Description:
Concepts of the time value of money and equivalence; basic economy study methods; decisions under certainty; decisions recognizing risk; and decisions admitting uncertainty.
Overview:
Engineering economics, previously known as engineering economy, is a subset of economics concerned with the use and application of economic principles in the analysis of engineering decisions. As a discipline, it is focused on the branch of economics known as microeconomics in that it studies the behavior of individuals and firms in making decisions regarding the allocation of limited resources. Thus, it focuses on the decision-making process, its context, and the environment. It is pragmatic by nature, integrating economic theory with engineering practice. But, it is also a simplified application of microeconomic theory in that it assumes elements such as price determination, competition, and demand/supply to be fixed inputs from other sources. As a discipline though, it is closely related to others such as statistics, mathematics, and cost accounting. It draws upon the logical framework of economics but adds to that the analytical power of mathematics and statistics.
Engineers seek solutions to problems, and along with the technical aspects, the economic viability of each potential solution is normally considered from a specific viewpoint that reflects its economic utility to a constituency. Fundamentally, engineering economics involves formulating, estimating, and evaluating the economic outcomes when alternatives to accomplish a defined purpose are available.
Read More:
(1) Engineering Economics: Meaning and Characteristics
(2) Why Engineers Need to Study Engineering Economy
(3) 1- Step-by-step guidance for the Engineering economy.
(4) What is Engineering Economics? (with pictures) - InfoBloom
(5) Description and Role in Decision Making - ENGENIEERING ECONOMIC ANALYSIS
Watch:
(1) Introduction to Engineering Economics - Engineering Economics Lightboard
by Engineering Economics Guy [5:29] | YouTube
(2) Ano nga ba ang Engineering Economics? And Principles of Engineering Economy! Engineering Economy
by Homemade Math [19:13] | YouTube
(5) Problem Solving Strategy for Engineering Economics - Engineering Economics Lightboard
by Engineering Economics Guy [7:26] | YouTube
Topics:
INTEREST AND THE VALUE OF MONEY
a. Definitions
b. Principles of Engineering Economics
c. Engineering Economics and the Design Process
d. Cost Concepts for Decision Making
e. Present Economic Studies
2. Money-Time Relationships and Equivalence
a. Interest and the Time Value of Money
b. The Concept of Equivalence
c. Cash Flows
3. Economic Study Methods
a. The Minimum Attractive Rate of Return
b. Basic Economic Study Methods:
i. Present Worth Method
ii. Future Worth Method
iii. Annual Worth Method
iv. Internal Rate of Return Method
v. External Rate of Return Method
c. Other Methods:
i. Discounted Payback Period Method
ii. Benefit / Cost Ratio Method
ENGINEERING ECONOMIC PRINCIPLES AND METHODS
4. Decisions Under Certainty
a. Evaluation of Mutually Exclusive Alternatives
b. Evaluation of Independent Projects
c. Effects of Inflation
d. Depreciation and After-Tax Economic Analysis
e. Replacement Studies
f. Break-Win Analysis
THE BASIC ECONOMIC DECISION MAKING CONCEPTS
5. Decisions Recognizing Risk
a. Expected Monetary Value of Alternatives
b. Discounted Decision Tree Analysis
6. Decisions Admitting Uncertainty
a. Sensitivity Analysis
b. Decision Analysis Models
PDF Materials (E-Books):
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