1.
Course objectives:
a. Apply the appropriate engineering economics analysis method(s) for
problem solving: present worth, annual cost, rate-of-return, payback, break-
even, benefit-cost ratio
b. Evaluate the cost effectiveness of individual engineering projects using the
methods learned and draw inferences for the investment decisions.
c. Compare the life cycle cost of multiple projects using the methods learned,
and make a quantitative decision between alternate facilities and/or systems.
d. Compute the depreciation of an asset using standard depreciation
techniques to assess its impact on present.
Copyright ©2012 by Pearson Education, Inc.
Engineering Economy, Fifteenth Edition
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
1. Textbooks and references:
Textbooks:
Engineering Economy, 15th edition, W.G. Sullivan, E.M. Wicks, C.P. Koelling, Prentice Hall, 2012.
Copyright ©2012 by Pearson Education, Inc.
Engineering Economy, Fifteenth Edition
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
Assessment component Assessment form (A.x.x) Percentage %
(1) (2) (3)
A1. Process assessment A1.1Quiz 15%
A1.2 Homework 15%
A2. Midterm assessment A2.1 Mid-term Exam 30%
A3. Final assessment A3.1 Final exam 40%
Copyright ©2012 by Pearson Education, Inc.
Engineering Economy, Fifteenth Edition
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
Week Course outline
1 Lecture 1: Introduction to EE
2 Lecture 2: Cost concepts and Design Economics
3 Lecture 3: Cost estimation techniques
4&5 Lecture 4: The time value of money
6&7 Lecture 5: Evaluating a single project
8 Review for Midterm examinations
9 & 10 Lecture 6: Comparison and Selection among alternatives
11 Lecture 7: Depreciation and Income taxes
12 Lecture 8: Evaluating projects with the benefit-cost ratio method
13 Lecture 9: Break-even and Sensitivity analysis
14 Lecture 10: Replacement analysis
15 Final Review
Copyright ©2012 by Pearson Education, Inc.
Engineering Economy, Fifteenth Edition
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
Engineering Economy
Chapter 1: Introduction to
Engineering Economy
Copyright ©2012 by Pearson Education, Inc.
Engineering Economy, Fifteenth Edition
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
Engineering economy…
involves the systematic
evaluation of the economic
merits of proposed solutions
to engineering problems.
Copyright ©2012 by Pearson Education, Inc.
Engineering Economy, Fifteenth Edition
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
Engineering economic analysis can
play a role in many types of situations.
• Choosing the best design for a high-efficiency gas
furnace.
• Selecting the most suitable robot for a welding
operation on an automotive assembly line.
• Making a recommendation about whether jet
airplanes for an overnight delivery service should
be purchased or leased.
• Determining the optimal staffing plan for a
computer help desk.
Copyright ©2012 by Pearson Education, Inc.
Engineering Economy, Fifteenth Edition
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
There are seven fundamental principles
of engineering economy.
• Develop the alternatives
• Focus on the differences
• Use a consistent viewpoint
• Use a common unit of measure
• Consider all relevant criteria
• Make uncertainty explicit
• Revisit your decisions
Copyright ©2012 by Pearson Education, Inc.
Engineering Economy, Fifteenth Edition
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
Engineering economic analysis
procedure
• Problem definition
• Development of alternatives
• Development of prospective outcomes
• Selection of a decision criterion
• Analysis and comparison of alternatives.
• Selection of the preferred alternative.
• Performance monitoring and postevaluation
of results.
Copyright ©2012 by Pearson Education, Inc.
Engineering Economy, Fifteenth Edition
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
Electronic spreadsheets are a
powerful addition to the analysis
arsenal.
• Most engineering economy problems can be
formulated and solved using a spreadsheet.
• Large problems can be quickly solved.
• Proper formulation allows key parameters
to be changed.
• Graphical output is easily generated.
Copyright ©2012 by Pearson Education, Inc.
Engineering Economy, Fifteenth Edition
Upper Saddle River, New Jersey 07458
By William G. Sullivan, Elin M. Wicks, and C. Patrick Koelling
All rights reserved.
