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IE343_HW1_Solutions - HomeworkAssignment#1Solutions PU R D...

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Homework Assignment #1 Solutions IE 343 ʹ Homework Assignment #1 Solutions ʹ Page 1 PURDUE UNIV ERSIT Y Hom e work A ss ignm e nt #1 IE 343: Engin ee ring E c onomi c s A ss ign e d: 27 Aug 2010 Fall 2010 Du e : 3 S e pt 2010 In s tru c tor: A . Capponi Probl e m 1 (10 poin ts ) Textbook Problem 1-14 a. The decision problem here is to decide which pizza to order while studying. Two options are available for pizza delivery and a decision has to be made based on suitable criteria, and in this case, least cost. b. Systematic application of the seven principles of engineering economy: 1. Alternatives: There are two alternatives, or pizza shops, from where to order the pizza: Pick 8S 6WLFNV DQG )UHG¶V± 2. Differences: Type of pizza, round or square; Costs associated with each pizza (including delivery charges); Delivery time could be an issue. 3. The viewpoint in this particular case will be the students who want to order pizza. 4. The unit of measure to be used in this particular problem is the cost. Since a product is being purchased, the most suitable comparison measure is the cost of each product. 5. There are three people who will be sharing this particular pizza. So, the selection criteria VKRXOG EH KRZ PXFK \RX¶UH ZLOOLQJ WR SD\ IRU D XQLW RI SL]]D± 6. In this particular case, there is no included uncertainty, but the students buying the pizza may think there is variability in the quality of the pizzas, delivery time, and even cost. 7. Revisiting the decision: 3HUKDSV ODVW WLPH \RX RUGHUHG IURP )UHG¶V LW ZDV FROG ZKHQ LW DUULYHG so that could have an impact on this decision. Perhaps the quality of the pizza from Pick Up Sticks was good the past two times, but before that it was just okay.
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