Scribd Logo
Upload

Welcome to Scribd!

  • 1K views

    Assignment #2 (Sep2019) - GDB3023-Solution

    Uploaded by

    Danish Zabidi
    The document describes an assignment problem involving engineering economics and entrepreneurship. It presents two multi-part problems analyzing the costs and profits of operating vehicles using methane extracted from cow manure and locating a municipal solid waste site. It also provides solutions to the problems showing calculations and conclusions.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Assignment #2 (Sep2019) - GDB3023-Solution

    Uploaded by

    Danish Zabidi
    1K views5 pages
    The document describes an assignment problem involving engineering economics and entrepreneurship. It presents two multi-part problems analyzing the costs and profits of operating vehicles using methane extracted from cow manure and locating a municipal solid waste site. It also provides solutions to the problems showing calculations and conclusions.

    Original Title

    Assignment #2 (Sep2019)-GDB3023-Solution

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document describes an assignment problem involving engineering economics and entrepreneurship. It presents two multi-part problems analyzing the costs and profits of operating vehicles using methane extracted from cow manure and locating a municipal solid waste site. It also provides solutions to the problems showing calculations and conclusions.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    1K views5 pages

    Assignment #2 (Sep2019) - GDB3023-Solution

    Uploaded by

    Danish Zabidi
    The document describes an assignment problem involving engineering economics and entrepreneurship. It presents two multi-part problems analyzing the costs and profits of operating vehicles using methane extracted from cow manure and locating a municipal solid waste site. It also provides solutions to the problems showing calculations and conclusions.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 5

    GDB3023

    ENGINEERING ECONOMICS & ENTREPRENEURSHIP


    SEPTEMBER 2019
    ASSIGNMENT #2 [CLO1]

    2-3 A group of enterprising engineering students has developed a process for


    extracting combustible methane gas from cow manure (don’t worry, the
    exhaust is odorless). With a specially adapted internal combustion engine,
    the students claim that an automobile can be propelled 15 miles per day
    from the “cow gas” produced by a single cow. Their experimental car can
    travel 60 miles per day for an estimated cost of $5 (this is the allocated
    cost of the methane process equipment—the cow manure is essentially
    free).

    (a.) How many cows would it take to fuel 1,000,000 miles of annual driving
    by a fleet of cars? What is the annual cost?
    (b.) How does your answer to Part (a) compare to a gasoline-fueled car
    averaging 30 miles per gallon when the cost of gasoline is $3.00 per
    gallon?

    Solution
    𝑚𝑖𝑙𝑒𝑠
    1,000,000
    𝑦𝑒𝑎𝑟
    (a) # 𝑐𝑜𝑤𝑠 = 𝑑𝑎𝑦𝑠 𝑚𝑖𝑙𝑒𝑠 = 182.6 𝑜𝑟 183 𝑐𝑜𝑤𝑠
    (365 )(15 )
    𝑦𝑒𝑎𝑟 𝑑𝑎𝑦

    𝑚𝑖𝑙𝑒𝑠 $5
    𝐴𝑛𝑛𝑢𝑎𝑙 𝑐𝑜𝑠𝑡 = (1,000,000 )( ) = $83,333 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟
    𝑦𝑒𝑎𝑟 60 𝑚𝑖𝑙𝑒𝑠

    𝑚𝑖𝑙𝑒𝑠
    1,000,000 $3
    𝑦𝑒𝑎𝑟
    (b) 𝐴𝑛𝑛𝑢𝑎𝑙 𝑐𝑜𝑠𝑡 𝑜𝑓 𝑔𝑎𝑠𝑜𝑙𝑖𝑛𝑒 = 𝑚𝑖𝑙𝑒𝑠 (𝑔𝑎𝑙𝑙𝑜𝑛) = $100,000 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟
    30
    𝑔𝑎𝑙𝑙𝑜𝑛

    It would cost $16,667 more per year to fuel the fleet of cars with gasoline.
    2-4 A municipal solid-waste site for a city must be located at Site A or Site B.
    After sorting, some of the solid refuse will be transported to an electric
    power plant where it will be used as fuel. Data for the hauling of refuse
    from each site to the power plant are shown in Table P2-4.

    Table P2-4
    Site A Site B
    Average hauling distance 4 miles 3 miles
    Annual rental fee for solid-waste site $5,000 $100,000
    Hauling cost $1.50 / yd3-mile $1.50 / yd3-mile

    If the power plant will pay $8.00 per cubic yard of sorted solid waste
    delivered to the plant, where should the solid-waste site be located? Use
    the city’s viewpoint and assume that 200,000 cubic yards of refuse will be
    hauled to the plant for one year only. One site must be selected.

    Solution

    Cost Site A Site B


    Rent = $5,000 = $100,000
    Hauling (4)(200,000)($1.50) = $1,200,000 (3)(200,000)($1.50) =
    $900,000
    Total $1,205,000 $1,000,000

    Note that the revenue of $8.00/yd3 is independent of the site selected. Thus, we can
    maximize profit by minimizing total cost. The solid waste site should be located in Site
    B.
    2-13 A large company in the communication and publishing industry has
    quantified the relationship between the price of one of its products and
    the demand for this product as Price = 150 – (0.01 × Demand) for an annual
    printing of this particular product. The fixed costs per year (i.e., per
    printing) is $50,000 and the variable cost per unit is $40. What is the
    maximum profit that can be achieved if the maximum expected demand is
    6,000 units per year? What is the unit price at this point of optimal
    demand?

    Solution

    p = 150 - 0.01D CF = $50,000 cv = $40/unit

    Profit = 150D - 0.01D2 - 50,000 - 40D = 110D - 0.01D2 - 50,000

    d(Profit)/dD = 110 - 0.02D = 0

    D = 5,500 units per year, which is less than maximum anticipated demand

    At D = 5,500 units per year, Profit = $252,500 and p = $150 - 0.01(5,500) = $95/unit.
    2-15 A company produces and sells a consumer product and is able to control the
    demand for the product by varying the selling price. The approximate
    relationship between price and demand is

    2,700 5,000
    𝑝 = $38 + − , 𝑓𝑜𝑟 𝐷 > 1,
    𝐷 𝐷2

    where p is the price per unit in dollars and D is the demand per month. The
    company is seeking to maximize its profit. The fixed cost is $1,000 per
    month and the variable cost (CV) is $40 per unit.

    (a.) What is the number of units that should be produced and sold each
    month to maximize profit?
    (b.) Show that your answer to Part (a) maximizes profit.

    Solution
    (a)
    2700 5000
    𝑃𝑟𝑜𝑓𝑖𝑡 = [38 + − 2 ] 𝐷 − 1000 − 40𝐷
    𝐷 𝐷

    5000
    = 38𝐷 + 2700 − − 1000 − 40𝐷
    𝐷
    5000
    𝑃𝑟𝑜𝑓𝑖𝑡 = −2𝐷 − + 1700
    𝐷

    𝑑(𝑃𝑟𝑜𝑓𝑖𝑡) 5000
    = −2 + 2 − 0
    𝑑𝐷 𝐷

    5000
    𝑜𝑟, 𝐷2 = − 2500 𝑎𝑛𝑑 𝐷∗ = 50 𝑢𝑛𝑖𝑡𝑠 𝑝𝑒𝑟 𝑚𝑜𝑛𝑡ℎ
    2

    (b)
    𝑑2 (𝑃𝑟𝑜𝑓𝑖𝑡) −10,000
    = < 0 𝑓𝑜𝑟 𝐷 < 1
    𝑑𝐷2 𝐷3

    Therefore, D* = 50 is a point of maximum profit.


    2-29 One component of a system’s life-cycle cost is the cost of system failure.
    Failure costs can be reduced by designing a more reliable system. A
    simplified expression for system life-cycle cost, C, can be written as a
    function of the system’s failure rate:
    𝐶𝐼
    𝐶 = + 𝐶𝑅 . 𝜆. 𝑡
    𝜆

    Where; CI = investment cost ($ per hour per failure)


    CR = system repair cost
    𝜆 = system failure rate (failure/operating hour)
    t = operating hours

    (a.) Assume that CI , CR, and t are constants. Derive an expression for
    𝜆, say 𝜆∗, that optimizes C.
    (b.) Does the equation in Part (a) correspond to a maximum or minimum
    value of C? Show all work to support your answer.
    (c.) What trade-off is being made in this problem?

    Solution
    𝑑𝐶 𝐶𝐼
    (a) =− + 𝐶𝑅 𝑡 = 0
    𝑑𝜆 𝜆2

    𝐶
    Or, 𝜆2 = 𝐶 𝐼𝑡 𝑎𝑛𝑑 𝜆∗ = (𝐶𝐼 /𝐶𝑅 𝑡)1/2 We are only interested in
    𝑅
    positive root.

    𝑑2 𝐶 2𝐶𝐼
    (b) = > 0 𝑓𝑜𝑟 𝜆 > 0
    𝑑𝜆2 𝜆3

    Therefore, 𝜆* results in a minimum life-cycle cost value.

    (c) Investment cost versus total repair cost

    You might also like