Introduction

    This course is designed to help engineers solve basic kinds of economics problems that arise in engineering.  One of the things that simplifies Engineering Economics is that all problems are basically solved in the same way.  This class has been organized to take advantage of these standard techniques that can be used to solve almost all econ problems that an engineer will have to face.

    All engineering economics problems are essentially solved by counting up the expenses and earnings to see whether the project "pays off".  Because most people are sensitive to when they get their money it is necessary to count the money at a common point in time.  There are factor - in this class called "Magic Numbers" that adjust money from different points in time to an equivalent value at a common point in time.  The Magic Numbers are applied by simply multiplying money at some different time by a Magic Number to move it back to a common point in time for counting.

    There are five basic types of Engineering Economics problems and the course is organized around these five types of problems

Unit #1 - Invest and Earn Problems  (A simple check of whether a project or plan makes enough money to be worth while)

Unit #2 - All Cost Alternatives Problems  (Problems of finding the least cost way of doing something)

Unit #3 - Comparative Investment Problems  (Problems of selecting which opportunity is the most worth while)

Unit #5 - Incremental Investment Problems  (Problems of right sizing a project for best results)

Unit #6 - Unit Cost Problems  (Expressing costs as a cost per unit of product)

 

    The missing unit numbers obviously indicate that there are other topics covered.  Unit #4 is on "Land Mines" - there are easily made mistakes in engineering econ problems and this unit is on recognizing and avoiding the simple mistakes that people "screw up" with.  Unit #7 is on Leverage - the use of borrowed money in project financing.  Unit #8 is on Taxes - Since around 30 to 40% of the earnings of project may be taken in taxes - obviously one cannot really decide whether a project is worth while without knowing how much of the money they are never going to see.

    Since the class is organized around a "how to solve problems" theme, text books are mostly supplemental resources.  The key material to pass the course is covered in lecture.  Thus attendance is important.  Notes in Power Point format are provided on the web site under "Topical Coverage".

    Periodically during the course a series of short problems are given to provide students "hands on" experience with the material presented in class.  These assignments are usually doing a single problem which (depending on degree of understanding) will usually be solvable in 10 to 25 minutes.

    The class has one Midterm and a Final.  More on Assignments and Tests can be found on the web site under the Assignment and Test buttons.

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