Introduction_to_Engineering_Economy

Introduction_to_Engineering_Economy - Engineering Economy...

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1 Engineering Economy Engineering Economy and Decision Analysis and Decision Analysis 2 Introduction to Engineering Economy Introduction to Engineering Economy IE 226 IE 226
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3 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. 4 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? Will it generate an acceptable return?
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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 6 Profit Enhancing Profit Enhancing Examples 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 180 billion yen 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,”
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Introduction_to_Engineering_Economy - Engineering Economy...

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