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    1.2 Principles of Engineering Economics

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    Tyler O'connor
    This document summarizes the key principles of engineering economics and discusses engineering economic decisions and professional ethics. The four principles of engineering economics are: (1) money has time value, (2) decisions should be based on differences among alternatives, (3) marginal revenue must exceed marginal cost, and (4) additional risk requires additional return. Engineering economic decisions relate to investment in engineering projects and include service/quality improvements, new products, equipment selection, cost reduction, and equipment replacement. Professional ethics refers to universal morals, individual morals, and formal codes that guide engineering work.

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    1.2 Principles of Engineering Economics

    Uploaded by

    Tyler O'connor
    284 views2 pages
    This document summarizes the key principles of engineering economics and discusses engineering economic decisions and professional ethics. The four principles of engineering economics are: (1) money has time value, (2) decisions should be based on differences among alternatives, (3) marginal revenue must exceed marginal cost, and (4) additional risk requires additional return. Engineering economic decisions relate to investment in engineering projects and include service/quality improvements, new products, equipment selection, cost reduction, and equipment replacement. Professional ethics refers to universal morals, individual morals, and formal codes that guide engineering work.

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    1. 1.2 Principles of Engineering Economics

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    This document summarizes the key principles of engineering economics and discusses engineering economic decisions and professional ethics. The four principles of engineering economics are: (1) money has time value, (2) decisions should be based on differences among alternatives, (3) marginal revenue must exceed marginal cost, and (4) additional risk requires additional return. Engineering economic decisions relate to investment in engineering projects and include service/quality improvements, new products, equipment selection, cost reduction, and equipment replacement. Professional ethics refers to universal morals, individual morals, and formal codes that guide engineering work.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    284 views2 pages

    1.2 Principles of Engineering Economics

    Uploaded by

    Tyler O'connor
    This document summarizes the key principles of engineering economics and discusses engineering economic decisions and professional ethics. The four principles of engineering economics are: (1) money has time value, (2) decisions should be based on differences among alternatives, (3) marginal revenue must exceed marginal cost, and (4) additional risk requires additional return. Engineering economic decisions relate to investment in engineering projects and include service/quality improvements, new products, equipment selection, cost reduction, and equipment replacement. Professional ethics refers to universal morals, individual morals, and formal codes that guide engineering work.

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    w

    Chapter 1.2 Principles of Engineering Economics

    Intended Learning Outcomes: At the end of this chapter, the students are expected to:

    1. xxxx xxxx xxxxx ;

    1.2.1 The Four Principles of Engineering Economics

    Principle 1: A nearby dollar/peso is worth more than a distant dollar/peso.

    – money has a time value associated with it.


    – it is better to receive money earlier than later

    Principle 2: All that counts is the differences among alternatives.

    – economic decision should be based on the differences among


    alternatives considered; should be based on the best use of limited
    resources
    Opportunity – the value of the best alternative given up
    Cost

    Principle 3: Marginal revenue must exceed marginal cost.

    Marginal – is the additional revenue made possible by increasing the activity by


    Revenue one unit (or a small unit).

    Marginal – the additional cost incurred by the same increase in activity


    Cost

    Principle 4: Additional risk is not taken without the expected additional return.

    1.2.2 Engineering Economic Decisions

    This term refers to all investment decisions relating to engineering projects.

    Types of Engineering Economic Decisions

    1. Service or quality improvement


    2. New products or product expansion
    3. Equipment and process selection
    4. Cost reduction, and
    5. Equipment replacement

    Engineering Economics
    Page 7
    Module 1: Introduction

    USMKCC-COL-F-050
    1.2.3 Professional Ethics

    Universal/ – fundamental moral beliefs held by virtually all people.


    Common
    Morals

    Individual/ – the moral beliefs that a person has and maintains over time
    Personal
    Morals

    Professional/ – formal standard/code that serves as a guide for decision making and
    Engineering performance of work activities in a specific engineering discipline
    Ethics

    Engineering Economics
    Page 8
    Module 1: Introduction

    USMKCC-COL-F-050

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