Advanced Engineering Economy(IND 511)
| Course Code | Course Name | Semester | Theory | Practice | Lab | Credit | ECTS |
|---|---|---|---|---|---|---|---|
| IND 511 | Advanced Engineering Economy | 1 | 3 | 0 | 0 | 3 | 6 |
| Prerequisites | |
| Admission Requirements |
| Language of Instruction | English |
| Course Type | Compulsory |
| Course Level | Masters Degree |
| Course Instructor(s) | E. Ertuğrul KARSAK ekarsak@gsu.edu.tr (Email) Ece UÇAR KELEŞ (Email) |
| Assistant | |
| Objective | The objectives of this course are to enable the student to understand the basics of engineering economy decisions, to review economic decision making techniques including methods for risk and uncertainty, and to develop overall economic cost awareness which will prove useful in personal investment decision making as well as in many types of engineering and management decisions. |
| Content |
- Introduction and organization - Review of discrete cash flow models - Uniform and gradient series - Nominal versus effective interest rates - Continuous compounding and continuous cash flows - Mid-period convention - Time-dependent interest rates - Loans - Equivalent methods for comparing alternatives (single project) - Present worth, future worth and annual worth methods - Benefit-cost ratio method - Rate of return method and variations - Internal rate of return method - External rate of return method - Decision rules for selecting among multiple alternatives - Present worth, future worth and annual worth methods - Benefit-cost ratio method - Internal rate of return method - Approximate and supplementary methods - Payback method - Profitability index - Depreciation methods - After-tax economy studies - Index numbers - Incorporating inflation into economic analysis - Replacement models - Retirement with identical replacement - Generalized replacement model - Dynamic programming formulations - Mathematical programming formulations for capital budgeting - Risk analysis - Statistical moments of random variables - Random cash flows - Random project life - Decision criteria and methods for risk and uncertainty - Portfolio optimization - Introduction to real options approach - Project presentations |
| Course Learning Outcomes |
LO 1: Cash flow models. LO 2: Effects of inflation on economic analysis. LO 3: Replacement models. LO 4: Mathematical programming formulations for capital budgeting. LO 5: Decision criteria and methods for risk and uncertainty LO 6: Multi-attribute and multi-objective decision making for investment analysis. LO 7: Portfolio optimization. |
| Teaching and Learning Methods | Lecture; problem sessions; discussion; self study. |
| References |
- Park, C.S., Sharp-Bette, G.P., Advanced Engineering Economics, John Wiley & Sons, 1990. - Fleischer, G.A., Introduction to Engineering Economy, PWS Publishing Company, Boston, 1994. |
Theory Topics
| Week | Weekly Contents |
|---|---|
| 1 | Introduction and organization, Review of discrete cash flow models, Uniform and gradient series, Nominal versus effective interest rates. |
| 2 | Continuous compounding and continuous cash flows, Mid-period convention, Time-dependent interest rates, Loans. |
| 3 | Equivalent methods for comparing alternatives (single project): Present worth, future worth and annual worth methods, Benefit-cost ratio method, Rate of return method and variations, Internal rate of return method, External rate of return method. |
| 4 | Decision rules for selecting among multiple alternatives: Present worth, future worth and annual worth methods, Benefit-cost ratio method, Internal rate of return method. Approximate and supplementary methods: Payback method, Profitability index. |
| 5 | Depreciation methods, After-tax economy studies. |
| 6 | Index numbers, Incorporating inflation into economic analysis. |
| 7 | Replacement models: Retirement with identical replacement, Generalized replacement model, Dynamic programming formulations. |
| 8 | Mathematical programming formulations for capital budgeting. |
| 9 | Midterm |
| 10 | Risk analysis, Statistical moments of random variables, Random cash flows, Random project life. |
| 11 | Decision criteria and methods for risk and uncertainty. |
| 12 | Portfolio optimization. |
| 13 | Introduction to real options approach. |
| 14 | Project presentations. |
Practice Topics
| Week | Weekly Contents |
|---|---|
| 1 | |
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| 14 |
Contribution to Overall Grade
| Number | Contribution | |
|---|---|---|
| Contribution of in-term studies to overall grade | 2 | 50 |
| Contribution of final exam to overall grade | 1 | 50 |
| Toplam | 3 | 100 |
In-Term Studies
| Number | Contribution | |
|---|---|---|
| Assignments | 0 | 0 |
| Presentation | 0 | 0 |
| Midterm Examinations (including preparation) | 1 | 25 |
| Project | 1 | 25 |
| Laboratory | 0 | 0 |
| Other Applications | 0 | 0 |
| Quiz | 0 | 0 |
| Term Paper/ Project | 0 | 0 |
| Portfolio Study | 0 | 0 |
| Reports | 0 | 0 |
| Learning Diary | 0 | 0 |
| Thesis/ Project | 0 | 0 |
| Seminar | 0 | 0 |
| Other | 0 | 0 |
| Toplam | 2 | 50 |
| No | Program Learning Outcomes | Contribution | ||||
|---|---|---|---|---|---|---|
| 1 | 2 | 3 | 4 | 5 | ||
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| 6 | X | |||||
| 7 | X | |||||
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| 11 | X | |||||
| 12 | X | |||||
| Activities | Number | Period | Total Workload |
|---|---|---|---|
| Class Hours | 14 | 3 | 42 |
| Working Hours out of Class | 14 | 5 | 70 |
| Midterm Examinations (including preparation) | 3 | 0 | 0 |
| Other Applications | 6 | 1 | 6 |
| Thesis/ Project | 12 | 0 | 0 |
| Total Workload | 118 | ||
| Total Workload / 25 | 4.72 | ||
| Credits ECTS | 5 | ||