EGN3613: Engineering Economics Analysis Assignment 1 https://www.youtube.com/wat

Question

EGN3613: Engineering Economics Analysis Assignment 1 https://www.youtube.com/watch?v=1q8mZwytm0M&feature=youtu.be after you watch youtube would you like please answer those question 1. What are the steps used in a decision making process? Provide an example of the process in bank replacing their old ATM machines with new state of the art ones. 2. Define the role of engineers in the Business Decision Making Process. 3. Explain the difference between large and small scale Engineering Projects. 4. Explain in details that factors that might affect Engineering Economic Decisions 5. What does the Economic Principle “Marginal revenue must exceed marginal cost” means? Provide at least two references to support your explanation. https://www.youtube.com/watch?v=1q8mZwytm0M&feature=youtu.be would you like please answer those question

Explanation / Answer

1. In economic decision making process the steps which are used in a decision making process are -

1. Identify the problem , 2. Define Goals and objective, 3. Collect relevant information, 4. Define feasable alternatives, 5. Identify the decision making criteria, 6. Evaluate alternatives, 7. Select the best alternative, 8. Implement the solution and monitor the results.

To replace the old ATM machine with new state of Art the bank will follow like following steps -

First, Bank will identify the problems with old ATM machine, some new function is necessary in ATM machine. Second, Bank will decide on the basis of problems associated with it what will be the goal, it can replace the machine or it can make some changes in old machine, so bank's goal is change and bring some new function in ATM machine. Third, on the basis of the goal the bank will collect relevant information regarding the regarding new ATM machine with new art and also will take different information like costing, prospects etc. It will also take information regarding what are the new function require in near futre. Fourth, On the basis of relevant information bank will now identify the feasible solutions, it means which are the solutions bank can take, what are the feasible possible alternatives on the basis of realistic estmation, it can be change the macine, repair the macine with bringing new function. Fifth, Among the feasible alternatives now bank will decide what will be the decision making criteria, it can be cost minimization with certain criteria, it could be benefit maximising with cost at a level etc. Sixth, Now bank will evaluate the alternatives on the basis of criteria fixed by bank for best alternative that could be cost minimization or benefit maximization. Seventh, Among the alternatives bank will select the best alternative of ATM machine, let best alternative is replace the machine. Eight, at last bank will implement the best alternative and will monitor the results.

2. The role of engineers is everywhere in business decision making process from design to investment to manufacture everywhere. Engineers participate in decision process from manufacturing to marketing to financing and economical decision. Engineers plan for the acquisition of equipment capital expenditure that will enable the firm to design and produce products economically. Engineers have to justify production of large scale projects with large amount of money and long period of time. Engineers has to also consider the impact of the project.

3. The large scale engineering project are definately larger in terms of investment, time period and also the impact. Let suppose a water management project in one hand and replacing a technical machine on the othe hand. The water management project it could be dam, or cannel. The costing and time period is generally high in large scale project. It is difficult to predict cost and revenue In the video it is water system. On the other hand small scale production could be replace the ATM macine.

4. The two main factors in economic decision making are - first one is Time and second one is Uncertainty. Now why time is important because in every project there is a life period of a project and in diffeent time there need different activities like changing the equipment of machine and project the demand in future. So time is one of the important factor which we should always take into the mind. Another impotant factor is Uncertainty. In every time of a project there is lot of uncertainty. The uncertainty related to market and different things which we should always take for better result of the project.

5. Marginal revenue is change in revenue due to change in production. It means if we take the decision to produce 1 more unit of output then the extra revenue (price*quantity) we can get from there is the marginal revenue for that product. On the other hand marginal cost is the change in cost due to change in output. To produce an extra unit what is the extra cost associate with it. So in economic principle to take the marginal revenue should exceed the marginal cost. Otherwise we will loose from that exta production. To viable and feasable the extra revenue should be greater than extra cost. Otherwise we shall not go for that.

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