Course Introduction(Undergraduate Program):Introduction to Engineering Economy（Bilingual）
Source: This web site Publish date: 2015-10-28 10:25:00
A succinct job description for an engineer consists of two words: problem solver. Broadly speaking, engineers use knowledge to find new ways of doing things economically. Engineering design solutions do not exist in a vacuum but within the context of a business opportunity. But every problem has multiple solutions, so the issue is, how does one rationally select the design with the most favorable economic result? The answer to this question can also be put forth in two words: engineering economy. Engineering economy provides a systematic framework for evaluating the economic aspects of competing design solutions. Just as engineers model the stress on a support column, or the thermodynamic response of a steam turbine, they must also model the economic impact of their recommendations.
Understanding and applying economic principles to engineering have never been more important. Engineering is more than a problem-solving activity focusing on the development of products, systems, and processed to satisfy a need or demand. Beyond function and performance, solutions must also be viable economically. Design decisions affect limited resources such as time, material, labor, capital, natural resources, not only initially (during conceptual design) but also through the remaining phases of the life cycle. A great solution can die a certain death if it is not profitable.
The technological andsocial environments in which we live continue to change ata rapid rate. In recent decades, advances in science and engineeringhave madespace travel possible, transformed our transportation systems, revolutionized thepractice of medicine, and miniaturized electronic circuits so that a computer canbe placed on a semiconductor chip. The list of such achievementsseems almostendless. In your science and engineeringcourses, you will learn about some of thephysical laws that underlie these accomplishments.
The utilization of scientific andengineering knowledge for our benefit is achieved through the design of thingswe use, such as furnaces for vaporizing trashand structures for supporting magnetic railways. However, these achievementsdon't occur without a price, monetary or otherwise. Therefore, the purpose ofthis book is to develop and illustrate the principles and methodology requiredto answer the basic economic question of any design: Do its benefits exceed itscosts?
The Accreditation Board for Engineering and Technology states thatengineering "is the profession in which a knowledge of the mathematical andnatural sciences gained by study, experience, and practice is applied with judgmentto develop ways to utilize, economically, the materials and forces of nature for thebenefit of mankind." In this definition, the economic aspects of engineering areemphasized, as well as the physical aspects. Clearly, it is essential that the economic part of engineering practice be accomplished well. Thus, engineers use knowledgeto find new ways of doing things economically.
Engineering economy is the dollars-and-cents side of the decisions thatengineers make or recommend as they work to position a firm to be profitable in a highly competitive marketplace. Inherent to these decisions are trade-offsamong different types of costs and the performance (response time, safety,weight, reliability, etc.) provided by the proposed design or problem solution. The mission of engineering economy is to balance these trade-offs in the most economical manner. For instance, if an engineer at Ford Motor Company invents a new transmission lubricant that increases fuel mileage by 10% and extends the life of the transmission by 30,000 miles, how much can the company afford to spend to implement this invention? Engineering economy can provide an answer.
A few more of the myriad situations in which engineering economy plays a crucial role in the analysis of project alternative come to mind:
1.Choosing the best design for a high-efficiency gas furnace
2.Selecting themost suitable robot for a welding operation on an automotiveassembly line
3.Making a recommendation about whether jet airplanes for an overnight delivery service should be purchased or leased
4.Determining the optimal staffing plan for a computer help desk
From these illustrations, it should be obvious thatengineering economy includes significant technical considerations. Thus, engineeringeconomyinvolves technical analysis, with emphasis on the economic aspects, and has the objective of assistingdecisions. This is true whether the decision maker is an engineer interactivelyanalyzing alternatives at a computer-aided design workstation or the ChiefExecutive Officer (CEO) considering a new project. An engineer who is unprepared toexcel at engineering economy is not properly equipped for his or her job.
The development, study, and application of any discipline must begin with a basic foundation. We define the foundation for engineering economy to be a set of principles that provide a comprehensive doctrine for developing the methodology. These principles will be mastered by students as they progress. Once a problem or need has been clearly defined, the foundation of the discipline can be discussed in terms of seven principles.
PRINCIPLE 1: Develop the Alternatives
The choice (decision) is among alternatives. The alternatives need to be identified and then defined for subsequent analysis.
PRINCIPLE 2: Focus on the Differences
Only the differences in expected future outcomes among the alternatives are relevant to their comparison and should be considered in the decision.
PRINCIPLE 3: Use a Consistent Viewpoint
The prospective outcomes of the alternatives, economic and other, should be consistently developed from a defined viewpoint (perspective).
PRINCIPLE 4: Use a Common Unit of Measure
Using a common unit of measurement to enumerate as many of the prospective outcomes as possible will simplify the analysis of the alternatives.
PRINCIPLE 5: Consider All Relevant Criteria
Selection of a preferred alternative (decision making) requires the use of a criterion (or several criteria). The decision process should consider both the outcomes enumerated in the monetary unit and those expressed in some other unit of measurement or made explicit in a descriptive manner.
PRINCIPLE 6: Make Risk and Uncertainty Explicit
Risk and uncertainty are inherent in estimating the future outcomes of the alternatives and should be recognized in their analysis and comparison.
PRINCIPLE 7: Revisit Your Decisions
Improved decision making results from an adaptive process; to the extent practicable, the initial projected outcomes of the selected alternative should be subsequently compared with actual results achieved.
This course has two primary objectives: (1) to provide students with a sound understanding of the principles, basic concepts, and methodology of engineering economy; and (2) to help students develop proficiency with these methods and with the process for facilitating rational decisions they are likely to encounter in professional practice. Interestingly, an engineering economy course may be a student's only college exposure to the systematic evaluation of alternative investment opportunities. In this regard, Engineering Economy is intended to serve as a text for classroom instruction and as a basic reference for use by practicing engineers in all specialty areas (e.g., chemical, civil, computer, electrical, industrial, and mechanical engineering). The course is also useful to persons engaged in the management of technical activities.
In summary, engineering economyis a collection of problem-solving tools and techniques that are applied to engineering, businessand environmental issues. Common, yet often complex, problems involving money are easier to understandand solve when students have a good grasp on the engineering economy approach toproblem solving and decision making. The problem-solving focus willenable students to master the theoretical and applied principles of engineering economy.