IE 226 Lecture1

IE 226 Lecture1 - IE 226: Engineering Economy and Decision...

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IE 226: Engineering Economy and Decision Analysis Gregory L. Tonkay, Ph.D. Associate Professor Associate Chair, ISE
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Engineering Engineering Engineers provide answers Ability to solve problems or take advantage of opportunities through the application of science Must meet certain criteria Technical feasibility/efficiency: meet or exceed specifications Economic feasibility/efficiency: meet budgets and return
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Engineering Economy Engineering Economy Every technical solution has financial consequences Engineering economic analysis determines whether a proposed solution is financially viable Will it pay? Is this the minimum cost solution?
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Engineering Economic Decisions Engineering Economic Decisions Profit Enhancing Programs : projects designed to generate revenues New product development New product acquisition Product/service capacity expansion Improved customer service
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Profit Enhancing Examples Profit Enhancing Examples Posco (Korea) said it would invest $12 billion to build an integrated steel plant in India -- capacity of 12 million tons/yr. Matsushita and Toray (Japan) will invest Y180 billion to build a plasma display panel (PDP) plant, increasing production by 6 million panels/yr. Cargill (USA) announced a $20 million investment to increase capacity of liquid chocolate and a production line for chocolate flakes, drops and chunks in Mouscron, Belgium. Kallal, L., “Cargill to Increase Capacity at Belgian Chocolate Plant,” Dow Jones Newswires , December 1, 2005. Cha, S.-J., “Posco to Invest $3.7B in First Phase of India Steel Plant,” Dow Jones Newswires , December 18, 2005. Nakamoto, M., “Plans revealed for biggest PDP plant - NEWS DIGEST,” Financial Times , p. 29, January 11, 2006.
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Engineering Economic Decisions Engineering Economic Decisions Cost Control Programs: projects designed to generate savings Improving efficiency Streamlining operations Eliminating waste Reducing liabilities
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IE 226 Lecture1 - IE 226: Engineering Economy and Decision...

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