Team Colt
Amy Harris – Team Captain
William Moore - Reporter
Luke Little
Hideaki Yamamoto
ISE321 – Engineering Economics
Dr. Componation
November 9, 20061. Executive Summary:
Our team was tasked with picking a car to purchase. Our first task was to decide what we each
wanted out of the potential vehicle and agree on what the vehicle should do. Next, we had to
find a common ground on which to judge the vehicles. We chose nine attributes by which to
judge the cars and then assigned those attributes overall weights to allow for comparisons to be
drawn among vehicles and scales so that each attribute of a vehicle could be ranked between one
and five. We also chose seventeen initial vehicles which were quickly narrowed to seven
vehicles based on safety ratings. Using the scales and weights we determined earlier, we decided
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on Dodge Durango SLT, because it was the clear winner with a score of 4.325 out of 5 and
stayed ahead of the rest of the vehicles in our sensitivity analysis.
2. Problem Description
Dr. Componation separated the ISE 321 class into 8 teams and presented them with the
task of finding their own “ideal” vehicle which they would intend to buy within the next year.
The purpose of this project was to utilize the economic skills learned in the class and to learn the
systematic approach engineers take to real-world situations. The teams had to create fictional (or
non-fictional) specifications for a vehicle that they will be purchasing within the next year and
submit the following data to Dr. Componation:
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Identify attributes relevant to their ideal vehicle.
Research various rating methods of the relevant attributes and develop a 5-point grading
scale to rate potential models.
Weight each attribute based on its relevance to the ideal vehicle making sure that the total
weight equals 100%.
Analyze potential models based on their score on the 5-point scale and provide a list of all
their scores. Reduce the number of models to be considered to 6 possibilities. Provide
reasoning for each model considered and for those that were eliminated from evaluation.
Evaluate remaining models’ attribute scores against the weighting system. Total all of the
weighted scores to provide each model with a final score. State the model with the best
final score as the preliminary recommendation.
Graph the final scores of each model against its price.
Conduct sensitivity analysis to determine whether there is a definite solution to the
problem presented. Sensitivity analysis should be conducted by varying the weighting
system slightly to provide new total scores for the models.
Determine whether there is one requisite model by comparing the sensitivity analysis
results to the preliminary recommendation.
3. Attributes Description:
For this project, Team Colt chose to rate vehicles based on reliability, crash test rating,
entertainment features, interior material, gas mileage, seating capacity, cargo capacity, towing
capacity, and power features. Information for reliability and crash test rating were obtained in
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pre-rated scales, so we used the data that was available. For entertainment, a factory head unit
with four speakers was rated a one, a factory CD/radio was rated a two, a multi-disc changer was
rated a three, a CD/radio with upgraded sound system was rated a four, and built-in screens were
rated a five. Power features were rated on a similar scale. The vehicle got one point for each of
the following: power windows, power locks, keyless entry, power mirrors, and power seats. For
the interior, nothing was rated a one, any vehicle with leather was rated a two, vinyl was rated a
three, cloth was rated a four, and any special treatments to cloth were rated a five. Gas mileage,
seating capacity, cargo capacity, and towing capacity were all measured in intervals described by
the table below. Each successive interval earned the vehicle another point on a five point scale.
Table 1: Intervaled Attributes Table
Attribute
Start Value End Value Interval
Gas Mileage
12
28
Seating Capacity
2
6
1 Passengers
Cargo Capacity
30
40
2.5 Cubic Feet
2000
5000
Towing Capacity
4
Unit
750
MPG
Pounds
Each attribute was also given a weight to go along with the scale. Team Colt gave
reliability and crash test rating each 20% of the weight, because these two attributes were the
most important. Towing capacity, also very important, was given a weight of 15%. Gas
mileage, seating capacity, and cargo capacity were less important, so they were given a weight of
10% each. Entertainment, interior, and power features were much less important, so they were
given 5% each.
4. Alternatives Description
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We decided to start with the list of all current SUVs and mid-size to large pickup trucks
that were 4 wheel drive. Our final picks were the Acura MDX, the Dodge Durango SLT, the
Ford Expedition XLT, the Honda Pilot, the Toyota Highlander Hybrid, the Honda Ridgeline, and
the Nissan Frontier.
Many choices were eliminated because they were missing critical
information such as crash test rating or reliability. Some of these were the Nissan Armada SE,
the Land Rover Range Rover, and the Suzuki XL-7. Others were eliminated, because their crash
test rating was too poor. We chose to remove all vehicles with a crash test rating of 4 or below.
We are not considering newer models because they are not proven and often do not have the
information we are rating by. The 7 vehicles listed above were chosen based on their fit with our
needs. They all fit our generic profile and had sufficient crash test ratings, towing capacity,
cargo capacity, and seating capacity.
5. Attribute Analysis
After narrowing our range of possible models down to 7, we analyzed each of their
relevant attributes according to our 5-point scale and weighting system to give them a numerical
value under each of the attributes. These values were combined to provide each model with a
total score.
Some of the models’ attributes did not fall directly on the values assigned in our 5-point
scale. In these cases, we adjusted the values based upon where they fell in our scale. For
example, the Ford Expedition gets, on average, 17 highway miles per gallon. However, 17 miles
per gallon falls between 2 and 3 points on our scale. Since the Expedition’s gas mileage was
closer to the second point’s value of 16 miles per gallon, the model received a score of 2.25 in
the gas mileage category. After all models we evaluated in all categories, their scores were
weighted according to the weighting system we established. Using the Ford Expedition as an
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example again, the 2.25 it received in gas mileage was then multiplied by 0.10 because gas
mileage was only 10% of what we were looking for in our requisite model. After multiplying the
scores in each category by the percentage of their importance, all of the scores were added to
give a number less than 5. This number was divided by 5 and multiplied by 100 to give the final
score.
6. Financial Analysis
In this section, financial aspect is focused to compare each attribute. In Table 2 and
Illustration 1, MACRS are calculated with 15 years of useful life to know the salvage value at
each year. In Illustrations 2, 3, and 4, there is “total cost”, which is the sum of accumulated fuel
cost and initial cost. Besides, we assumed that nominal interest rate is 5% and fuel charge is
$2.10/gallon. In Illustration 2, a car is supposed to run 10k miles per year. Same as to Illustration
3 and 4, cars are supposed to run 25k miles per year and 50k miles per year. What those figures
have in common is that; cars with highest and smallest cost stay same. The cheapest car is
Frontier from Honda. In addition, Frontier ranks middle in terms of over all score in Illustration
5. On the other hand, highest-cost car is Expedition XLT from Ford. Thus, even if taking account
into not only cost but also score, Frontier should be the best choice among them.
Year
0
1
2
3
4
5
6
7
8
Table2: Depreciation of Modified Accelerated Cost Recovery System (MACRS)
Durango
Expedition
Highlander
MDX
SLT
XLT
Pilot
Hybrid
Ridgeline
$38,402.00 $32,329.00
$34,026.00 $31,773.00
$36,135.00 $29,760.00
$36,481.90 $30,712.55
$32,324.70 $30,184.35
$34,328.25 $28,272.00
$32,833.71 $27,641.30
$29,092.23 $27,165.92
$30,895.43 $25,444.80
$29,550.34 $24,877.17
$26,183.01 $24,449.32
$27,805.88 $22,900.32
$26,593.39 $22,387.83
$23,563.01 $22,002.80
$25,023.49 $20,608.80
$23,932.13 $20,147.43
$21,205.00 $19,800.93
$22,519.33 $18,546.43
$21,539.68 $18,133.34
$19,085.18 $17,821.48
$20,268.12 $16,692.38
$19,273.96 $16,225.93
$17,077.65 $15,946.87
$18,136.16 $14,936.54
$17,008.25 $14,318.51
$15,070.12 $14,072.26
$16,004.19 $13,180.70
Frontier
$25,796.00
$24,506.20
$22,055.58
$19,850.02
$17,863.73
$16,076.07
$14,468.98
$12,947.01
$11,425.05
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$14,738.69 $12,407.87
$12,472.97 $10,500.46
$10,203.41 $8,589.82
$7,937.69 $6,682.40
$5,668.14 $4,771.76
$3,402.42 $2,864.35
$1,132.86
$953.71
$0.00
$0.00
$13,059.18
$11,051.64
$9,040.71
$7,033.17
$5,022.24
$3,014.70
$1,003.77
$0.00
$12,194.48
$10,319.87
$8,442.09
$6,567.48
$4,689.69
$2,815.09
$937.30
$0.00
$13,868.61 $11,421.89
$11,736.65 $9,666.05
$9,601.07 $7,907.23
$7,469.10 $6,151.39
$5,333.53 $4,392.58
$3,201.56 $2,636.74
$1,065.98
$877.92
$0.00
$0.00
$9,900.50
$8,378.54
$6,854.00
$5,332.03
$3,807.49
$2,285.53
$760.98
$0.00
$40,000.00
$35,000.00
MACRS
MDX
Durango SLT
$30,000.00
Expedition XLT
Pilot
Highlander Hybrid
$25,000.00
value($)
9
10
11
12
13
14
15
16
Ridgeline
Frontier
$20,000.00
$15,000.00
$10,000.00
$5,000.00
$0.00
1
2
3
4
5
6
7
8
9
10
life year
11
12
13
14
15
16
Illustration 1: Depreciation – total cost with 10k miles/year
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17
$45,000
Depreciation - total cost with 10kmile/year
$40,000
$35,000
$30,000
$25,000
cost
$20,000
MDX
Durango SLT
Expedition XLT
Pilot
Highlander Hybrid
Ridgeline
Frontier
$15,000
$10,000
$5,000
$0
1
2
3
4
5
6
7
8
year
9
10
11
12
13
14
15
Illustration 2: Depreciation – total cost with 10k miles/year
Depreciation - total cost with 25kmile/year
$50,000
$40,000
$30,000
cost
MDX
Durango SLT
Expedition XLT
Pilot
Highlander Hybrid
Ridgeline
Frontier
$20,000
$10,000
$0
1
2
3
4
5
6
7
8
9
10
11
12
13
year
Illustration 3: Depreciation – total cost with 25k miles/year
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14
15
$75,000
Depreciation - total cost with 50kmile/year
$65,000
$55,000
$45,000
cost
$35,000
MDX
Durango SLT
Expedition XLT
Pilot
Highlander Hybrid
Ridgeline
Frontier
$25,000
$15,000
$5,000
1
2
3
4
5
6
7
year
8
9
10
11
12
13
Illustration 4: Depreciation – total cost with 25k miles/year
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14
15
Illustration 5: Initial cost vs. Over all score
7. Recommendations
The preliminary recommendation is the Durango SLT. We have a robust answer because
the Durango did not win on account of one column. It did close to average or better than average
in most of the columns. It did better in the more important columns. Its closest competitor was
within a point of the Durango, but when the two are compared the Durango has a better price and
better gas mileage while the Expedition which only does better in power features.
8. Bibliography
Acura (2006). www.acura.com, 17 Oct. 2006.
American Honda Motor Co., Inc. (2006). www.honda.com, 17 Oct. 2006.
Consumers Union of U.S., Inc. (2002-2006). http://www.consumerreports.org, 17 Oct. 2006.
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DaimlerChrysler (1995-2006). www.dodge.com, 17 Oct. 2006.
Ford Motor Company (2006). www.ford.com/, 17 Oct. 2006.
Kelley Blue Book Co., Inc. (1995-2006). http://www.kbb.com/, 17 Oct. 2006.
Microsoft (2006). http://autos.msn.com/everyday/everyday.aspx, 17 Oct. 2006.
Nissan Motor Co. Ltd. and/or Nissan North America, Inc. 2002-2006 Nissan North America, Inc.
(2002-2006). www.nissanusa.com, 17 Oct. 2006.
Public Domain. http://www.nhtsa.dot.gov/ncap/, 17 Oct. 2006.
Toyota Motor Sales, U.S.A., Inc. (2005-2006). www.toyota.com, 17 Oct. 2006.
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