Intro to Eng'g Economy

Summary

This video introduces the key concepts of engineering economy, focusing on the intersection of engineering principles and economic analysis. It highlights the importance of making informed decisions that balance costs and benefits in engineering projects, ensuring financial viability alongside technical functionality. The lecture explores the role of engineers in business decision-making, from design to execution, and underscores the value of engineering economy in everyday life, such as personal investments and financial choices. With simple mathematical tools and a rational decision-making process, engineering economy empowers engineers to create sustainable, profitable solutions.

Takeaways

• 😀 Economics is the study of using limited resources to satisfy unlimited human wants, focusing on land, labor, and capital.
• 😀 Engineering is the application of knowledge from math and sciences to develop designs, products, systems, and processes.
• 😀 Engineering economy combines both fields, evaluating the profitability and trade-offs of design projects to ensure economic feasibility.
• 😀 Engineers play a crucial role in business by making decisions that balance functionality, performance, and economic viability of projects.
• 😀 Engineering economy is about maximizing benefits while minimizing costs, ensuring the long-term benefit outweighs long-term costs.
• 😀 Engineers make capital budgeting decisions, considering costs such as time, materials, labor, and natural resources throughout a project’s lifecycle.
• 😀 Rational decision-making in engineering involves identifying the problem, gathering relevant data, analyzing alternatives, and selecting the best option.
• 😀 Engineering economy helps evaluate financial results after a decision is made, guiding future operations and investments.
• 😀 Engineering students must study economics to effectively combine technical design with financial feasibility, ensuring successful projects.
• 😀 Engineers should also consider the economic aspects of their designs, not just the technical parts, to create sustainable and profitable solutions.
• 😀 Engineering economy principles are useful in everyday decisions, such as determining whether to rent or buy a house or evaluating personal investments.

Q & A

What is the primary purpose of the lecture on engineering economy?

The primary purpose is to introduce the concepts and principles of engineering economy and its importance in engineering practice, particularly in decision-making processes that balance costs and benefits in design projects.

How is 'economics' defined in the context of this lecture?

Economics is defined as the study of how limited resources (land, labor, and capital) are used to satisfy unlimited human wants, with an emphasis on sustainable development for future generations.

What does the term 'engineering economy' mean?

Engineering economy refers to the systematic evaluation of the economic merits of engineering projects, focusing on profitability and balancing the trade-offs between costs and performance.

Why is engineering economy important for engineers?

It is crucial because engineers are involved in decision-making processes across various business functions. Engineering economy helps ensure that designs and projects are not only technically sound but also economically viable.

What role do engineers play in business, according to the lecture?

Engineers participate in various decision-making processes, including project creation, design, manufacturing, marketing, and finance. They need to consider the economic aspects of their work in addition to technical performance.

What is meant by the concept of 'capital budgeting decisions' in engineering economy?

Capital budgeting decisions involve determining whether an engineering project should continue or be abandoned, based on its long-term benefits versus costs.

What is the mission of engineering economy?

The mission of engineering economy is to balance trade-offs among different types of costs and to determine the most economical solution while maximizing benefits and minimizing costs.

What is the decision-making process in engineering economy?

The decision-making process involves recognizing the decision problem, gathering relevant information, identifying feasible alternatives, analyzing those alternatives, and selecting the best possible decision based on objectives, criteria, and constraints.

How does accounting relate to engineering economy?

Accounting is used to evaluate the financial performance of decisions made in engineering projects, focusing on past and present financial data to assess the effectiveness of investments and decisions.

Why should engineering students study engineering economics?

Engineering students should study engineering economics because it enables them to make informed financial decisions, balance technical and economic aspects of design, and apply these principles in their daily lives and careers.