits, giving business loans and auto loans, mortgage lending, and basic investment products like savings accounts and certificates of deposit. The traditional commercial bank is a brick and mortar institution with tellers, safe deposit boxes, vaults and ATMs. However, some commercial banks do not have any physical branches and require consumers to complete all transactions by phone or Internet. In exchange, they generally pay higher interest rates on investments and deposits, and charge lower fees

Characteristics / Features of a Bank

Characteristics / Features of a Bank

1. Dealing in Money

Bank is a financial institution which deals with other people's money i.e. money given by depositors.

2. Individual / Firm / Company

A bank may be a person, firm or a company. A banking company means a company which is in the business of banking.

3. Acceptance of Deposit

A bank accepts money from the people in the form of deposits which are usually repayable on demand or after the expiry of a fixed period. It gives safety to the deposits of its customers. It also acts as a custodian of funds of its customers.4. Giving Advances

A bank lends out money in the form of loans to those who require it for different purposes.

Characteristics / Features of a Bank

5. Payment and Withdrawal

A bank provides easy payment and withdrawal facility to its customers in the form of cheques and drafts, It also brings bank money in circulation. This money is in the form of cheques, drafts, etc.

6. Agency and Utility Services

A bank provides various banking facilities to its customers. They include general utility services and agency services.

7. Profit and Service Orientation

A bank is a profit seeking institution having service oriented approach.

8. Ever increasing Functions

Banking is an evolutionary concept. There is continuous expansion and diversification as regards the functions, services and activities of a

productionThe processes andmethodsused to transformtangibleinputs (raw materials,semi-finished goods,subassemblies) andintangibleinputs (ideas,information,knowledge)intogoodsorservices.Resourcesare used inthisprocesstocreateanoutputthat is suitable for use or hasexchange value.

Six Sigma Six Sigma is a management philosophy developed by Motorola that emphasizes setting extremely high objectives, collecting data, and analyzing results to a fine degree as a way to reduce defects in products and services. The Greek lettersigmais sometimes used to denote variation from a standard. The philosophy behind Six Sigma is that if you measure how many defects are in a process, you can figure out how to systematically eliminate them and get as close to perfection as possible. In order for a company to achieve Six Sigma, it cannot produce more than 3.4 defects per million opportunities, where an opportunity is defined as a chance for nonconformance.Break- Even AnalysisAn analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even analysis calculates what is known as a margin of safety, the amount that revenues exceed the break-even point. This is the amount that revenues can fall while still staying above the break-even point.Break- Even AnalysisAcalculationof theapproximatesales volumerequired to justcovercosts, below which production would be unprofitable and above which it would beprofitable. Break-even analysis focuses on the relationship betweenfixed cost,variable cost, andprofit.

Why Calculate the Breakeven Point?

The breakeven point is an important reference point that enters into planning and carrying out business activities. By clearly understanding the level of sales needed to cover all costs, you know how many units you must produce, in the case of a manufacturing business, or how many units you need to purchase and sell, in the case of a merchandising business. In a services business, the breakeven point indicates the number of billable hours you must work in order to cover your cost

The CalculationThe CalculationAt the breakeven point: revenue = fixed costs + variable costs.Therefore, in order to calculate the breakeven point, you need to determine all the fixed and variable costs involved in the operation. Fixed costs are those that are invariable, and that must be paid regardless of the level of sales. Variable costs are incurred in proportion to the level of sales. monetary valueDefinition[Save to Favorites][See Examples]Thevalueorworththat aproductorservicewouldbringto someone ifsold.

Monetary Valuemonetary value- the property of having material worth (often indicated by the amount of money something would bring if sold); "the fluctuating monetary value of gold and silver"; "he puts a high price on his services"; "he couldn't calculate the cost of the collection"monetary value

Theamountofvaluean item or aservicehas in relation to if it were sold forcashto a willingbuyer.

Capital BudgetingCapital budgeting(or investment appraisal) is the planning process used to determine whether an organization's long terminvestments such as new machinery, replacement machinery, new plants, new products, and research development projects are worth pursuing. It is budget for majorcapital, or investment, expenditures.[1]Capital BudgetingA capital budget determines funding for assets that produce income, and you will have to make decisions about which assets to buy based on a clear set of objectives. Without these objectives, you have no way of knowing how much money you need to budget for capital expenditures. Your capital budget objectives work with your overall business plans to provide a strategic road map for your company's future.

Depreciation DefinationA noncashexpensethatreducesthevalueof an asset as aresultofwear and tear, age, orobsolescence. Most assetslosetheir value over time (in other words, theydepreciate), and must be replaced once the end of theiruseful lifeis reached. There are severalaccounting methodsthat are used in order towrite offanasset'sdepreciationcostover theperiodof its useful life. Because it is anon-cash expense, depreciationlowersthecompany'sreportedearningswhile increasingfree cash flow.2. Adeclinein the value of a given currency incomparisonwith othercurrencies. For instance, if the U.S. dollar depreciatesagainsttheEuro,buyerswould have to pay moredollarsin order to obtain the originalamountof euros before depreciation occurred.

Straight-line depreciation

Straight-line depreciation is the simplest and most often used technique, in which the company estimates the "salvage value" of the asset after the length of time over which it is depreciated, and assumes the drop in the asset's value is in equal, constant yearly increments over that amount of time. The salvage value is an estimate of the value of the asset at the time it will be sold or disposed of; it may be zeroActivity depreciationActivity depreciationActivity depreciation methods are not based on time, but on a level of activity. This could be miles driven for a vehicle, or a cycle count for a machine. When the asset is acquired, we estimate its life in terms of this level of activity. Assume the vehicle above is estimated to go 50,000 miles in its lifetime. We calculate a per-mile depreciation rate: ($17,000 cost - $2,000 salvage) / 50,000 miles = $0.30 per mile. Each year, we then calculate the depreciation expense by multiplying the rate by the actual activity level.

corporation definitionFirm that meets certainlegalrequirementsto be recognized as having a legal existence, as anentityseparate and distinct from itsowners. Corporations are owned by theirstockholders(shareholders) who share inprofitsand losses generated through the firm'soperations, and have three distinctcharacteristics(1) Legal existence: a firm can (like a person)buy,sell, own, enter into acontract, and sue otherpersonsand firms, and be sued by them. It can do good and be rewarded, and can commit offence and be punished.

corporation definition(2)Limited liability: a firm and its owners arelimitedin theirliabilityto thecreditorsand otherobligorsonly up to theresourcesof the firm, unless the owners give personal-guaranties. (3) Continuity of existence: a firm can live beyond the life spans andcapacityof its owners, because itsownershipcan be transferred through asaleor gift ofshares.2. Municipalauthorityof a town or city.3. A very large, usually diversified, firm.

Corporationa:a group of merchants or traders united in a trade guildb:the municipal authorities of a town or city2:a body formed and authorized by law to act as a single person although constituted by one or more persons and legally endowed with various rights and duties including the capacity of succession3:an association of employers and employees in a basic industry or of members of a profession organized as an organ of political representation in acorporativestate4:potbelly1Seecorporationdefined for English-language learnersSeecorporationdefined for kids

Labour ProblemsLabour Problemswar-time industries slowing downWomen pressured to stay at homeso returning soldiers could have jobsJobs were hard to findMany veterans of the war flooded the job market.Some industries had become very wealthy becauseof the warNow that the demand for production haddecreased so did the need for people to work

2InflationRising costs of goods and services and the costof livingDuring the war prices had increased greatly.Wages had also gone up but had not kept pace withrising prices.Between 1914 and 1919 the cost of living haddoubled.

Labour Problems

Unions and StrikesIn 1919Low employmentNo unemployment insurance (EI)No workers compensationNo pensionsMany poor working conditionsLaws favoured the employers

Labour ProblemsThousands joined unions to fight for workersrightsMany employers did not take these unionsseriouslyIn many cases the only way for workers to maketheir demands heard was to go on strike.Three easy ways out for employers.1) injunction2) strikebreakers (scabs)3) strikers would be replaced

and lose their jobs

What is Industrial RelationsIndustrial relations is themanagement of therelationship betweenemployers and employees

Industrial ActionHas a long history, with the first recorded strike taking place in ancient Egypt

Industrial action is now a common sight in most democratic countries

Human Resources (HR)Employees are commonly referred to as human resources

HR departments manage industrial relations in many firms

Trade UnionsUnions support employee rights and help them negotiate for better pay and working conditions through collective bargaining.

Employer AssociationsSuch organisations support employers in negotiations, lobby governments on their behalf and provide training on issues such as health and safety

Engineering EnvironmentAn engineering economy study is accomplished using a structured procedure and mathematical modeling techniques. The economics results are then used in a decision situation that involves two or more alternative and normally includes other engineering knowledge and input. Engineering EconomyFundamentally, engineering economy involves formulating , estimating, and evaluating the economics outcomes when alternatives to accomplish a defined purpose are available. Another way to define purpose are available. Another way to define engineering economy is as a collection of mathematical techniques that simplify economics comparison. Features / Characteristics of Labour Labour is a perishable factor

Labour can not be stored. Once the labour is lost, it can not be made up. Unemployed workers can not store their labour for future employment.1. Labour is inseparable from labourer

Labour can not be separated from labourer. Worker sells their service and doesn't sell themselves.

Features / Characteristics of LabourLabour is a heterogeneous factorNo two persons possess the same quality of labour. Skills and efficiency differs from person to person. So, some workers are more efficient than others in the same job.Labour is a human capitalSociety makes investment in labour in the forms of education, health, training, etc. This improves efficiency of labour. So, it is a human capital.

Features / Characteristics of LabourLabour has a derived demandLike other factors of production, labour has a derived / indirect demand. It contributes to production process.Labour is an active factor of production

Other factors like land, capital are passive, but labour is an active factor of production. Being a human being, this factor has its own feelings, likes and dislikes, thinking power, etc.