Advanced Engineering Economics
In these, please describe your reasons for choosing the principle(s) you select.
If I considered the value of all alternatives in the present, which of the seven basic principles would I be applying?
Which principle is applied when one chooses dollars for alternative comparison?
The concept of feedback is embodied in which principle?
Cost = $100+$10*(Number of Units)
Which is the fixed cost?
Which is the variable cost?
What is the incremental cost?
What is the summation of all costs related to a product, structure, system, or service during its life span?
Which cost is the cost of the best rejected opportunity?
Profit in dollars = -D4+4,000,000D+100000 where D = demand in units. For 0 ≤ D ≤ 120 what value of demand, D, generates the maximum profit?
Profit in dollars = (D-30)2+1,000 where D = demand. For 0 ≤ D ≤ 70 what is the maximum profit?
Consider the following project. Between what two demands is the breakeven point?
Demand (Units) Revenue/Unit ($) Cost/Unit ($)
0 0 200
10 50 190
20 100 180
30 150 170
40 200 160
50 250 150
Determine a more exact value of the breakeven point in problem 9.
Revenue in dollars = a0 + a1Dk where D = demand in million units.
Cost in dollars = b0. What is the general formula (with a0, a1, b0, D, k) for the breakeven point?
In problem 11, if a0 = 5, a1 = 8, b0 = 32, and k =3, what is D at breakeven?
For a cost function of ax + b/x + k, what is each term of the cost function named?
There are three levels of detail in cost estimates. What are they and what are their accuracies?
Here is a cost index table.
Year Index
2017 2.0 a) If cost in 2017 is $1000 what are the costs for 2018 and 2019?
2018 2.1 b) Can you estimate cost for 2020 and 2021?
2019 2.2 c) Do you think you could use only this data for 2035?
What is generally the largest source of error in cost estimation?
In the equation: Cost= ∑_d▒C_d +∑_m▒f_m u_m, define each term.
Estimate cost for the following data (costs are in dollars).
Component Direct Cost ($) Unit Cost ($) Number of Units (#)
1 1000 10 20
2 2000 20 40
3 3000 30 60
Estimate cost for the following data (costs are in dollars).
Component Direct Cost ($) Unit Cost ($) Number of Units (#)
1 1000 10 20
2 1000 10 for 20 units, 5 thereafter 30
3 2000 20 for 30 units, 10 thereafter 50
Dr. Brown is making a new flux capacitor. His first flux capacitor cost $100,000 and had a power level of 1.21 GW. His new flux capacitor will have a power level of 2.42 GW. What is an estimate of its cost? (Assume the flux capacitor cost varies like that of a nuclear generating plant.)
A new power plant has a 4 units with a capacity of 100MW each and cost $20 million. An older plant of the same type cost $10 million and had a capacity of 100000 kW. What is the cost-capacity factor?
What is the cost-capacity factor for a fossil-fuel plant?
What does it mean when a cost-capacity factor is less than 1? What does it mean when it is greater than 1?
If you wanted to use a similar technique to power-sizing for concrete bridges being built along the interstate, what do you think you would use for size (S)? (Explain your idea)
Your group of technicians has a learning curve for a new task. They are seeing a 20% reduction in time whenever the number of units doubles. If it takes 50 minutes to complete the first item, then how long will it take to complete the 5th item?
You have a different group of technicians with a different learning curve. Their first item took 50 minutes and you went to lunch (very long) and didn’t measure their 2nd or 3rd item’s time. You did get the 4th item’s time which was 25 minutes. What is this group’s learning curve slope parameter? For +1, does your answer look like any other “sort of” common number you know?
Here is a NEW and DIFFERENT type of learning curve table. What is the value of n in the equation
Zu = Kun for this table?
Number of Units Z/K
1 1 Think about this one, don’t just plug and chug!
3 0.9
9 0.81
Use the following cash flow for problems 28 through 34.
In year 0 you paid $50000 for a machine
In years 1 through 5 you made $10000 per year from the machine
In year 3 you had to pay an additional $10000 to keep the machine going
In year 5 you sold the machine for $20000
Draw the cash flow diagram for this problem.
Calculate the Present Worth (PW) at 10% interest.
Calculate the Future Worth (FW) at 10% interest.
Calculate the Annual Worth (AW) at 10% interest.
What is the payback period?
Does the payback period and the PW, FW, and AW make sense?
Is this a viable project?
If you solve for an Internal Rate of Return (IRR) using a present worth equation, what value do you set the present worth to in order to solve the equation?
Jack Black, engineer extraordinaire, had just returned from taking a 30-page exam in his engineering management graduate program. His boss, Lucy (who certainly had a thing for diamonds and atmospheric sciences) asked Joe to evaluate a new project. Because Jack was quite discombobulated from his testing extravaganza he had a tough time. He persevered and brought Lucy two answers. A future worth that was > 0 and a present worth that was < 0. What should Lucy say to Jack?
What is the present worth, future worth, and annual worth of the following project if i = 10% per year? Hint: 1) You might want to consider the 5 as an A for all 8 years and have some additional + or – cash flows in years 4, 5, and 8. OR 2) Use NPV function in Excel for years 1 thru 8 and subtract 25.
Year Cash Flow
0 -25
1 5
2 5
3 5
4 1
5 7
6 5
7 5
8 11
