SOLUTION MANUAL FOR Engineering Economy, 18th edition Sullivan INSTANT
DOWNLOAD SOLUTION MANUAL 3 Chapter 1 Solutions
, Solutions to Chapter 1 Problems
1-1 Some typical applications of engineering economy are listed below. Different
organizations have been assumed, but many applications do not vary significantly by the
type of organization.
Manufacturing Company
• Addition (expansion) to an existing plant.
• Improvements to a material handling system.
• Selecting between numerical controlled milling machines produced by different
manufacturers.
• Selecting the preferred conceptual (preliminary) design for a new consumer product.
• Selecting the preferred detailed design for an application (e.g. a precompressor option
for a present series of large gasoline engines).
Service Company
• Selecting the best type (and model) of light truck for use in a service fleet.
• Determining the preferred location of a distribution center.
• Selecting an upgraded computer system to integrate and improve the
accomplishment of a number of present functions in an organization.
• Selecting the preferred conceptual (preliminary) design for a new consumer service
and its basic delivery process.
• Selecting the preferred detailed design for a service (e.g., a home health care service
involving professional nursing care to meet the periodic needs of patients).
Government Organization
• Evaluating the contracting of garbage pickup and disposal versus continued
accomplishment by a city work force.
• Analyzing the significant repair and upgrading of a highway bridge versus its
replacement with a new structure.
• Selecting the preferred conceptual (preliminary) design for a new elementary school.
• Evaluating the life cycle cost for a new major weapon system.
• Determining the preferred replacement cycle for medium sized backhoes in the
highway department equipment fleet.
1-2 The economic aspects of an engineering project are of equal importance to its physical
aspects. It is very important to the engineering profession and the public that the designs
for products, structures, systems, and services result in economic consequences
acceptable to the user(s). Otherwise, the basic social needs (or wants) will not be
satisfied.
Chapter 1 Solutions 4
, 1-3 Some non-monetary factors (attributes) that might be important are:
• Safety
• Reliability (from the viewpoint of user service)
• Quality in terms of consumer expectations
• Aesthetics (how it looks, and so on)
• Patent considerations
1-4 The increased use of automation in the activities of all organizations should increase the
importance of engineering economy studies. Some reasons for this viewpoint are:
increased investment costs; the tradeoff between increased investment costs and other
costs such as personnel; the impact on revenue of improved service time, better flexibility
to meet changing demand, and so on; the consideration of new costs associated with
software, maintenance, and changed skill requirements in the work force; and other
factors that impact the economic and other consequences of increasing automation.
1-5 The results of engineering economic analyses are used to assist decision making. A
decision involves making a choice among two or more alternatives; thus, fundamentally
the decision is among alternatives.
1-6 A potential alternative, in order to be selected as a feasible alternative for detailed
analysis, must be considered capable of achieving the outcomes for the project based on
preliminary analysis. The planned outcomes for a project are the goals, objectives,
performance criteria, and other results that have been established.
1-7 Uncertainty refers to the variation of actual values that will occur in the future from the
estimated values developed at the time of the study associated with a project.
Engineering economic analysis is prospective in that it deals with the analysis of the
estimated future consequences of alternative courses of action. Thus, uncertainty is
inherently involved. Some causes of uncertainty are:
• Rapid changes in the demand for products and services.
• Inflation and price changes.
• Changes in technology.
• Competition in the world marketplace.
• Changes in regulatory requirements.
• Lack of an adequate costing base (data) for a new project.
1-8 The perspective related to cash flow of $1,000 between two individuals is different for
the person paying the amount than it is for the one receiving it; that is, the first person
sees a negative cash flow of $1,000 and the second person sees a positive cash flow of
the same amount. Thus, the viewpoint or perspective related to the future consequences
of a course of action is in terms of an individual organization, constituency group, and so
on. Normally, the perspective used is that of the owners of the organization.
1-9 There is not a single "correct" plan for accomplishing a post-evaluation. However,
SOLUTION MANUAL FOR Engineering Economy, 18th edition Sullivan INSTANT
DOWNLOAD SOLUTION MANUAL 5 Chapter 1 Solutions
, important activities to be included in a technical plan for this purpose are:
Chapter 1 Solutions 6
DOWNLOAD SOLUTION MANUAL 3 Chapter 1 Solutions
, Solutions to Chapter 1 Problems
1-1 Some typical applications of engineering economy are listed below. Different
organizations have been assumed, but many applications do not vary significantly by the
type of organization.
Manufacturing Company
• Addition (expansion) to an existing plant.
• Improvements to a material handling system.
• Selecting between numerical controlled milling machines produced by different
manufacturers.
• Selecting the preferred conceptual (preliminary) design for a new consumer product.
• Selecting the preferred detailed design for an application (e.g. a precompressor option
for a present series of large gasoline engines).
Service Company
• Selecting the best type (and model) of light truck for use in a service fleet.
• Determining the preferred location of a distribution center.
• Selecting an upgraded computer system to integrate and improve the
accomplishment of a number of present functions in an organization.
• Selecting the preferred conceptual (preliminary) design for a new consumer service
and its basic delivery process.
• Selecting the preferred detailed design for a service (e.g., a home health care service
involving professional nursing care to meet the periodic needs of patients).
Government Organization
• Evaluating the contracting of garbage pickup and disposal versus continued
accomplishment by a city work force.
• Analyzing the significant repair and upgrading of a highway bridge versus its
replacement with a new structure.
• Selecting the preferred conceptual (preliminary) design for a new elementary school.
• Evaluating the life cycle cost for a new major weapon system.
• Determining the preferred replacement cycle for medium sized backhoes in the
highway department equipment fleet.
1-2 The economic aspects of an engineering project are of equal importance to its physical
aspects. It is very important to the engineering profession and the public that the designs
for products, structures, systems, and services result in economic consequences
acceptable to the user(s). Otherwise, the basic social needs (or wants) will not be
satisfied.
Chapter 1 Solutions 4
, 1-3 Some non-monetary factors (attributes) that might be important are:
• Safety
• Reliability (from the viewpoint of user service)
• Quality in terms of consumer expectations
• Aesthetics (how it looks, and so on)
• Patent considerations
1-4 The increased use of automation in the activities of all organizations should increase the
importance of engineering economy studies. Some reasons for this viewpoint are:
increased investment costs; the tradeoff between increased investment costs and other
costs such as personnel; the impact on revenue of improved service time, better flexibility
to meet changing demand, and so on; the consideration of new costs associated with
software, maintenance, and changed skill requirements in the work force; and other
factors that impact the economic and other consequences of increasing automation.
1-5 The results of engineering economic analyses are used to assist decision making. A
decision involves making a choice among two or more alternatives; thus, fundamentally
the decision is among alternatives.
1-6 A potential alternative, in order to be selected as a feasible alternative for detailed
analysis, must be considered capable of achieving the outcomes for the project based on
preliminary analysis. The planned outcomes for a project are the goals, objectives,
performance criteria, and other results that have been established.
1-7 Uncertainty refers to the variation of actual values that will occur in the future from the
estimated values developed at the time of the study associated with a project.
Engineering economic analysis is prospective in that it deals with the analysis of the
estimated future consequences of alternative courses of action. Thus, uncertainty is
inherently involved. Some causes of uncertainty are:
• Rapid changes in the demand for products and services.
• Inflation and price changes.
• Changes in technology.
• Competition in the world marketplace.
• Changes in regulatory requirements.
• Lack of an adequate costing base (data) for a new project.
1-8 The perspective related to cash flow of $1,000 between two individuals is different for
the person paying the amount than it is for the one receiving it; that is, the first person
sees a negative cash flow of $1,000 and the second person sees a positive cash flow of
the same amount. Thus, the viewpoint or perspective related to the future consequences
of a course of action is in terms of an individual organization, constituency group, and so
on. Normally, the perspective used is that of the owners of the organization.
1-9 There is not a single "correct" plan for accomplishing a post-evaluation. However,
SOLUTION MANUAL FOR Engineering Economy, 18th edition Sullivan INSTANT
DOWNLOAD SOLUTION MANUAL 5 Chapter 1 Solutions
, important activities to be included in a technical plan for this purpose are:
Chapter 1 Solutions 6
