3360 unit 01.1 2016-i-01
TRANSCRIPT
-
8/19/2019 3360 Unit 01.1 2016-I-01
1/17
ENGR 3360U
Unit 1
1.1 General Introduction to
Engineering Economic Analysis
Dr. J. Michael Bennett, P. Eng., PMP,
UOIT
Version F
-
8/19/2019 3360 Unit 01.1 2016-I-01
2/17
Unit 1 – General Introduction to Engineering Economic Analysis
Version F r. !.". #ennett$ %.Eng.$ %"% ENGR 3360U Eng Eco1&'
()ange Record
Version F Initial (reation
-
8/19/2019 3360 Unit 01.1 2016-I-01
3/17
Unit 1 – General Introduction to Engineering Economic Analysis
(ourse *utline
1. Engineering Economic Analysis
'. General Economics
'.1 "icroeconomics
'.' "acroeconomics
'.3 "oney + t)e #an, o- (anada3. Engineering Estimation
. Interest and E/uialence
. %resent 2ort) Analysis
6. Annual (as) Flo
4. Rate o- Return Analysis
5. %ic,ing t)e #est ()oice
. *t)er ()oosing 7ec)ni/ues
10. Uncertainty and Ris,
11. Income and e8reciation
1'. A-ter&ta9 (as) Flos
13. Re8lacement Analysis
1. In-lation1. "ARR :election
16. %u;lic :ector Issues
14. 2)at an Engineer s)ould ,no
a;out Accounting
15. 7)e #usiness %lan
Version F r. !.". #ennett$ %.Eng.$ %"% ENGR 3360U Eng Eco1&3
-
8/19/2019 3360 Unit 01.1 2016-I-01
4/17
Unit 1 – General Introduction to Engineering Economic Analysis
Version F r. !.". #ennett$ %.Eng.$ %"% ENGR 3360U Eng Eco1&
(ourse
7)is course is a ;ird$ rig)t>
Engineering and economy
-
8/19/2019 3360 Unit 01.1 2016-I-01
5/17
Unit 1 – General Introduction to Engineering Economic Analysis
Version F r. !.". #ennett$ %.Eng.$ %"% ENGR 3360U Eng Eco1&
"ottos
7ime is money
An engineer is someone )o can ;uild -or a
dime$ )at any damn -ool can ;uild -or a dollar
7)ere are t)ree ,inds o- economists? t)ose )o
count and t)ose )o don@t
-
8/19/2019 3360 Unit 01.1 2016-I-01
6/17
Unit 1 – General Introduction to Engineering Economic Analysis
Version F r. !.". #ennett$ %.Eng.$ %"% ENGR 3360U Eng Eco1&6
*;seration
o many -ilt)y ric) economists do you
,no>
o you t)in, t)at #ill Gates ould 8ass t)is
course> 2ould )e een ta,e it>
-
8/19/2019 3360 Unit 01.1 2016-I-01
7/17
-
8/19/2019 3360 Unit 01.1 2016-I-01
8/17
Unit 1 – General Introduction to Engineering Economic Analysis
(arlyle@s snide /uote
B7eac) a 8arrot to say Bsu88ly and demandC
and you@e got an economistC
BGie me a one&)anded economist? all o-
t)e ot)ers say on one )andon t)e ot)er)andHHC arry :. 7ruman
Is a No;el category
Version F r. !.". #ennett$ %.Eng.$ %"% ENGR 3360U Eng Eco1&5
-
8/19/2019 3360 Unit 01.1 2016-I-01
9/17
Unit 1 – General Introduction to Engineering Economic Analysis
Unit 1 Road "a8
1.1 Engineering Economic Analysis1.' ecision "a,ing
1.3 "acro and "icro Economics
1. Fundamental #usiness :tructures1. Interest Rates
1.6 :8reads)eet -unctions
1.4 "inimum attractie rate o- return1.5 (as) -los
1. ou;ling times
Version F r. !.". #ennett$ %.Eng.$ %"% ENGR 3360U Eng Eco1&
-
8/19/2019 3360 Unit 01.1 2016-I-01
10/17
Unit 1 – General Introduction to Engineering Economic Analysis
1.1 2)at is t)e most im8ortant
Engineering Varia;le>
Version F r. !.". #ennett$ %.Eng.$ %"% ENGR 3360U Eng Eco1&10
J K L
-
8/19/2019 3360 Unit 01.1 2016-I-01
11/17
Unit 1 – General Introduction to Engineering Economic Analysis
Version F r. !.". #ennett$ %.Eng.$ %"% ENGR 3360U Eng Eco1&11
2)y Engineering Economic Analysis is Im8ortant to
Engineers
Engineers BdesignC and create
esigning inoles economic decisions
Engineers must ;e a;le to incor8orate
economic analysis into t)eir creatie e--orts *-ten engineers must select and e9ecute -rommulti8le alternaties
A 8ro8er economic analysis -or selection ande9ecution is a -undamental as8ect o-engineering
-
8/19/2019 3360 Unit 01.1 2016-I-01
12/17
-
8/19/2019 3360 Unit 01.1 2016-I-01
13/17
Unit 1 – General Introduction to Engineering Economic Analysis
Version F r. !.". #ennett$ %.Eng.$ %"% ENGR 3360U Eng Eco1&13
Role o- Engineering Economic Analysis
in ecision "a,ing
ecision ma,ing inoles t)e estimation o--uture eentsoutcomes
Engineering economy aids in /uanti-ying 8astoutcomes and -orecasting -uture outcomes
Engineering Economy 8roides a -rameor,-or modeling 8ro;lems inolingM
7ime
"oney
Interest rates
-
8/19/2019 3360 Unit 01.1 2016-I-01
14/17
Unit 1 – General Introduction to Engineering Economic Analysis
Version F r. !.". #ennett$ %.Eng.$ %"% ENGR 3360U Eng Eco1&1
7o (oncerns o- Engineering
Engineers )ae t)e dual tas, o-determiningM
1. 2)at society ants Dits needs$ and
'. o ;est to com;ine economic resources$ 8rocesses$ etc. to 8roduce t)e goods and
serices desired ;y society.
E--iciencyM ;ot) 8)ysical and economice--iciencies must ;e considered.
-
8/19/2019 3360 Unit 01.1 2016-I-01
15/17
Unit 1 – General Introduction to Engineering Economic Analysis
Version F r. !.". #ennett$ %.Eng.$ %"% ENGR 3360U Eng Eco1&1
%)ysical and Economic E--iciency
%)ysical e--iciency
"easure o- t)e success o- engineering actiity
in t)e 8)ysical enironment? ratio o- out8uts to
in8uts"a9imum 8)ysical e--iciency ratio is 1 Dor
100O
%)ysical units include #7Us$ ,&)ours$ etc.
-
8/19/2019 3360 Unit 01.1 2016-I-01
16/17
Unit 1 – General Introduction to Engineering Economic Analysis
Version F r. !.". #ennett$ %.Eng.$ %"% ENGR 3360U Eng Eco1&16
Economic e--iciency
Ratio o- alue or ort) to cost? must e9ceed 1
or 100O
Engineer must 8roduce out8uts t)at are most&alued Do- greatest satis-action ;y society
Deconomic e--iciency
-
8/19/2019 3360 Unit 01.1 2016-I-01
17/17
Unit 1 – General Introduction to Engineering Economic Analysis
Version F r ! " #ennett % Eng %"% ENGR 3360U Eng Eco1&14
ENGINEERING
SPHERE
1950s
ECONOMIC
SPHERE
190s!
ECONOMIC
SPHERE
ENGINEERING
SPHERE
Eolution o- Economic + %)ysical E--iciency
(Physical efficiency)(Economic
efficiency)
Economic Efficiency
Independent decision making Significant overlap
Physical efficiency