NE 364
Engineering Economy
Lecture 1
Introduction
NE 364 Engineering Economy
1
Course Objectives
 Introduction to the basic cost concepts and economic
environment.
 Familiarization with the principles of money- time
relations and basics of investments opportunities
assessment and evaluation.
NE 364 Engineering
Economy
2
Course Info
 Lecturers:
Dr. Noha Galal
Office: 418
Dr. Hala Farouk
Office: 418
Dr. Mootaz Ghazy
Office: 323
Dr. Ingy ElKouly
Office: 323
Dr. Alyaa Abd ElHalim
 Textbook:
William G. Sullivan, E.M. Wicks, J.T. Luxhoj,
Engineering Economy, the 15th Edition, 2010
 Lecture notes & Assignments:
 www.halafarouk.info
 https://sites.google.com/site/ngalalcourses/
NE 364 Engineering Economy
3
Introduction
NE 364 Engineering Economy
4
What is Engineering Economy?
 Engineering Economy involves the systematic
evaluation of the economic merits of proposed
solutions to engineering problems.
NE 364 Engineering Economy
5
Where can Engineering Economy
provide answers?
 Choosing the best design for a high efficiency gas
furnace
?
?
NE 364 Engineering Economy
6
Where can Engineering Economy
provide answers?
 Selecting the most suitable robot for a welding
operation on an automotive assembly line.
NE 364 Engineering Economy
7
Where can Engineering Economy
provide answers?
 Ex 2-11: Total Cost in material selection
 Material:
 1112 screw machine steel?
 Or Brass screw stock?
 Economic selection among materials cannot be based
solely on the costs of materials. Change in material
may affect the design, processing cost, and shipping
costs.
NE 364 Engineering Economy
8
Where can Engineering Economy
provide answers?
 Ex 2-13: selecting alternative machine speeds
 Speed??
 Increasing machine speed higher output rate
 BUT different machine downtime for maintenance.
NE 364 Engineering Economy
9
Where can Engineering Economy
provide answers?
 Ex 2-16: Trade-offs in energy efficiency studies
 Energy efficiency affects the annual expense of
operating an electrical device such as pump or motor.
 More energy-efficient device extra capital investment
 BUT  annual savings in electrical power expenses
NE 364 Engineering Economy
10
Principles of Engineering
Economy
1. Develop the Alternatives
2. Focus on the Differences
3. Use a Consistent Viewpoint
4. Use a Common Unit of Measure
5. Consider All Relevant Criteria
6. Make Uncertainty Explicit
7. Revisit Your Decisions
NE 364 Engineering Economy
11
Engineering Economy & the
Design Process
 A sound engineering economic analysis procedure
incorporates the basic seven principles .
 The seven-step procedure is also used to assist
decision making within the engineering design process.
NE 364 Engineering Economy
12
NE 364 Engineering Economy
13
Course Outline
 Introduction and Overview
 Cost Concepts
 Time – money Relationships & Equivalence
 Simple Interest
 Compound Interest
 Cash flow Diagrams (Single cash flows, annuity, uniform series, uniform
gradient
 Nominal & Effective interest rates




Applications of Money-Time Relationships (PW, AW, FW)
Comparing Alternatives
Benefit-to-Cost Analysis
Depreciation
NE 364 Engineering Economy
14
Course Material
 www.halafarouk.info
 https://sites.google.com/site/ngalalcourses/
NE 364 Engineering Economy
15
ABET Student Outcomes
a
• An ability to apply knowledge of mathematics, science,
and engineering.
c
• An ability to design a system, component, or process to
meet desired needs within realistic constraints such as
economic, environmental, social, political, ethical, health
and safety, manufacturability, and sustainability.
e
• An ability to identify, formulate, and solve engineering
problems.
g
• An ability to communicate effectively.
h
• The broad education necessary to understand the impact
of engineering solutions in a global, economic,
environmental, and societal context.
NE 364 Engineering Economy
16
Grading System
 7th Week Assessment
 Exam (20pt.) + Quizzes (10pt)
 Exam at 4 PM and the location will be announced at exam time.
 Quizzes in the tutorial.
 12th Week Assessment
 Exam (15 pt.) + Quizzes (5 pt.)
 Exam at 4 PM and the location will be announced at exam time.
 Quizzes in the tutorial.
 Continuous Assessment (10 pt.)
 Participation in Lecture + Attendance
NE 364 Engineering Economy
17