Assignment #1

Textbook-Chapter 1

1-2.
Some of the following problems would be suit- able for solution by engineering economic analysis. Which
ones are they?

(a) Would it be better to buy a hybrid car?

Yes, because it involves comparing the costs and benefits of purchasing a hybrid car, such as fuel
savings, maintenance costs, and environmental impact, this problem is appropriate for engineering
economic analysis.

(b) Should an automatic machine be purchased to replace three workers now doing a task by hand?

Considering that it examines the expenses and advantages of purchasing new equipment, this
problem is appropriate for engineering economic analysis. When the costs of purchasing and
operating the new machine are compared to the costs of continuing to use manual labor, it is possible
to determine whether the investment makes financial sense.

(c) Would it be wise to enroll for an early morning class to avoid traveling during the morning traffic rush
hours?

This issue is not typically addressed through engineering economic analysis. It has more to do with
personal convenience and lifestyle choices than it does with traditional engineering or economic
decisions.
(d) Would you be better of if you changed your major?

This problem is not a traditional engineering or economic analysis question. It involves personal and
career preferences, which are not typically analyzed using engineering economic techniques.

(e) Should you work more and borrow less even if it delays your graduation?

This is not a traditional engineering problem, despite the fact that it involves financial decisions and
trade-offs. It is more concerned with personal financial planning and academic choices.
1-12.

Consider the following situations. Which ones appear to represent rational decision making? Explain.

(a) Joe's best friend has decided to become a civil engineer, so Joe has decided that he will also
become a civil engineer.

This situation does not appear to be a rational decision-making situation. Without taking into
account his own interests, abilities, or career objectives, Joe's decision to pursue a career in civil
engineering appears to be solely influenced by the recommendation of his best friend. Making
choices based on personal preferences, knowledge, and an evaluation of one's own circumstances
and goals is a common aspect of rational decision-making.

(b) Jill needs to get to the university from her home. She bought a car and now drives to the university
each day. When Jim asks her why she didn't buy a bicycle instead, she replies, "Gee, I never
thought of that."

It doesn't seem like rational decision-making would apply in this case. Jill's decision to purchase a
car without taking into account different modes of transportation, such a bicycle, indicates that
she did not carefully analyse and explore her options. When making rational decisions, a person
normally weighs available possibilities and selects the one that best suits their needs

(c) Don needed a wrench to replace the spark plugs in his car. He went to the local automobile sup-
ply store and bought the cheapest one they had. It broke before he had finished replacing all the
spark plugs in his car.

This situation demonstrates an inability to make rational decisions. Don's decision to purchase
the cheapest wrench without considering its quality or durability resulted in a poor result.
Rational decision making takes into account factors such as product quality, dependability, and
suitability for the task at hand.

1-18.

The three economic criteria for choosing the best alternative are maximize the difference
between out-put and input, minimize input, and maximize output. For each of the following
situations, what is the correct economic criterion?
 (a). A manufacturer can sell upto two full shift of production at a fixed price. As production Is
increased, unit costs increase as a result of overtime pay and so forth. The manufacturer's
criterion should be?

Minimize input: In this case, the manufacturer should aim to produce the desired quantity (up to
two full shifts) while minimizing input costs to maintain profitability. The goal is to produce
efficiently without incurring excessive costs.

(b) An architectural and engineering firm has been awarded the contract to design a wharf with
fixed performance specifications for a petroleum company. The engineering firm's criterion for its
client should be?

Maximise output: The engineering firm should aim to design a dock that satisfies or surpasses the
fixed performance requirements given by the client. Delivering a top-notch, fully functional
product that meets the needs of the client is what is prioritised.

(c) An off-campus bookstore is choosing its target used/new split for next year. Its criterion should
be ?

Maximize the difference between output and input: In this case, the bookstore must try to
maximize the difference between (the output) and the costs associated with acquiring both used
and new books (input). This involves identifying the best mix of selling used and new books in
order to maximize profit.

(d) At an auction of antiques, a bidder for a particular porcelain statue would be trying to ?

Maximize output: The bidder's goal is to win the porcelain statue by bidding the most money they
can afford. The term "output" in this instance refers to obtaining the desired antique item.
1-55.
Two manufacturing firm, located in cities 90 miles apart, both send their trucks four times a week
to the other city full of cargo and return empty. Each driver costs $275 per day with benefits (the
round trip takes all day) and each firm has truck operating costs of $1.20 a mile. How much could
each firm save weekly if each sent its truck twice a week and hauled the other firm's cargo on the
return trip?

Answer:
There are 2 firms and when they are using method where it sends truck twice a week and
hauled the other firm's cargo on the return trip is just dividing the cost in half .
So ,

1st
Truck Operating Cost (oneway) = $1.2 x 90 miles = $108
Round trip oprating cost = $108 x 2 = $ 216
Total round trip cost = $216 + $275(driver cost) = $491
4-times a week cost = 4 x 491 = 1964

(There are 2 firms and when they are using method where it sends truck twice a week and
hauled the other firm's cargo on the return trip is just dividing the cost in half .)

2nd
2 times and hauled the other firm's cargo = 2 x 419 or 1964/2 = 982

The firms would save about $ 982.

1-26.
A farmer must decide what combination of seed, water, fertilizer, and pest control will be most
profitable for the coming year. The local agricultural college did a study of this farmer's situation and
prepared the following table.
 Plan Cost/acre Income/acre
A 600 800
B 1500 1900
C 1800 2250
D 2100 2500

The last page of the college's study was torn off, and hence the farmer is not sure which plan the
agricultural college recommends. Which plan should the farmer adopt? Explain

Answer :

To determine which plan to apply, we will calculate the profit (per acre) generated by each plan using the
formula:

Plan Cost/acre Income/acre Profit = Income - Cost

A 600 800 200
B 1500 1900 400
C 1800 2250 450
D 2100 2500 400

As Plan C is more profitable than the other plans, farmers should adopt it. The farmer will receive the
highest profit of $450 per acre from this plan.

1-35.
Find the ethics code for the professional society of

your major.

(a) Summarize its key points.

(b) What are its similarities and differences in comparison to NSPE's ethics code?

Answer :

The Code of Ethics for the American Society for Engineering Management (ASEM) its key points and
identify any similarities or differences compared to the National Society of Professional Engineers (NSPE)
Code of Ethics:
Fundamental Principles:

1. Honesty and Fairness: ASEM members are expected to be honest and fair in serving various
stakeholders, including members, organizations, clients, and the public.

2. Competence and Prestige: ASEM strive to increase the competence and prestige of the
engineering management profession.

3. Public Health and Safety: Members are required to use their knowledge and skills for the
protection of public health, safety, and welfare.

Fundamental Canons:

1. Safety, Health, and Welfare: Members must hold paramount the safety, health, and welfare of
the public, similar to the NSPE Code.

2. Qualifications: Undertake assignments in the profession of engineering management only when

qualified by education or experience, aligning with the NSPE Code's emphasis on competence.

3. Professional Competence: Maintain professional competence, contribute to the body of

knowledge in engineering management, and promote the professional development of others in
the field.

4. Professional Conduct: Act in a professional manner towards colleagues, ASEM staff, customers,
clients, and the public, which is akin to the NSPE Code's focus on professionalism.

5. Credit and Fair Criticism: Give proper credit for the work of others and accept and give honest
and fair professional criticism, similar to the NSPE Code's emphasis on giving credit and not
promoting self-interest at the profession's expense.

6. Adherence to ASEM's Governance: Abide by the Constitution, By-Laws, and policies of ASEM.

7. Reporting Violations: Disclose any alleged violation by a member of this Code of Ethics to the
ASEM Executive Committee promptly, completely, and truthfully.

Compare with the NSPE Code of Ethics:

Both codes emphasize the critical importance of public safety, health, and welfare.

Both codes require members to conduct themselves professionally and to give proper credit for the work
of others.

Both codes promote professional competence and the body of knowledge in their respective fields.
Both codes expect members to report alleged code violations promptly and truthfully.

The key differences between the two codes are related to the engineering management profession's
specific focus areas. ASEM's code includes specific references to ASEM's governance and policies, which
are not included in the NSPE Code.

1-54.
A manufacturing firm has received a contract to assemble 1000 units of test equipment in the nextyear.
The firm must decide how to organize its assembly operation. Skilled workers, at $33 per hour each, can
individually assemble the test equipment in 2.6 hours per unit. Alternatively, teams of four less skilled
workers (at $19 per hour each) can assemble a unit in one hour. Which approach is more econimical

Answer:

We need to compare the costs of using skilled workers individually versus using teams of less
skilled workers. Let us estimate the cost of each approach:

Skilled Workers Individually:

Labor cost for 1000 units :

2.6 hrs x 1000 hrs = 2600 hrs
2600hrs x $33 /hr (skilled) = $ 85800

Teams of Less Skilled Workers:

Labor cost /1000 unit :

1 hr x 1000hrs = 1000 hrs
4(team) x 1000 hrs x $ 19/ hr = 76000
According to the cost analysis, the second approach, which employs teams of less skilled workers,
is more cost effective. It costs $76000 per unit, whereas the first method, which employs skilled
workers individually, costs $85800.
1-64.
Jim Jones, a motel owner, noticed that just down the street the "Motel 46" advertises a $46-per-night
room rental rate on its sign. As a result, this competitor has rented all 80 rooms every day by late
afternoon. Jim, on the other hand, does not advertise his rate, which is $64 per night, and he averages
only a 60% occupancy of his 50 rooms. There are a lot of other motels nearby, but only Motel 46 advertises
its rate on its sign. (Rates at the other motels vary from $48 to $99 per night.) Jim estimates that his actual
incremental cost per night for each room rented, rather than remaining vacant, is $12. This $12 pays for
all the cleaning, laundering, maintenance, utilities, and so on. Jim believes his eight alternatives are:

What should Jim do? Show how you reached your conclusion.

Answer:

Alternative Price/night Fixed Cost Profit= Rate (%) Occupancy of Total profits = (price X
price – the original no. of rooms ) – (fixed
cost rooms = cost X no. of rooms)
50xrate/100
1 $45 12 33 100% 50 (45x50)-(12X50) =
$1650
2 $52 12 40 94 47 $1880
3 $58 12 46 80 40 $1840
4 $64 12 52 66 33 $1716
5 $58 12 46 70 35 $1610
6 $64 12 52 68 34 $1768
7 $72 12 60 66 33 $1980
8 $78 12 66 56 28 $1848

Since the seventh alternative yields a higher profit of $1980,it is the best option.