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    Engineering Economics - An Introduction

    Uploaded by

    Owen Matare
    After studying Chapter 1, students should understand the need for engineering economy in engineering fields, its basic concepts, and its role in decision making. Engineering economy involves the systematic evaluation of the financial aspects of engineering problems and decisions. It uses principles like generating alternatives, considering only differences between alternatives, using the same perspectives and units of measurement, and including all relevant factors to aid decision making for issues like expanding production, replacing equipment, or closing down parts of operations.

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    Engineering Economics - An Introduction

    Uploaded by

    Owen Matare
    10 views9 pages
    After studying Chapter 1, students should understand the need for engineering economy in engineering fields, its basic concepts, and its role in decision making. Engineering economy involves the systematic evaluation of the financial aspects of engineering problems and decisions. It uses principles like generating alternatives, considering only differences between alternatives, using the same perspectives and units of measurement, and including all relevant factors to aid decision making for issues like expanding production, replacing equipment, or closing down parts of operations.

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    Engineering Economics_An Introduction

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    After studying Chapter 1, students should understand the need for engineering economy in engineering fields, its basic concepts, and its role in decision making. Engineering economy involves the systematic evaluation of the financial aspects of engineering problems and decisions. It uses principles like generating alternatives, considering only differences between alternatives, using the same perspectives and units of measurement, and including all relevant factors to aid decision making for issues like expanding production, replacing equipment, or closing down parts of operations.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    10 views9 pages

    Engineering Economics - An Introduction

    Uploaded by

    Owen Matare
    After studying Chapter 1, students should understand the need for engineering economy in engineering fields, its basic concepts, and its role in decision making. Engineering economy involves the systematic evaluation of the financial aspects of engineering problems and decisions. It uses principles like generating alternatives, considering only differences between alternatives, using the same perspectives and units of measurement, and including all relevant factors to aid decision making for issues like expanding production, replacing equipment, or closing down parts of operations.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 9

    After studying Chapter 1, the students

    should be able to :
     Understand the need for Engineering
    Economy in the field of engineering.
     Understand the basic Engineering Economy.
     Determine the role of Engineering Economy
    in decision making.

    1
     Development in science and technology
    causes changes for improvement.

     Knowledge in the field of engineering is


    very important, for example in designing a
    product or services.

     Decision making requires a systematic


    financial management.

    2
     Engineering and economic are closely
    related.

     Economic Engineering involves systematic


    evaluation in financial management in
    solving engineering problems.

    3
     The decision to choose between altenatives
    depend on the monetary factors

     The decision made is a balance between a


    combination of technical and economic
    aspect.

    4
    May be categorized into 3 programs:

     Program to increase profit; example, development of a new


    product, increasing new production capacity, and improving
    customer service centre.

     Cost control programs such as, defect reduction programs


    because each defect is costly, efficiency improvement, waste
    reduction and liabilities reduction programs.

     Facilities/ infrastructure programs such as construction of


    roads, bridges, playground etc. These programs are not profit
    oriented but rather focus on increasing convenience and
    comfort at minimum cost.

    5
    :Decision is classified into 3 :

     Expansion; production capacity, exploring new


    market for product or service.

     Replacement ; replacing existing method with the


    optimum and least costly method, equipment,
    process or location.

     Closure ; usually the last resort; more towards


    investment decision such as closing down factory,
    termination of projects and others.

    6
     Cash Flow

     Time

     Growth Rate

    Time value of money concept.

    7
     Principle 1 Generate altenatives.
     Principle 2 Consider diferences only.
     Principle 3 Use the same perspectives
    for each altenatives.
     Principle 4 Use the same unit of
    measurement.
     Principle 5 Consider all relevant factors.
     Principle 6 Conduct sensitivity analyses.
     Principle 7 Continuous monitoring and
    improvement of decision.

    8
     What is Engineering Economy?

     Importance of Engineering Economy to an


    engineer.

     The basic principles of engineering economy


    for decision making in engineering problems.

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