IE347 ENGINEERING ECONOMY
| Course Code: | 5680347 |
| METU Credit (Theoretical-Laboratory hours/week): | 3 (3.00 - 0.00) |
| ECTS Credit: | 5.0 |
| Department: | Industrial Engineering |
| Language of Instruction: | English |
| Level of Study: | Undergraduate |
| Course Coordinator: | Prof.Dr. MERAL AZİZOĞLU |
| Offered Semester: | Fall Semesters. |
Course Objectives
COURSE OBJECTIVE 1: At the end of the course, the students will develop an understanding of time value of money and economic equivalence.
COURSE OBJECTIVE 2: At the end of the course, the students will understand the relation between index numbers and inflation and the effect of inflation on economic analysis
COURSE OBJECTIVE 3: At the end of the course, the students will learn the techniques for evaluating the worth of prospective projects, investment opportunities and design choices.
Course Content
Economic analysis for engineering and managerial decision making. Techniques for evaluating the worth of prospective projects, investment oppurtunities and design choices. Interest and time value of money, methods for evaluation of alternatives: present worth, annual equivalent worth, rate of return, benefit cost ratio method, and payback method. Replacement analysis, inflation and cost estimation. After tax economic analysis, and methods of financing. Sensitivity and risk analysis.
Course Learning Outcomes
be able to calculate present worth of a project given its future worth
be able to calculate present worth of a project given annual worth
be able to determine an investment’s duration given its present and future worth
be able to make present worth calculations adjusted for inflation
be able to infer inflation rate from index numbers
learn how to calculate an index number using a basket of goods and services
compare mutually exclusive alternatives by different evaluation methods
determine the cost of debt and cost of equity capital and compare with the MARR
learn how to select an alternative using incremental benefit/cost analysis
Program Outcomes Matrix
| Contribution | |||||
| # | Program Outcomes | No | Yes | ||
| 1 | An ability to identify, formulate, and solve complex engineering problems by applying principles of engineering, science, and mathematics | ✔ | |||
| 2 | An ability to apply engineering design to produce solutions that meet specified needs with consideration of public health, safety, and welfare, as well as global, cultural, social, environmental, and economic factors | ✔ | |||
| 3 | An ability to communicate effectively with a range of audiences | ✔ | |||
| 4 | An ability to recognize ethical and professional responsibilities in engineering situations and make informed judgments, which must consider the impact of engineering solutions in global, economic, environmental, and societal contexts | ✔ | |||
| 5 | An ability to function effectively on a team whose members together provide leadership, create a collaborative and inclusive environment, establish goals, plan tasks, and meet objectives | ✔ | |||
| 6 | An ability to develop and conduct appropriate experimentation, analyze and interpret data, and use engineering judgment to draw conclusions | ✔ | |||
| 7 | An ability to acquire and apply new knowledge as needed, using appropriate learning strategies | ✔ | |||
| 8 | An ability to design, analyze, operate, and improve integrated systems that produce and/or supply products and/or services in an effective, efficient, sustainable, and socially responsible manner | ✔ | |||
| 9 | An ability to apply critical reason and systems thinking in problem solving and systems design | ✔ | |||
| 10 | An ability to use scientific methods and tools (such as mathematical models, statistical methods and techniques) necessary for industrial engineering practice | ✔ | |||