Engineering Economy And Managment

Hello everybody,hopefully everyone to be very well and healthy

Today we will discuss to economy and managment topic according to engineering fundamental tools.

First of all,ı will mention my content

1. What does it mean engineering economy?
2. Performing engineering economy study
3. interest rate and ROR,MARR
4. Equivalence
5. Simple and Compound interest
6. Terminology and Symbols
7. Cash Flow

Definition:engineering economy is involved with the equation,estimation and evaluation of economy. Outcomes when alternatives to accomplish a defined purpose are avaliable

Section 1.1 Role of Engineering Economy: important point:people make decisions,NOT TOOLS!,

Engineering Economy is a set of tools that aid in decision making — but will not make the decision for you!

Engineering economy is based mainly on estimates of future events — must deal with the future and risk and uncertainty.

Section 1.2 Problem-Solving Approach:

1. Understand the Problem
2. Collect all relevant data/information
3. Define the feasible alternatives
4. Evaluate each alternative(Where the major tools of engineering economy are applied)
5. Select the “best” alternative
6. Implement and monitor(Major Role of Engineering Economy)

What is th tools?= Present Worth, Future Worth Annual Worth, Rate of Return Benefit/Cost, Payback, Capitalized Cost, Value Added.

1.2 Section Performing An Engineering Economy Study:Alternatives,Cash flows,Alternative selection,Evaluation criteria,Intangible factors,time value of money.

1. 3 Section Performing a study:• To have a problem, one must have alternatives (two or more ways to solve a problem)
2. Alternative ways to solve a problem must first be identified
3. Estimate the cash flows for the alternatives
4. Analyze the cash flows for each alternative
5. 4 Section Alternatives:To analyze, one must have:Concept of the time value of $$, an Interest Rate,some measure of economic worth,evaluate and weigh,factor in noneconomic parameters,select, implement, and monitor.

NEEDED PARAMETERS? • First cost (investment amounts),• Estimates of useful or project life,Estimated future cash flows (revenues and expenses and salvage values),Interest rate, ınflation and tax effects.

CASH FLOW:Estimate flows of money coming into the firm — revenues salvage values, etc. (magnitude and timing) — positive cash flows. Estimates of investment costs, operating costs, taxes paid — negative cash flows.

Time value of money:The change in the amount of money over a given time period is called the time value of money; by far, the most important concept in engineering economy.