Engineering economy

N. A. Heinen and D. J. Patterson, Combustion Engine Economy, Emissions, and Controls, University of Michigan, Ann Arbor, Mich., Chapt. 5,1992. 

Blank, L. T. and A. J. Tarquin. Engineering Economy. McGraw-Hill, New York (1997). Bowman, M. S. Applied Economic Analysis for Technologists, Engineers, and Managers. Prentice-Hall, Englewood Cliffs, NJ (1998). 

Certain terminology has been developed to identify the equipment under consideration. The item in place is called the defender, and the candidate for replacement is called the challenger. This terminology and methodology was reported by E. L. Grant and W. G. Ireson in Engineering Economy, Wiley, New York, 1950. To apply this method, there are certain rules. The value of the defender asset is a sunk cost and is irrelevant except insofar as it affects cash flow from depreciation for the rest of its life and a tax credit for the book loss if it is... 

Taylui, G.A. Managerial and Engineering Economy, Economic Decision Making, D Nostrand Co 7 New York, NY, 1966. 

Some argued that by encouraging many small biorefineries, the government was encouraging higher-cost and more inefficient biorefineries because of the engineering economies of scale involved. Indeed, an internal study by the Institute for Local Self-Reliance concluded that a 150 million gal/yr ethanol facility had unit costs about 15-20 /gal less than those of a 15 gal/ yr facility. 

Engineering Economy, Z94-5, American National Standards Institute, Institute of Industrial Engineers. 

Tables of interest and cash-flow factors, such as are illustrated in Tables 1, 5, 6, 7, and 8 of this chapter, are presented in all standard interest handbooks and textbooks on the mathematics of finance as well as in appendices of most textbooks on engineering economy. Exponential functions for continuous compounding are available in the standard mathematical tables. The development of tables for any of the specialized factors is a relatively simple matter with the ready availability of digital computers, as is illustrated in Example 3 of this chapter.

Steam-engine Economy.— The steam rate of an engine depends primarily on the initial pressure and superheat, back pressure and ratio of expansion. The following tables refer to perfect engines (Rankine cycle). The probable... 

Each company and each economist has one or more ways of determining profitability by economic analysis. It is not the purpose of this book to elaborate on these. Excellent books on chemical engineering economy are listed in the Additional Selected References. However, three of the more popular methods will be discussed (1) return on investment, (2) pay-out time, (3) project present worth. To proceed with the economic analysis, net or new earnings must first be determined from selling price less costs. 

E. L. Grant, "Principles of Engineering Economy, 3d ed.. The Ronald Press Company, New York, 1950. 

Too often, worthwhile energy projects are killed by the one-year payback syndrome. In addition to being too strict, the one-year payback concept ignores the time value of money, a fundamental of engineering economy. In many energy and environmental projects, the payback is nowhere close to a one-year rmdiscotmted payback. 

Traditional Engineering Economy Cash Flow Profiles... 

The cash flow profile should include aU cash items anticipated to flow into or out of a project. Each cash flow item must be identified specifically according to the time at which this flow occurs. The major items included in an engineering economy study are ... 

Convention in engineering economy studies dictates that all discrete cash flows are considered to occur at the end of the period, which is normally at the end of each year. However, the period may be quarterly, monthly, or even daily. 

Excel Spreadsheet can calculate equivalent values from a series of cash flows regardless of whether they follow a particular gradient series, such as in this example, or are just best estimates of the cash flows for each period. This is a powerful feature eclipsing the requirement of uniform cash flow series necessary in traditional engineering economy models. 

Smith, G. W., Engineering Economy Analysis of Capital Expenditures, 4th Ed., Iowa State University Press, Ames, 1987. 

Park, C. S., Contemporary Engineering Economy, 2nd Ed., Addison-Wesley, Reading, MA, 1997. 

Schenbach, T. E., Engineering Economy Applying Theory to Practice, Richard D. Irwin, Homewood, IL, 1995. 

Sullivan, W. G., Ed., Engineering Economy, 11th Ed., Prentice Hall, Upper Saddle River, NJ, 2000. 

Young, D., Modem Engineering Economy, John Wiley Sons, New York, 1993. 

Portions of this chapter are adopted substantially unchanged from the Handbook of Industrial Engineering, 2nd ed.. Chapter 52. That material, in turn, was based in large part on the Handbook of Industrial Engineering, 1st ed.. Chapter 9.5, by James R. Buck and Jose M. Tanchoco, as well as other materi adopted, by permission of the publisher, from G. A. Fleischer, Engineering Economy, Chapter 8, PWS-Kent Publishing Company, Boston, 1984. 

Limited space precludes a full discussion of these (and other) risk measures. Therefore, in the remainder of this section we will limit our remarks to the variance, a statistic that has proven most popular in use as well as in the literature of engineering economy. 

Fleischer, G. A., Ed., Risk and Uncertainly Non-Deterministic Decision Making in Engineering Economy, Monograph Series No. 2, American Institute of Industrial Engineers, Norcross, GA, 1975. 

---