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    BCT 5053 Engineering Economics: Chapter 1: Introduction To Engineering Economic

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    Are Onez
    1. The document introduces engineering economics concepts and defines economics as the study of how scarce resources are used to produce goods and services. 2. Engineering economics applies economic principles to engineering problems by comparing costs of alternatives and determining the most cost-effective solution. 3. The key steps in an engineering economy study are to define the problem and alternatives, collect relevant cash flow and interest rate information, evaluate alternatives using economic measures, and select the best alternative based on the analysis.

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    BCT 5053 Engineering Economics: Chapter 1: Introduction To Engineering Economic

    Uploaded by

    Are Onez
    21 views13 pages
    1. The document introduces engineering economics concepts and defines economics as the study of how scarce resources are used to produce goods and services. 2. Engineering economics applies economic principles to engineering problems by comparing costs of alternatives and determining the most cost-effective solution. 3. The key steps in an engineering economy study are to define the problem and alternatives, collect relevant cash flow and interest rate information, evaluate alternatives using economic measures, and select the best alternative based on the analysis.

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    Chapter 1

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    1. The document introduces engineering economics concepts and defines economics as the study of how scarce resources are used to produce goods and services. 2. Engineering economics applies economic principles to engineering problems by comparing costs of alternatives and determining the most cost-effective solution. 3. The key steps in an engineering economy study are to define the problem and alternatives, collect relevant cash flow and interest rate information, evaluate alternatives using economic measures, and select the best alternative based on the analysis.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    21 views13 pages

    BCT 5053 Engineering Economics: Chapter 1: Introduction To Engineering Economic

    Uploaded by

    Are Onez
    1. The document introduces engineering economics concepts and defines economics as the study of how scarce resources are used to produce goods and services. 2. Engineering economics applies economic principles to engineering problems by comparing costs of alternatives and determining the most cost-effective solution. 3. The key steps in an engineering economy study are to define the problem and alternatives, collect relevant cash flow and interest rate information, evaluate alternatives using economic measures, and select the best alternative based on the analysis.

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    BCT 5053 ENGINEERING

    ECONOMICS
    Chapter 1: Introduction To
    Engineering Economic
    Student should be able to:

    Introduction
    Engineering
    to
    economy
    engineering
    concepts
    economy

    Steps in
    Decision
    analyzing
    making
    engineering
    process
    economy
    WHAT IS ECONOMICS?

    “Economics is the study of how people and


    society choose to employ scarce resources that
    could have alternative uses in order to produce
    various commodities and to distribute them for
    consumption, now or in the future, ...”
    WHAT IS ECONOMICS?

    “ A study of how people use their limited


    resources to try to fulfil unlimited wants and
    involves alternatives or choices”
    WHAT IS ENGINEERING ECONOMICS?

    The application of economic principles to


    engineering problems, for example in comparing
    the comparative costs of two alternative capital
    projects or in determining the optimum
    engineering course from the cost aspect.
    • Engineering economics is the application of
    economic techniques to the evaluation of
    design and engineering alternatives.

    • The role of engineering economics is to assess


    the appropriateness of a given project,
    estimate its value, and justify it from an
    engineering standpoint.
    Why Engineering Economy is
    Important to Engineers?

    Engineers must be able


    Engineers design and Designing involves to incorporate
    create economic decisions economic analysis into
    their creative efforts

    Understanding and
    A proper economic
    Often engineers must applying time value of
    analysis for selection
    select and implement money, economic
    and execution is a
    from multiple equivalence, and cost
    fundamental task of
    alternatives estimation are vital for
    engineering
    engineers
    Decision making process
    • Decision are made routinely to choose one
    alternative over another by individuals in
    everyday life
    By engineers on the job

    By managers who supervise the activities of


    others

    By corporate presidents who operate a business

    By government officials who work for the public


    good
    • Most decisions affect what will be done, the
    time frame of engineering economy is
    primarily the future
    • The numbers used in engineering economy
    are best estimates of what is expected to
    occur
    • 4 essential elements Cash Flows
    Times of occurrence of Cash
    Flows
    Interest rates for time value of
    money
    Measure of economic worth for
    selecting an alternative
    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
    Steps in an Engineering Economy
    Study

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