Engineering Economic Analysis Quiz
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Engineering Economic Analysis Quiz

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Questions and Answers

What is the most common criterion in decision-making?

  • Maximize Risks
  • Minimize Costs
  • Integrate Criteria
  • Maximize Profit (correct)

    • The decision-making process includes auditing the results to compare reality versus prediction.

    True

    What is the primary purpose of constructing models in decision-making?

    To describe interrelationships among relevant data and predict outcomes.

    In ethics, deciding between right and wrong involves determining _____ and guidelines for conduct.

    <p>duty</p> Signup and view all the answers

    Match the following components of decision-making with their descriptions:

    <p>Construct Models = Predicting outcomes of various alternatives Audit Results = Comparing reality vs. prediction Choose Best Alternative = Selection based on criteria Ethics = Distinguishing between right and wrong</p> Signup and view all the answers

    Which of the following is not one of the ethical obligations of professional engineers?

    <p>Avoid public scrutiny</p> Signup and view all the answers

    What is the first step in the Decision-Making Process?

    <p>Recognize Problem / Opportunity</p> Signup and view all the answers

    Risk and uncertainty are not considered when predicting alternatives' outcomes.

    <p>False</p> Signup and view all the answers

    What should one do when they learn from mistakes in decision-making?

    <p>Adjust future decisions based on lessons learned.</p> Signup and view all the answers

    Feasibility studies are examples of simple problems in engineering decision-making.

    <p>False</p> Signup and view all the answers

    What is the purpose of engineering economic analysis?

    <p>To systematically compare alternatives based on their economic merits.</p> Signup and view all the answers

    In the decision-making process, after identifying feasible alternatives, the next step is to ________ the outcomes of these alternatives.

    <p>predict</p> Signup and view all the answers

    Match the following types of problems with their examples:

    <p>Simple Problems = Should our company pay the vendor cash or credit? Intermediate Problems = Should I buy or lease my next car? Complex Problems = Feasibility study of a new automobile plant</p> Signup and view all the answers

    Which of the following is NOT a key step in the Decision-Making Process?

    <p>Consider Potential Biases</p> Signup and view all the answers

    Engineering economic analysis can be applied to both product design and selection of projects.

    <p>True</p> Signup and view all the answers

    Give an example of a complex problem faced by engineers.

    <p>Planning for new highways.</p> Signup and view all the answers

    What does SWOT stand for in the context of decision-making?

    <p>Strengths, Weaknesses, Opportunities, Threats</p> Signup and view all the answers

    Identifying feasible alternatives is not a crucial step in the decision-making process.

    <p>False</p> Signup and view all the answers

    What are two sources of information in the data collection process?

    <p>Financial Accounting System and Market Research</p> Signup and view all the answers

    The process of recognizing needs for new products, processes, or facilities is called __________.

    <p>Opportunity Identification</p> Signup and view all the answers

    Match the following decision-making components with their descriptions:

    <p>Define Goals/Objectives = Establishing the targets for what needs to be achieved Assemble Relevant Data = Collecting necessary information for analysis Identify Feasible Alternatives = Generating a range of possible options Financial Consequences = Evaluating costs and benefits of decisions</p> Signup and view all the answers

    Which of the following is NOT a factor to consider when defining goals/objectives?

    <p>Market analysis</p> Signup and view all the answers

    Intangible consequences include only financial impacts of decisions.

    <p>False</p> Signup and view all the answers

    What does bounded rationality refer to in the decision-making process?

    <p>The limited number of alternatives considered due to constraints in information and thinking capacity.</p> Signup and view all the answers

    What is a common ethical lapse when recognizing a problem in decision making?

    <p>Looking the other way due to bribes or fear of retribution</p> Signup and view all the answers

    Favoring a single stakeholder group while defining goals is considered an ethical lapse.

    <p>True</p> Signup and view all the answers

    What is the ethical issue associated with assembling relevant data?

    <p>Using faulty or inaccurate data</p> Signup and view all the answers

    Selecting a criterion to determine the best alternative should consider not only monetary consequences but also other significant consequences like ___.

    <p>safety and environmental impact</p> Signup and view all the answers

    Match the decision process step with its corresponding ethical lapse:

    <p>Recognize the problem = Looking the other way Identify feasible alternatives = Leaving legitimate alternatives out of consideration Audit the result = Hiding past mistakes Select criterion to determine best alternative = Considering only monetary consequences</p> Signup and view all the answers

    Which of the following is an ethical lapse in the construction of a model?

    <p>Using a short horizon that favors one alternative</p> Signup and view all the answers

    Using pessimistic estimates for one alternative while being overly optimistic for another is an ethical decision-making practice.

    <p>False</p> Signup and view all the answers

    Why is it important to recognize ethical issues in the decision-making process?

    <p>To ensure a transparent and honest approach that considers all stakeholders.</p> Signup and view all the answers

    Study Notes

    Types of Problems

    • Simple problems have straightforward solutions, such as buying a metro-rail pass or paying by credit
    • Intermediate problems require more analysis, like buying or leasing a car or deciding on a CNC machine to purchase
    • Complex problems are multi-faceted and require extensive feasibility studies, such as planning for new highways

    Role of Engineering Economic Analysis

    • This systematic tool compares different alternatives based on their economic merits
    • Most applicable to problems with significant economic importance, demanding a structured analysis
    • It can be applied to diverse areas like product/process design, capital equipment purchase, project selection, and investment decisions

    Decision-Making Process

    • Recognizing the problem/opportunity is the first step and can arise from needs for new products or processes, or the need for improvement
    • Defining goals/objectives should consider general and specific aims, multiple objectives, potential conflict, and limiting factors
    • Assembling relevant data is crucial for accurate decision-making. Data can come from financial accounting, cost accounting, market research, quotations, economic indicators, and other published information
    • Identifying feasible alternatives involves exploring various options, including doing nothing and simple solutions
    • Selecting the criterion to evaluate alternatives can be multifaceted, with conflicting criteria and possibly multiple evaluation factors
    • Constructing a model represents the interrelationships between data to predict the outcomes of the various alternatives
    • Predicting alternatives’ outcomes requires comparing outcomes, factoring in risk and uncertainty, and potentially revising alternatives using additional information
    • Choosing the best alternative depends on the selection criteria and additional intangible aspects
    • Auditing the results means comparing reality to predictions, learning from mistakes, and considering replacement analysis

    Ethical Dimensions in Engineering Decision-Making

    • Ethical considerations should be inherent throughout the decision-making process
    • Example lapses can occur in all stages, including failing to acknowledge problems, favoring specific objectives, using inaccurate data, neglecting viable alternatives, focusing solely on monetary outcomes, constructing models with biased horizons, manipulating predictions, choosing suboptimal alternatives, and failing to address past mistakes

    Ethics in Engineering Economic Analysis

    • Integrity and honesty are paramount when conducting the decision-making process, considering data, analysis methods, recommendations, and follow-up
    • Recognizing ethical issues should be an integral part of the decision-making process

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    Lecture 1 - Making Economic Decisions PDF

    Description

    Test your knowledge on the types of problems and the role of engineering economic analysis in decision-making. Understand how to differentiate between simple, intermediate, and complex problems, and learn how systematic analysis can help in evaluating alternatives. This quiz will guide you through the fundamentals of effective decision-making processes in engineering.

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