Application of engineering or mathematical analysis and synthesis to decision making in economics. The knowledge and techniques concerned with evaluating the worth of commodities and services relative to their cost. Analysis of the economics of engineering alternativesThis course has to do with money and success. Most of us want some measure of success in life. For better or for worse, money (and economics) has a lot to do with success.

1. Engineering
economics
Presentation on
Engineering economic:
Importance & Application

2. What is Engineering
Economics ?
 Application of engineering or
mathematical analysis and synthesis
to decision making in economics.
 The knowledge and techniques
concerned with evaluating the worth
of commodities and services relative
to their cost.
 Analysis of the economics of
engineering alternatives. 2

3. Money and Success
 This course has to do with money
and success.
 Most of us want some measure of
success in life.
 For better or for worse, money (and
economics) has a lot to do with
success.
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4. Economics and Engineering
 Economics is a big part of an engineer's
job.
 The engineer must translate scientific ideas in
products and systems that better mankind.
 Ideas need to make sense economically and
the engineer must be able to convince others
that this is so.
 That is true of any organization that you
might join upon graduation.
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5. Why Engineers Study Engineering
Economics
 Engineers students should prepared themselves with
economic empowerment so that they could manage
their wealth, help them in starting their own business
or during managerial period.
 It is because money is one of important factor in
completing a project. Furthermore, fresh graduates
also need to manage their wealth well since a lot of
graduates facing problem because lack of information
about the loans that they have made.
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6. The Goal
 For-profit organizations have for
goal to make money - now and in
the future.
 Not-for-profit must remain financially
sound.
 Both types must worry about money
or they will probably cease to exist.
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7. Economics and World
Institutions
 World: International trade, balance of
payments, currency evaluation
 Federal, State and Local: Tax spending,
GNP(Gross National Product), distribution
of resources, support of institutions, public
welfare
 Organization: Revenues, costs, profit,
return on investment, stock prices
 You: Salary, investments, savings,
borrowing
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8. Business Decisions are
not Simple
 Product design
 Process design (inspection, operations,
raw materials)
 Machine selection
 Facility design
 All decisions are interrelated. You can't
make one without affecting many others.
This is especially true when multiple
products, periods, stages are involved.
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9. Engineering Economic
Analysis - Seven Steps
1. Recognize and formulate the problem.
2. Develop feasible alternatives.
3. Develop cash flows for each alternative.
4. Select a criterion (or criteria) for
determining the preferred alternative.
5. Analyze and compare alternatives.
6. Select the preferred alternative.
7. Perform monitoring and post-evaluation.
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10. Economic Enviorment
 Much less of a quantitative nature is known about
economic environments -- this is due to economics
being involved with the actions of people, and the
structure of organization.
 Satisfaction of the physical and economic
environments is linked through production and
construction processes. Engineers need to control
systems to achieve a balance in attributes in both the
physical and economic environments, and within the
bounds of limited resources. 10

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