BE/CEE 405 Engineering Economics (Fall 2006)
TR 10:30 to 11:45, Miller 101
Instructor: PingSun Leung
Office: Gilmore 111
Telephone: 956-8562
Office Hours: MW 2:00-3:00 p.m. and by appointment
Email:psleung@hawaii.edu
Homepage: http://www.ctahr.hawaii.edu/LeungP/
Teaching Assistant: Rhoda L.T. Lin
Office: Gilmore 108
Telephone: 956-6787
Office Hours: TRF 2:00-3:00 p.m. and by appointment
Email:luoting@hawaii.edu
Catalog Description
Economic analysis in engineering and management decision-making, interest, depreciation, income tax, cost classification, break-even analysis, economic comparisons of alternatives, benefit-cost analysis. Prerequisites: Econ 120 or 130, and senior standing; or consent.
Course Objectives
BE 405/CEE 405 prepares engineering students in making decisions regarding the acquisition and retirement of capital goods. Student will learn about the economic effects of such decisions and methods for comparing engineering alternatives using economic criteria. The overall goals are
| (a) | to provide a one-semester introductory survey of engineering economics concepts and techniques that can assist engineering and engineering management personnel to make sound investment decisions; |
| (b) | to develop practical knowledge and hands-on experience in solving common engineering economics problems including the use of electronic spreadsheets; |
| (c) | to cultivate an appreciation for the economic environment of engineering and engineering management decision making. |
Skills and Knowledge to be Acquired
Investment analysis of engineering projects is the essence of this course. Students will come to understand and apply modern engineering economics techniques for sound decision-making in evaluating engineering alternatives, including capital budgeting and project financing; impact of price level changes, depreciation and taxation on choice of alternatives; replacement analysis; uncertainty and risk in operation and financing; important factors affecting investment decisions for private and public projects. Students will learn to formulate and solve problems utilizing MS Excel and investment analysis add-ins. Several examples of the applications of engineering economics concepts and techniques introduced in lectures and utilized in computer assignments will be from scaled-down ‘real world’ case studies.
Required Text
William G. Sullivan, Elin M. Wicks, and James Luxhoj. 2006. Engineering Economy, 13/E, Prentice Hall, 675pp.
Course Organization and Administration
While the focus of the course is to provide a survey of modern engineering economics methods for effective engineering and engineering management decision making, it is organized closely parallel the textbook around the following topics:
| (1) | Introduction to engineering economics; |
| (2) | Cost concepts and design economics; |
| (3) | Cost estimation techniques; |
| (4) | Money-time relationships and equivalence; |
| (5) | Applications of money-time relationships; |
| (6) | Comparing alternatives; |
| (7) | Depreciation and income taxes; |
| (8) | Price changes and exchange rates; |
| (9) | Replacement analysis; |
| (10) | Dealing with uncertainty; |
| (11) | Evaluating projects with the benefit/cost ratio method; |
| (12) | Probabilistic risk analysis; |
| (13) | Capital financing and allocation; |
| (14) | Dealing with multiattributed decisions. |
Class meetings are lecture oriented. However, you are required to read the assigned materials before each class meeting in order to participate by raising questions and generating discussion. Make use of the student CD packaged with the textbook to master spreadsheet modeling using Excel to solve engineering economics problem in addition to the examples used in the lectures.
You are required to complete 13 homework assignments and prepared to discuss the solutions on the due date. Your completed homework assignments should be prepared in two parts: a narrative part answering the questions (in MS Word or handwritten) and an Excel attachment if appropriate. Turn in your assignments as email attachments to Rhoda with a cc to me before class (10:30 a.m.) on the due date. NO late homework will be accepted.
There will be 2 midterms and a final exam. Exam will be open book and notes. Also, calculators may be used. Exam questions will be similar to examples in the texts, problems discussed in class and homework assignments. Each exam will covered only topics after the last exam. For example, final exam will covered only topics after the 2nd midterm exam.
Grading
Grades will be determined from a class curve with the following grade weights:
| Midterm | 200 |
| Final Exam | 100 |
| 13 Homework Assignments @ 10 points | 130 |
| TOTAL | 430 |
Tentative Schedule
| Data | Topics | Assigned Readings | |||
| Aug | 22 | T | Introduction to Engineering Economics | Ch 1, Appendix A | |
| 24 | R | Cost Concepts and Design Economics | Ch 2, Appendix A | ||
| 28 | M | Last Day to Drop Classes and Switch Sections (Without “W” Grade) | |||
| 29 | T | Cost Estimation Techniques | Ch 3 | ||
| 31 | R |
|
Ch 3 | ||
| Sept | 4 | M | Holiday : Labor Day | ||
| 5 | T | Money-Time Relationships and Equivalence | Ch 4 | ||
| 7 | R | Money-Time Relationships and Equivalence | Ch 4 | ||
| 12 | T | Money-Time Relationships and Equivalence | Ch 4 | ||
| 14 | R | Money-Time Relationships and Equivalence | Ch 4 | ||
| 19 | T | 1st MIDTERM | |||
| 21 | R | Applications of Money-Time Relationships | Ch 5 | ||
| 26 | T | Applications of Money-Time Relationships | Ch 5 | ||
| 28 | R | Comparing Alternatives | Ch 6 | ||
| Oct | 3 | T | Comparing Alternatives | Ch 6 | |
| 5 | R | Depreciation and Income Taxes | Ch 7 | ||
| 10 | T | Depreciation and Income Taxes | Ch 7 | ||
| 12 | R | Evaluating Projects with Benefit-Cost-Ratio Method | Ch 11 | ||
| 17 | T | Evaluating Projects with Benefit-Cost-Ratio Method | Ch 11 | ||
| 19 | R | Price Changes and Exchange Rates | Ch 8 | ||
| 20 | F | Last Day for In-Person Restricted Withdrawal (With “W” Grade) | |||
| 24 | T | Price Changes and Exchange Rates | Ch 8 | ||
| 26 | R | 2nd MIDTERM | |||
| 31 | T | Dealing with Uncertainty | Ch 10 | ||
| Nov | 2 | R | Dealing with Uncertainty | Ch 10 | |
| 7 | T | Holiday : Election Day | |||
| 9 | R | Probabilistic Risk Analysis | Ch 12 | ||
| 10 | F | Holiday : Veterans’ Day | |||
| 14 | T | Probabilistic Risk Analysis | Ch 12 | ||
| 16 | R | Replacement Analysis | Ch 9 | ||
| 21 | T | Replacement Analysis | Ch 9 | ||
| 23 | R | Holiday : Thanksgiving Day | |||
| 28 | T | Capital Financing and Allocation | Ch 13 | ||
| 30 | R | Capital Financing and Allocation | Ch 13 | ||
| Dec | 5 | T | Dealing with Multiattributed Decisions | Ch 14 | |
| 7 | R | Dealing with Multiattributed Decisions | Ch 14 | ||
| 12 | T | Final Exam 9:45-11:45 |
