Engineering Economy

Content

Objective

The world’s resources are decreasing day by day and the efficient use of these resources is one of the major fields of industrial engineering. In this context, Engineering Economics techniques are among the most effective techniques available. The knowledge that the student obtains through this course, which is obligatory in the program, will be advantageous for evaluation of the projects and investments in internships and in professional life. Hence the objectives of this course are to:

• Give an insight about the time value of money
• Ensure that the student is able to compare cash flows occurring at different times.
• Give knowledge about the methods of evaluating a project or an investment alternative in everyday work.

Course Content

Week 1: Introduction to Engineering Economy
Week 2: The Equivalence of Cash Flows and the Concept of Compound Interest.
Week 3: Measures of Worth I
Week 4: Measures of Worth II – Incremental Analysis
Week 5: Measures of Worth III - Additional Methods for Determining the Economic Value.
Week 6: Quiz - Depreciation
Week 7: Depreciation
Week 8: Midterm
Week 9: Taxes – After-Tax Economy Studies
Week 10: Taxes – After-Tax Economy Studies
Week 11: Retirement and Replacement
Week 12: Retirement and Replacement - Quiz
Week 13: Inflation
Week 14: Inflation

Course Learning Outcomes

A student who completes this course successfully, will be able to:

1) Define the time value of money from different perspectives and evaluate cash flows occurring at different times.

2) Compare equivalent values of cash flows.

3) Evaluate project and investment alternatives and decide on investment planning.

4) Calculate the depreciation expenses of the company’s equipments and explain how depreciation expenses affect the tax management.

5) Determine the economic lives of company’s equipments and apply the replacement analyses to company’s equipments.

6) Comprehend the concept of inflation.

7) Apply his knowledge of course in interdisciplinary platforms.

Teaching and Learning Methods

Lecture; problem sessions; discussion; self study.

References

• Fleischer, G.A., “Introduction to Engineering Economy”, PWS Publishing, Boston, 1994
• Tolga, E., Kahraman, C., “Mühendislik Ekonomisi”, İTÜ Yayınları, İstanbul, 1994
• Course Notes