University Of Karachi

2012
Engineering Economics

Syed Saad Ahmed B.E 3rd Year B-0933040 Chemical Engineering Assignment no.: 1

Submitted To, Ma am Mehwish Qasim

Engineering Economics 2012

Definition of Economics:
Economics is the branch of science which deals with the system of production and management of material wealth, aspect of social, political and economical life. It concerned with worldly necessities of life, using the minimum of time or resources necessary for effectiveness.

Engineering Economics:
Engineering economics is the branch of science which deals with the concepts and techniques of analysis useful in evaluating the worth of systems, products, and services in relation to their costs. Engineering economics is the application of economic techniques to the evaluation of design and engineering alternatives. The role of engineering economics is to assess the appropriateness of a given project, estimate its value, and justify it from an engineering standpoint.

It is used to answer many different questions:  Which engineering projects are worthwhile? Has the mining or petroleum engineer shown that the mineral or oil deposits is worth developing?

 Which engineering projects should have a higher priority? Has the industrial engineer shown which factory improvement projects should be funded with the available dollars?

 How should the engineering project be designed? Has chemical or process engineer chosen the best thickness for insulation?

Two Factors in Engineering Economic Decisions The factors of time and uncertainty are the defining aspects of any engineering economic decisions

Prepared by: Syed Saad Ahmed

Engineering Economics 2012

The five main types of engineering economic decisions are: (1) Service improvement (2) Equipment and process selection (3) Equipment replacement, (4) New product and product expansion (5) Cost reduction.

IMPORTANCE OF ENGINEERING ECONOMY

IMPORTANCE OF ENGINEERING ECONOMY 1 Individuals, small business owners, large corporation presidents, and government agency heads are routinely faced with the challenge of making decisions when selecting one alternative over another. These are decisions of how to be investing the funds, or capital, of the company and its owners. IMPORTANCE OF ENGINEERING ECONOMY 2 Engineering economy, quite simply, is about determining the economic factors and the economic criteria utilized when one or more alternatives are considered for selection. Another way to define engineering economy is a collection of mathematical techniques that simplify economic comparisons. IMPORTANCE OF ENGINEERING ECONOMY 3 With the techniques of Engineering Economy, a rational and meaningful approach to evaluating the economic aspects of different methods (alternatives) of accomplishing a given objective can be developed.

Prepared by: Syed Saad Ahmed