SIE 265 - Engineering Economic Analysis

SIE 265 - Engineering Economic Analysis (3) Methods and modern techniques of engineering economic analysis for decision making, evaluations of economic alternatives, cost control, capital budgeting, managerial cost accounting, deterministic inventory theory and decision-making under uncertainty. 3ES. P, ENGR 102, MATH 125b. (Identical with ENGR 265).

C. Park, Contemporary Engineering Economics, 2^nd Edition, Addison Wesley, 1997.

None

J. B. Goldberg, Associate Professor of Systems and Industrial Engineering

1. Engineering design process
2. Experience with spreadsheet packages
3. Finite series summation
4. Solving polynomial equations for roots

Remedial instruction offered to students as needed. Small review in the classroom. No major problems encountered.

This course prepares the student to consider the economic dimensions in the evaluation of engineering alternatives. Hence it is particularly useful in the analysis and decision stages of the engineering design process. Emphasis is on the analytical consideration of money and its impact on the areas of system operations and acquisition. By the end of the course, the student will be prepared to analyze complex decision problems and will have sufficient background to perform well on the engineering economics section of the Fundamentals of Engineering Exam.

1. Understanding of concepts of the time value of money and interest rates.
2. Ability to analyze cash flow series using decision criteria of present worth, annual 3. equivalent, and internal rate of return.
3. Ability to develop cash flow series considering the effects of taxes, inflation, depreciation, and loan interest payments.
4. Ability to apply techniques to large-scale problems.
5. Ability to consider problems in the public sector where profit may not be the primary criteria.
6. Ability to use the World Wide Web to help learn the material and find information.

1. Interest and the Time Value of Money (2 hours)
2. Equivalence of Cash Flows (5)
3. Formulas For Computing Equivalent Cash Flows (6)
4. Amortization (3)
5. Project Screening (1)
6. Decision Criteria Present Worth, Annual Equivalent, and Internal Rate of Return (5)
7. Breakeven Analysis (1)
8. Taxes (2)
9. Depreciation (2)
10. Developing Net Income and Cash Flow Statements (3)
11. Equipment Replacement Problems (2)
12. Inflation (2)
13. Raising and Budgeting Capital (3)
14. Cost Benefit Analysis and Cost Effectiveness (2)
15. Project Randomness, Risk, and Sensitivity Analysis (3)

Class Requirements:

1. Three lecture sessions per week.
2. 10 Homework assignments per semester, approximately 5 problems per assignment, at least 2 problems where spreadsheet should be used to facilitate the analysis.
3. Two examinations and a final
4. Case project that exercises the design process and teamwork

1. Student must use spreadsheets for the homework and design problem
2. Course material is on the World Wide Web and students access to obtain homework assignments and solutions, data for homework and case problems, class notes, example problems, alternative explanations of text material, spreadsheet examples.

Laboratory Projects: None

1. Class examinations.
2. Case project report.
3. Homework evaluation

Contribution to program objectives: Goals 1, 3, 4, 5

Prepared by: Jeff Goldberg    Date: March 31, 1998