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ENGR 3360U

Unit 1

1.1 General Introduction to

Engineering Economic Analysis

Dr. J. Michael Bennett, P. Eng., PMP,

UOIT

Version F

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Unit 1 – General Introduction to Engineering Economic Analysis

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()ange Record

Version F Initial (reation

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(ourse *utline

1. Engineering Economic Analysis

'. General Economics

'.1 "icroeconomics

'.' "acroeconomics

'.3 "oney + t)e #an, o- (anada3. Engineering Estimation

. Interest and E/uialence

. %resent 2ort) Analysis

6. Annual (as) Flo

4. Rate o- Return Analysis

5. %ic,ing t)e #est ()oice

. *t)er ()oosing 7ec)ni/ues

10. Uncertainty and Ris,

11. Income and e8reciation

1'. A-ter&ta9 (as) Flos

13. Re8lacement Analysis

1. In-lation1. "ARR :election

16. %u;lic :ector Issues

14. 2)at an Engineer s)ould ,no

a;out Accounting

15. 7)e #usiness %lan

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(ourse

7)is course is a ;ird$ rig)t>

Engineering and economy

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"ottos

7ime is money

An engineer is someone )o can ;uild -or a

dime$ )at any damn -ool can ;uild -or a dollar

7)ere are t)ree ,inds o- economists? t)ose )o

count and t)ose )o don@t

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*;seration

o many -ilt)y ric) economists do you

,no>

o you t)in, t)at #ill Gates ould 8ass t)is

course> 2ould )e een ta,e it>

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(arlyle@s snide /uote

B7eac) a 8arrot to say Bsu88ly and demandC

and you@e got an economistC

BGie me a one&)anded economist? all o-

t)e ot)ers say on one )andon t)e ot)er)andHHC arry :. 7ruman

Is a No;el category


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Unit 1 Road "a8

1.1 Engineering Economic Analysis1.' ecision "a,ing

1.3 "acro and "icro Economics

1. Fundamental #usiness :tructures1. Interest Rates

1.6 :8reads)eet -unctions

1.4 "inimum attractie rate o- return1.5 (as) -los

1. ou;ling times


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1.1 2)at is t)e most im8ortant

Engineering Varia;le>


J K L

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2)y Engineering Economic Analysis is Im8ortant to

Engineers

Engineers BdesignC and create

esigning inoles economic decisions

Engineers must ;e a;le to incor8orate

economic analysis into t)eir creatie e--orts *-ten engineers must select and e9ecute -rommulti8le alternaties

A 8ro8er economic analysis -or selection ande9ecution is a -undamental as8ect o-engineering

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Role o- Engineering Economic Analysis

in ecision "a,ing

ecision ma,ing inoles t)e estimation o--uture eentsoutcomes

Engineering economy aids in /uanti-ying 8astoutcomes and -orecasting -uture outcomes

Engineering Economy 8roides a -rameor,-or modeling 8ro;lems inolingM

7ime

"oney

Interest rates

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7o (oncerns o- Engineering

Engineers )ae t)e dual tas, o-determiningM

1. 2)at society ants Dits needs$ and

'. o ;est to com;ine economic resources$ 8rocesses$ etc. to 8roduce t)e goods and

serices desired ;y society.

E--iciencyM ;ot) 8)ysical and economice--iciencies must ;e considered.

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%)ysical and Economic E--iciency

%)ysical e--iciency

"easure o- t)e success o- engineering actiity

in t)e 8)ysical enironment? ratio o- out8uts to

in8uts"a9imum 8)ysical e--iciency ratio is 1 Dor

100O

%)ysical units include #7Us$ ,&)ours$ etc.

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Economic e--iciency

Ratio o- alue or ort) to cost? must e9ceed 1

or 100O

Engineer must 8roduce out8uts t)at are most&alued Do- greatest satis-action ;y society

Deconomic e--iciency

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ENGINEERING

SPHERE

1950s

ECONOMIC

SPHERE

190s!

ECONOMIC

SPHERE

ENGINEERING

SPHERE

Eolution o- Economic + %)ysical E--iciency

(Physical efficiency)(Economic

efficiency)

Economic Efficiency

Independent decision making Significant overlap

Physical efficiency

3360 Unit 01.1 2016-I-01

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