book

Engineering Economy

by Zahid A. Khan, Arshad Noor Siddiquee, Brajesh Kumar

March 2012

Beginner

410 pages

10h 49m

English

Pearson India

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Cover
Title Page
Contents
About the Authors
Foreword
Preface
1 - Engineering Economy: A Prologue
1.1 - Consumer and Producer Goods and Services1.2 - Necessities, Luxuries, and Relation between Price and Demand1.3 - Competition or Market Structure1.4 - Relation between Total Revenue and Demand1.5 - Cost Concepts1.6 - Relationship between Cost and Volume1.7 - The Law of Supply and Demand1.8 - The Law of Diminishing Marginal Returns
2 - Fundamentals of Mathematics and Engineering Economics
2.1 - Introduction2.2 - Theory of Consumer Behaviour2.2.1 - Meaning of Utility2.2.2 - Meaning of Demand2.3 - Concepts of Elasticity2.3.1 - Own Price Elasticity2.3.2 - Determinants of Price Elasticity2.3.3 - Income Elasticity of Demand2.3.4 - Cross-price Elasticity of Demand2.3.5 - Engel Curve and Income Elasticity2.3.6 - Relationship between Price Elasticity and Marginal Revenue2.4 - Laws of Diminishing Marginal Utility2.5 - Principle of Equimarginal Utility2.6 - Indifference Curves (ICs) Theory/Ordinal Utility Theory2.6.1 - Indifference Curves2.6.2 - Nature of Consumer Preferences2.6.3 - Indifference Map2.7 - Rate of Commodity Substitution2.7.1 - Properties of ICs2.7.2 - Budget Line2.7.3 - Consumer's Equilibrium/Maximization of Utility2.7.4 - Alternative Method of Utility Maximization2.8 - Application and Uses of ICs2.8.1 - Income and Leisure Choice2.8.2 - Revealed Preference Hypothesis2.8.3 - Consumer's Surplus
3 - Elementary Economic Analysis
3.1 - Theory of the Firm3.2 - Law of Supply3.2.1 - Concepts of Elasticity of Supply3.3 - Meaning of Production3.3.1 - Production Function and Its Types3.3.2 - General Production Function3.3.3 - Cobb-Douglas Production Function3.3.4 - CES Production Function3.3.5 - Producer's Equilibrium3.4 - Concept of Isoquants3.5 - Marginal Rate of Technical Substitution3.6 - The Elasticity of Substitution3.7 - Iso-cost Line3.8 - Producer's Surplus3.9 - Cost Minimization3.9.1 - Cost Function for the Cobb-Douglas Technology3.9.2 - The Cost Function for the CES Technology3.9.3 - The Cost Function for the Leontief Technology3.9.4 - The Cost Function for the Linear Technology3.10 - Returns to Scale and Returns to Factor3.11 - Cost Theory and Estimation3.11.1 - Concept of Costs and Its Types3.12 - Profits3.12.1 - Normal Profits3.12.2 - Economic Profits3.12.3 - Profit Maximization3.13 - Market Structure and Degree of Competition3.13.1 - Perfect Competition3.13.2 - Monopoly3.13.3 - Monopolistic Competition3.13.4 - Oligopoly Models
4 - Interest Formulae and their Applications
4.1 - Introduction4.2 - Why Return to Capital is Considered?4.3 - Interest, Interest Rate and Rate of Return4.4 - Simple Interest4.5 - Compound Interest4.6 - The Concept of Equivalence4.7 - Cash Flow Diagrams4.8 - Terminology and Notations/Symbols4.9 - Interest Formula for Discrete Cash Flow and Discrete Compounding4.9.1 - Interest Formulae Relating Present and Future Equivalent Values of Single Cash Flows4.9.2 - Interest Formulae Relating a Uniform Series (Annuity) to Its Present and Future Worth4.10 - Interest Formulae Relating an Arithmetic Gradient Series to Its Present and Annual Worths4.10.1 - Finding P when Given G4.10.2 - Finding A when Given G4.11 - Interest Formulae Relating a Geometric Gradient Series to Its Present and Annual Worth4.12 - Uniform Series with Beginning-of-Period Cash Flows4.13 - Deferred Annuities or Shifted Uniform Series4.14 - Calculations Involving Uniform Series and Randomly Placed Single Amounts4.15 - Calculations of Equivalent Present Worth and Equivalent Annual Worth for Shifted Gradients4.16 - Calculations of Equivalent Present Worth and Equivalent Annual Worth for Shifted Decreasing Arithmetic Gradients4.17 - Nominal and Effective Interest Rates4.18 - Interest Problems with Compounding More Often than Once per Year4.18.1 - Single Amounts4.18.2 - Uniform Series and Gradient Series4.18.3 - Interest Problems with Uniform Cash Flows Less Often than Compounding Periods4.18.4 - Interest Problems with Uniform Cash Flows More Often than Compounding Periods

5 - Methods for Making Economy Studies
5.1 - Introduction5.2 - Basic Methods5.3 - Present Worth (P.W.) Method5.4 - Future Worth (F.W.) Method5.5 - Annual Worth (A.W.) Method5.6 - Internal Rate of Return (I.R.R.) Method5.7 - External Rate of Return (E.R.R. ) Method5.8 - Explicit Reinvestment Rate of Return (E.R.R.R.) Method5.9 - Capitalized Cost Calculation and Analysis5.10 - Payback (Payout) Method
6 - Selection Among Alternatives
6.1 - Introduction6.2 - Alternatives Having Identical Disbursements and Lives6.3 - Alternatives Having Identical Revenues and Different Lives6.3.1 - Comparisons Using the Repeatability Assumption6.3.2 - Comparisons Using the Coterminated Assumption6.4 - Alternatives Having Different Revenues and Identical Lives6.5 - Alternatives Having Different Revenues and Different Lives6.6 - Comparison of Alternatives by the Capitalized Worth Method6.7 - Selection among Independent Alternatives
7 - Replacement and Retention Decisions
7.1 - Introduction7.2 - Reasons for Replacement7.3 - Terminologies Used in Replacement Study7.4 - Economic Service Life7.5 - Procedure for Performing Replacement Study7.6 - Replacement Study Over a Specified Study Period
8 - Depreciation
8.1 - Introduction8.2 - Depreciation Terminology8.3 - Methods of Depreciation8.3.1 - The Straight Line (SL) Method8.3.2 - The Declining Balance (DB) Method8.3.3 - Sum-of-the-Years'-Digits (SYD) Method8.3.4 - The Sinking Fund Method8.3.5 - The Service Output Method
9 - Economic Evaluation of Public Sector Projects
9.1 - Public Sector Projects9.2 - Benefit/Cost Analysis of a Single Project9.3 - Selection between Two Mutually Exclusive Alternatives Using Incremental B/C Analysis9.4 - Selection among Multiple Mutually Exclusive Alternatives Using Incremental B/C Analysis
10 - Economy Study with Inflation Considered
10.1 - Introduction10.2 - Effects of Inflation10.3 - Present Worth Calculations Adjusted for Inflation10.4 - Future Worth Calculations Adjusted for Inflation10.5 - Capital Recovery Calculations Adjusted for Inflation
11 - Make or Buy Decision
11.1 - Introduction11.2 - Feasible Alternatives for Launching New Products11.3 - Decisive Factors for Make or Buy Decision11.3.1 - Criteria for Make Decision11.3.2 - Criteria for Buy Decision11.4 - Techniques Used to Arrive at Make or Buy Decision11.4.1 - Simple Cost Analysis11.4.2 - Economic Analysis11.4.3 - Break-Even Analysis
12 - Project Management
12.1 - Introduction12.2 - Phases of Project Management12.2.1 - Planning12.2.2 - Scheduling12.2.3 - Monitoring and Control12.3 - Bar or Gantt Charts12.4 - Network Analysis Technique12.5 - Critical Path Method (CPM)12.5.1 - Arrow Diagrams12.5.2 - Activity Description12.5.3 - Understanding Logic of Arrow Diagrams12.5.4 - Dummy Activities12.6 - Guidelines for Drawing Network Diagrams or Arrow Diagrams12.7 - CPM Calculations12.7.1 - Critical Path12.7.2 - Critical Activities12.7.3 - Non-critical Activities12.7.4 - Earliest Event Time12.7.5 - Latest Event Time12.8 - Calculation of the Earliest Occurrence Time of Events12.9 - Calculation of the Latest Occurrence Time of Events12.10 - Activity Times12.10.1 - Earliest Start Time12.10.2 - Earliest Finish Time12.10.3 - Latest Finish Time12.10.4 - Latest Start Time12.11 - Float12.11.1 - Types of Float12.11.2 - Negative Float12.12 - Identification of Critical Path12.13 - Programme Evaluation and Review Technique (PERT)12.13.1 - PERT Activity Time Estimates12.13.2 - PERT Computations12.13.3 - Computation of Probabilities of Completion by a Specified Date12.14 - Project Crashing12.14.1 - Cost Slope12.14.2 - Cost of Crashing
13 - Value Engineering
13.1 - What is Value Engineering or Value Analysis?13.1.1 - Definition of VE or VA13.1.2 - Defining Cost and Value13.2 - Nature and Measurement of Value13.3 - How is a VE or VA Study Conducted?13.4 - The VE or VA Process13.5 - Types of VE or VA13.6 - How to Use VE or VA13.6.1 - Keys to Success13.6.2 - Origination Phase13.6.3 - Information Phase13.6.4 - Innovation Phase13.6.5 - Evaluation Phase13.6.6 - Implementation Phase13.7 - Summary
14 - Forecasting
14.1 - Introduction14.2 - Basic Categories of Forecasting14.3 - Extrapolative Methods14.3.1 - Components of Demand14.3.2 - Moving Average Method14.3.3 - Weighted Moving Average Method14.3.4 - Exponential Smoothing Methods14.4 - Causal or Explanatory Methods14.4.1 - Regression Analysis14.4.2 - Simple Regression Analysis14.5 - Qualitative or Judgmental Methods14.5.1 - Build up Method14.5.2 - Survey Method14.5.3 - Test Markets14.5.4 - Panel of Experts14.6 - Forecast Errors
Appendix A
Appendix B
Appendix C
Bibliography
Copyright

Overview

Engineering Economy is meant as an introductory course for undergraduate students, and it explains and demonstrates the principles and techniques of engineering economic analysis as applied in different fields of engineering.

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