Engineering Economic Analysis Overview

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What is one of the key purposes of using engineering economic calculations?

To compare differing cash flows.

Why is postaudit of results considered an essential part of engineering decision making?

To ensure that projected benefits are obtained and to encourage realistic estimates in analyses.

What is one of the gravest responsibilities of an engineer?

Protecting the safety of the public, clients, and/or employees.

When does the time value of money become irrelevant in decision making?

When all costs and benefits occur within a brief period of time. Signup and view all the answers

What is one of the most valued personal characteristics in the engineering environment?

Integrity. Signup and view all the answers

In the given scenario, should Sandy buy a dozen candy bars at the lower price?

Yes. Signup and view all the answers

What is the focus of engineering economic analysis?

Costs, revenues, and benefits that occur at different times. Signup and view all the answers

When do construction costs occur in engineering projects?

Near future during the design and building stages. Signup and view all the answers

What is the term used for analyzing costs, benefits, and revenues occurring over time?

Engineering economic analysis. Signup and view all the answers

What questions can engineering economic analysis help answer?

Which projects are worthwhile, priority of projects, how projects should be designed, etc. Signup and view all the answers

In what stage do revenues or benefits typically occur in engineering projects?

After completion, usually for years. Signup and view all the answers

Give an example of a situation where engineering economic analysis is necessary.

Determining if a mineral or oil deposit is worth developing. Signup and view all the answers

What are the three types of consequences that may arise from an alternative in engineering decision making?

Market consequences, Extra-market consequences, Intangible consequences Signup and view all the answers

How can economic criteria for judging alternatives be reduced to three cases?

When neither input nor output is fixed, maximize profit; For fixed input, maximize benefits or other outputs; For fixed output, minimize costs or other inputs Signup and view all the answers

What is the significance of cost-accounting systems in engineering decision making?

They are an important source of cost data, but their allocations of indirect costs may be inappropriate for economic analysis Signup and view all the answers

How are market consequences and extra-market consequences organized for decision making?

They are organized into a cash flow diagram Signup and view all the answers

What is the main criterion for choosing among possible alternatives in engineering decision making?

Economic efficiency Signup and view all the answers

What does engineering decision making focus on when solving substantial engineering problems?

Economic aspects Signup and view all the answers