ECONOMY - ENGINEERING ECONOMICS CHEMICAL ENGINEERING...

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Unformatted text preview: ENGINEERING ECONOMICS CHEMICAL ENGINEERING ECONOMICS I. INTRODUCTION II. PLANT DESIGN PROCESS III. GENERAL CONSIDERATIONS IV. CAPITAL INVESTMENT V. PRODUCT COST – ECONOMIC PRODUCTION VI. TIME VALUE OF MONEY VII. PROFITABILITY VIII. ANALYSIS OF ALTERNATIVES IX. ANALYSIS OF REPLACEMENTS X. INFLATION XI. OPTIMIZATION XII. PROJECT MANAGEMENT XIII. BASIC ACCOUNTING XIV. COST CONTROL I. INTRODUCTION ENGINEERING ECONOMICS * ANY PRODUCT DEVELOPED OR PRODUCED WHICH CANNOT BE MARKETED AT A PRICE ABOVE ITS COST IS A FAILURE * ENGINEERS SHOULD NEVER FORGET THAT ECONOMICS IS THE ONLY GUIDE IN INDUSTRY BECAUSE ALL ENGINEERING PRACTICES REQUIRE THE USE OF LARGE AMOUNT OF CAPITAL; AND CAPITAL OWNERS EXPECT MAXIMUM RETURN ON THEIR CAPITAL INVESTED THEREFORE * SELECTION OF ALTERNATIVES TO ALLOCATE CAPITAL * DETERMINATION OF CAPACITY, PROCESS AND EQUIPMENT * RUNNING THE PLANT SHOULD BE QUIDED BY ECONOMIC PRINCIPLES IN INDUSTRY SO ENGINEERS SHOULD KNOW ENGINEERING ECONOMY ENGINEERING ECONOMICS THE LITERATURE ON ENGINEERING ECONOMY STARTED BY WELLINGTON’S ‘THE ECONOMIC THEORY OF LOCATION OF RAILWAYS’ IN 1887 IN 1920 : GOLDMAN - ‘FINANCIAL PLANNING’ FISH - ‘ENGINEERING ECONOMICS’ IN 1930 : E.L.GRANT (USUALLY CALLED THE FATHER OF ENGINEERING ECONOMY) PUBLISHED ‘PRINCIPLES OF ENGINEERING ECONOMY’ IN INDUSTRY AN ENGINEER MAY ENCOUNTER QUESTIONS LIKE: * WITH LIMITED CAPITAL AVAILABLE, WHICH INVESTMENT ALTERNATIVE SHOULD BE SELECTED? * WHICH ONE OF SEVERAL COMPETING ENGINEERING DESIGNS SHOULD BE SELECTED? * SHOULD THE MACHINE (OR PROCESS) NOW IN USE BE REPLACED WITH A NEW ONE? ENGINEERING ECONOMICS * WOULD IT BE PREFERABLE TO PURSUE A SAFER COURSE OF ACTION OR TO FOLLOW A RISKIER ONE THAT OFFERS HIGHER POTENTIAL RETURNS? * HOW MANY UNITS OF PRODUCT HAVE TO BE SOLD BEFORE A PROFIT CAN BE MADE? * SHOULD A PLANT PRODUCE A PART IN ITS OWN FACILITY, KNOWING THAT INVESTMENT WILL BE NEEDED, OR SHOULD THE PLANT SUBCONTRACT (MAKE OR BUY) ? ENGINEERS SHOULD BE ABLE FIND THE CORRECT ANSWERS TO THESE QUESTIONS THE CORE OF ENGINEERING ECONOMICS IS DECISION MAKING BASED ON COMPARISONS OF THE WORTH OF ALTERNATIVE COURSES OF ACTION WITH RECPECT TO THEIR COSTS IN THIS COURSE WE WILL STUDY THE ECONOMIC PRINCIPLES THAT IS USED FOR DESIGNING PLANTS OR PROCESSES IN INDUSTRY AND GUIDE THE ENGINEERS IN THEIR DECISIONS. ENGINEERING ECONOMICS EFFICIENCY THE OBJECTIVE OF ENGINEERING IS TO GET THE GREATEST END RESULT PER UNIT OF RESOURCE EXPENDITUTE. ENGINEER MUST BE CONCERNED WITH TWO LEVELS OF EFFICIENCY. ON THE FIRST LEVEL IS PHYSICAL EFFICIENCY EXPRESSED AS OUTPUT DIVIDED BY INPUTS OF SUCH PHYSICAL UNITS AS BTU’S, KILOWATTS OR KG. PHYSICAL EFFICIENCY = OUTPUT / INPUT THIS KIND OF EFFICIENCY IS ALWAYS LESS THAN UNITY....
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This note was uploaded on 12/19/2009 for the course INDUSTRIAL ie500 taught by Professor Mathematicalprogrammibg during the Spring '09 term at Bilkent University.

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ECONOMY - ENGINEERING ECONOMICS CHEMICAL ENGINEERING...

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