Appendix IB. Course Syllabi

IE 305 Engineering Economic Analysis

Analysis of economic decisions related to planning, developing, and managing engineering projects. Time value of money, evaluating alternative projects, decisions involving capital expenditures in private and public sectors.

Prerequisites: Math 166

Text:
Engineering Economic Analysis - 7th Edition by Newnan and Lavelle, Engineering Press, 1998.

Course Objectives:

1. To learn, practice, and apply engineering economic formulas relating interest and the time value of money to economic decision making.
1. To learn the importance of engineering economic decision making to all business, management, and decision-making bodies as well as it’s importance in all other engineering disciplines.
2. To be able to apply economic analysis and decision making to a real entrepreneurial business situation.
3. To practice and develop teamwork and group collaboration skills.
4. To practice and refine communication and presentation skills.

Topics Covered:

1. Introduction and overview of economic decision making
1. Spreadsheets and other computer analysis
2. Equivalence and Interest (nominal and effective)
3. Continuous compounding of interest
4. Cash Flow Diagramming
5. Time Value of Money
6. Gradient formulas
7. Present, Annual, and Future Worth Analysis
8. Loans/Stocks/Bonds/Other Investments
9. Rate of Return Analysis - Internal, External
10. Incremental Analysis for Multiple Alternatives
11. Benefit Cost and Government Expenditures
12. Depreciation and Taxes
13. Capital Gains and Losses
14. Replacement Analysis
15. Sensitivity and Risk Analysis
16. Simulation of Economic Decision Making
17. Allocation of Capital

Class/Laboratory Schedule:
The course meets three times per week for 50 minutes. The learning environment is active and varied (small groups, in-class activities, discussions, peer presentations, etc.). Students complete four major homework assignments and an end-of-semester project. Some homework and projects are assigned to individuals others are completed with 1 or 2 other students in a team. There are two in-class exams plus a final exam. Students are expected to participate in class and present material assigned that day.

Professional Component Contributions:
Students learn how to make sound economic decisions. They must consider the appropriate mix of data and assumptions and be sensitive to other constraints such as management, personnel and costs. Most problems are open-ended requiring both quantitative and subjective analysis. Economic decisions are discussed in the context of the human element, culture, and global viewpoint.

Relationship to Program Objectives:

Objectives 1, 3, and 6 - Economic decisions require that one understand not only the financial picture but also the appropriate mix of people, materials, machines and information necessary for each enterprise.

Objective 2 and 7 - Students learn that the best design or device is not always feasible due to constraints and limitations imposed by other sectors of the business or environment. They must effectively bridge the gaps between engineering and business interests.

Objectives 1, 2, 3, 6, and 7 - All economic decisions must be made to minimize costs or maximize profits. The integration of people, materials, equipment, information and control are additionally important considerations.

Objectives 2 and 7 - Students will gain an understanding of the importance of each functional unit of an enterprise as well as how they relate and interact with one another. There is also an element of the culture in which these companies operate. We discuss the tax systems of countries other than the US and US companies operating offshore.

Objectives 3, 5, and 7 - Students will work with every other member of the course through assigned and in-class projects. They will provide the essential leadership and initiative to meet the objectives of each team project.

How Assessed:
Assessment of the instructor is performed at midterm by Alpha Pi Mu and at the end of the semester by the department. This permits me to receive feedback which I incorporate into the course. I also have the students evaluate the course periodically throughout the semester with written comments and a self-evaluation of "What I Learned" as a result of the project. All of the feedback is helpful in modifying the course and my approach to teaching.

Actions Taken to Improve the Course:
I have modified the course to meet overall program objectives and lists of topics to correspond with other required IE courses. I continue to add more content on economic decision making that affects all engineering and business disciplines. The final project is intended to allow students to apply course content to a business setting. I have worked with a number of students from other majors who are encouraging their peers to take this version of the course.

Prepared by: Cheryl Moller-Wong

Date Prepared: December 10, 1999