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ES6 - Ch1 - Lesson 1.1 1.2 Introduction To Engineering Economy

This document provides an introduction to engineering economics. It defines key terms like economy, economics, and engineering economics. Engineering economics involves the systematic evaluation of economic benefits of proposed engineering solutions. The document also discusses the rational decision-making process, which involves 7 steps: 1) diagnose the problem, 2) analyze the environment, 3) develop viable alternatives, 4) evaluate alternatives, 5) make a choice, 6) implement the decision, and 7) evaluate and adapt the decision results. Each step of the rational decision-making process is then explained in more detail.

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Nadine Panti
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57 views20 pages

ES6 - Ch1 - Lesson 1.1 1.2 Introduction To Engineering Economy

This document provides an introduction to engineering economics. It defines key terms like economy, economics, and engineering economics. Engineering economics involves the systematic evaluation of economic benefits of proposed engineering solutions. The document also discusses the rational decision-making process, which involves 7 steps: 1) diagnose the problem, 2) analyze the environment, 3) develop viable alternatives, 4) evaluate alternatives, 5) make a choice, 6) implement the decision, and 7) evaluate and adapt the decision results. Each step of the rational decision-making process is then explained in more detail.

Uploaded by

Nadine Panti
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ES6

ENGINEERING
ECONOMICS
Engr. Karen Joi P. Beo | Engr. Karl Kenneth S. Araojo
L e s s o n 1 .1
INTRODUCTION
Lesson 1.2
THE RATIONAL DECISION-MAKING
PROCESS
Lesson 1.3
BUSINESS ORGANIZATION
Lesson 1.4

INTRODUCTION STRATEGIC ENGINEERING


TO ENGINEERING ECONOMIC DECISIONS
Lesson 1.5
ECONOMICS
Chapter 1
ECONOMIC ENVIRONMENT

2
CHAPTER OBJECTIVES
At the end of this chapter, the students shall be able
to achieve the following learning outcomes:

| Define Engineering Economics


| Familiarize with the Rational Decision-Making Process
and its application.
| Familiarize with the different types of business
organizations in the industry.
| Discuss the advantages/disadvantages of each business
organization.
| Understand and apply fundamental concepts and use
the terminology of engineering economics.

3
L e s s o n 1 .1

INTRODUCTION TO
ENGINEERING
ECONOMICS
DEFINITION OF TERMS

Economy
• An economy is a system of inter-related production and consumption activities that
ultimately determine the allocation of resources within a group.
• The production and consumption of goods and services as a whole fulfill the needs of
those living and operating within it.

 Economics – is the science that deals with the production, allocation and use of
goods and services. The two major subdivisions of economics are:
a. Macroeconomics is the study of the entire system of economics.
b. Microeconomics is the study of how the systems affect one business or
parts of the economic system.
• An economy is everything involved in managing all
RESOURCES in a particular place.
International Institute for Management Development (IMD)

IMD’s 2022 World


Competitiveness Yearbook
ranked the Philippines 48th out
of 63 economies, from the
52nd spot out of 64 economies
in 2021. This was the
Philippines’ highest ranking in
two years or since placing
45th in 2020.

However, the country continued


to lag behind its neighbors,
placing 13th among the 14 Asia-
Pacific economies in the index
for the fifth straight year.
ENGINEERING ECONOMICS

 Engineering Economics –Engineering economics involves the systematic evaluation


of the economic benefits of proposed solutions to engineering problems.
 The engineering economics involves technical analyzing with emphasis on the
economic aspects and has the objective of assisting decisions.
9
Lesson 1.2

THE RATIONAL
DECISION-MAKING
PROCESS
DECISION-MAKING

the process of identifying and


choosing alternative courses of
action in a manner
appropriate to the demands of
the situation

11
DECISION-MAKING
PROCESS
ACCORDING TO DAVID H. HOLT, RATIONAL DECISION-MAKING IS A
PROCESS INVOLVING THE FOLLOWING STEPS:

1. diagnose problem
2. analyze environment
3. develop viable alternatives
4. evaluate alternatives
5. make a choice
6. implement decision
7. evaluate and adapt decision results
STEP 1 | DIAGNOSE PROBLEM
“identification of the problem is tantamount to
having the problem half-solved”

What is a problem?
A problem exist when there is a difference
between an actual situation and a desired
situation.
STEP 2 | ANALYZE THE ENVIRONMENT
the objective of environment analysis is the
identification of constraints
STEP 3 | DEVELOP VIABLE ALTERNATIVES
1. Prepare a list of alternative solutions
2. Determine the viability of each solutions
3. Revise the list by striking out those which are
not viable
STEP 4 | EVALUATE ALTERNATIVES
evaluation makes choosing the right solution less
difficult

Each alternative must be analyzed and evaluated in


terms of it’s value, cost, and risk characteristics.
STEP 5 | MAKE A CHOICE
Process of selecting among alternatives
representing potential solutions to a problem

Particular effort should be made to identify all


significant consequence of your choice
STEP 6 | IMPLEMENT DECISION
Carrying out the decision so that the objectives
sought will be achieved.

To make implementation, a plan must be deviced.


Everyone involved in the implementation must
understand and accept the solution.
STEP 7 | EVALUATE & ADAPT DECISION RESULTS
This step requires checking at each stage of the process to
assure that the alternative generated, the criteria used in
evaluation, and the solution selected for implementation are in
keeping the goal and objectives originally specified.

This also requires actions to ensure that activites performed


match the desired activites or goals that have been set.
THANK YOU.

20XX Pitch Deck 20

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