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NE 364 Engineering Economy Lecture 1 Introduction NE 364 Engineering Economy 1.

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Presentation on theme: "NE 364 Engineering Economy Lecture 1 Introduction NE 364 Engineering Economy 1."— Presentation transcript:

1 NE 364 Engineering Economy Lecture 1 Introduction NE 364 Engineering Economy 1

2 Course Objectives Introduction to the basic cost concepts and economic environment. Familiarization with the principles of money- time relations and basics of investments opportunities assessment and evaluation. NE 364 Engineering Economy 2

3 Course Info Lecturers: Dr. Salah Mosaad Dr. Hala Farouk Office: 418 Dr. Mootaz Ghazy Office: 323 Textbook: William G. Sullivan, E.M. Wicks, J.T. Luxhoj, Engineering Economy, the 15th Edition, 2010 Lecture notes & Assignments: NE 364 Engineering Economy 3

4 Introduction NE 364 Engineering Economy 4

5 What is Engineering Economy? Engineering Economy involves the systematic evaluation of the economic merits of proposed solutions to engineering problems. 5 NE 364 Engineering Economy

6 Where can Engineering Economy provide answers? Choosing the best design for a high efficiency gas furnace 6 ? ? NE 364 Engineering Economy

7 Where can Engineering Economy provide answers? Selecting the most suitable robot for a welding operation on an automotive assembly line. 7 NE 364 Engineering Economy

8 Where can Engineering Economy provide answers? Ex 2-11: Total Cost in material selection Material: 1112 screw machine steel? Or Brass screw stock? Economic selection among materials cannot be based solely on the costs of materials. Change in material may affect the design, processing cost, and shipping costs. 8 NE 364 Engineering Economy

9 Where can Engineering Economy provide answers? Ex 2-13: selecting alternative machine speeds Speed?? Increasing machine speed  higher output rate BUT  different machine downtime for maintenance. NE 364 Engineering Economy 9

10 Where can Engineering Economy provide answers? Ex 2-16: Trade-offs in energy efficiency studies Energy efficiency affects the annual expense of operating an electrical device such as pump or motor. More energy-efficient device  extra capital investment BUT  annual savings in electrical power expenses NE 364 Engineering Economy 10

11 Principles of Engineering Economy 1. Develop the Alternatives 2. Focus on the Differences 3. Use a Consistent Viewpoint 4. Use a Common Unit of Measure 5. Consider All Relevant Criteria 6. Make Uncertainty Explicit 7. Revisit Your Decisions NE 364 Engineering Economy 11

12 Engineering Economy & the Design Process A sound engineering economic analysis procedure incorporates the basic seven principles. The seven-step procedure is also used to assist decision making within the engineering design process. NE 364 Engineering Economy 12

13 NE 364 Engineering Economy 13

14 Course Outline Introduction and Overview Cost Concepts Time – money Relationships & Equivalence Simple Interest Compound Interest Cash flow Diagrams (Single cash flows, annuity, uniform series, uniform gradient Nominal & Effective interest rates Applications of Money-Time Relationships (PW, AW, FW) Comparing Alternatives Benefit-to-Cost Analysis Depreciation NE 364 Engineering Economy 14

15 Course Material NE 364 Engineering Economy 15

16 Grading System 7 th Week Assessment Exam (20pt.) + Quizzes (10pt) Exam on Tuesday 08 April, 2014 at 4 PM and the location will be announced at exam time. Quizzes in the tutorial. 12 th Week Assessment Exam (15 pt.) + Quizzes (5 pt.) Exam on Tuesday 13 May, 2014 at 4 PM and the location will be announced at exam time. Quizzes in the tutorial. Continuous Assessment (10 pt.) Participation in Lecture + Attendance NE 364 Engineering Economy 16


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