Lecture 2 (Engineering Economics) PDF

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Engineering Economics...

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8/31/2020 - Decision Making Process - Recognize the Problem - Define the goal or objective - Assemble relevant data - Identify feasible alternatives - Select the criterion to determine the best alternative - Construct the model - Predict the outcome for each alternative - Choose the best alternative - Audit the results - In economic decision making related engineering projects, which of the following factor is a non-economic factor - Morale - Decision making in engineering economics almost always involves in choosing the - Alternative that is the most cost-effective - Fixed Cost: does not change with the level of activity or volume - Tends to be over a range of volume - Variable Cost: depends on the level of output - Generally decreases as volume increases - Marginal Cost: the cost for one additional unit beyond current level - Frequently has interesting “pain points” where some capacity is exceeded and the very next unit calls for some large investment - Average Cost: total cost divided by the number of units - Total cost = fixed cost + total variable cost - a) 500 - Average cost: $13 - Marginal cost: $13 - b) 1500 - Average cost:...