Lec%208_Full(1)

# Lec%208_Full(1) - IE 343 Engineering Economics Lecture 8...

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IE 343 Engineering Economics Lecture 8: Chapter 4 – The Time Value of Money Instructor: Tian Ni Sep. 9, 2011 IE 343 Fall 2011 1

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• We will give back the graded Hws and Quizzes in class • Leftovers will be placed in a big box with name "IE343 Engineering Economics Section 2 Tian Ni" in GRIS269 • If you did not get back your hw or quiz in class, you can go to GRIS269 “printing room” to find it out. IE 343 Fall 2011 HWs and Quizzes Return 2
• Quiz 2 will be given at the beginning of the class 4:30PM – 4:45PM next Wednesday Sep.14 • Quiz 2 will have 2 problems totally 10 points • You will have 15 minutes to finish quiz 2 • All quiz 2 problems will be selected from the following three sources. You will see the same problems but maybe with numbers changed IE 343 Fall 2011 Tips for Quiz 2 3

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• Three sources: 1. Homework 2 Problem 1-9 (solutions for Homework 2 will be posted on Blackboard Vista after Friday’s class Sep.9) 2. Examples on Lecture Notes (please refer to the full version lecture notes for the example solutions) Lec 4_Full: Example 2.1, Example 2.8 – 2.10 Lec 5_Full: Example 2.10 – 2.12 Lec 6_Full: Example 3.1 – 3.4 3. Examples on Textbook Chapter 2: Example 2-4 to 2-11 Chapter 3: Example 3.1 to 3-6 IE 343 Fall 2011 Tips for Quiz 2 4
Learning Curve Model Assumption: As the output level doubles , the number of input resources decreases by a constant percentage. Last Time … n u u K Z ) ( = curve) learning 90% a for 9 . 0 ( decimal a as expressed rate learning or parameter curve learning the : exponent curve learning the , 2 log log : unit, output first the produce to resources input of number the : unit, output th the produce to resources input of number the : number unit output the : = = s s s n K u Z u u 5 IE 343 Fall 2011

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Learning Curve Model IE 343 Fall 2011 6 Learning rate s lower, decreasing faster! 0 10 20 30 40 50 60 70 80 90 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 100 Learning Rate=0.75 Learning Rate=0.9 Learning Rate=0.5
• Finish Chapter 3 - Cost and Revenue Estimation • Quantitative Techniques for Estimation – Parametric cost estimating (Cost Estimating Relationship (CER) development through mathematical techniques) Statistical techniques for developing CER (e.g., linear regression) • Start Chapter 4 - The Time Value of Money IE 343 Fall 2011 Today … 7

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Cost Estimating Relationship IE 343 Fall 2011 8
Cost Estimating Relationship (CER) IE 343 Fall 2011 Definition: A CER is a mathematical model that describes the cost of an engineering project as a function of one or more design variables. 9

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Cost Estimating Relationship (CER) IE 343 Fall 2011 Steps in CER development: i. Define the problem ii. Collect data iii. Develop CER equation iv. Validate model 10
IE 343 Fall 2011 iii. Develop CER equation CER equation development involves initial guess of the shape of the relationship and estimation of the model parameters. 11

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## This note was uploaded on 01/28/2012 for the course IE 343 taught by Professor Vincent,g during the Winter '08 term at Purdue.

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Lec%208_Full(1) - IE 343 Engineering Economics Lecture 8...

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