Transcription of Engineering Economics - MIT OpenCourseWare
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Engineering Economics - MIT OpenCourseWare
Engineering Economic Analysis: Slide 1 Econ & Enviro Issues In Materials Selection Randolph KirchainMassachusetts Institute of Technology Department of Materials Science & Engineering Massachusetts Institute of TechnologyDepartment of Materials Science & EngineeringEngineering Economics : Comparing Financial Characteristics of Design Options Engineering Economic Analysis: Slide 2 Econ & Enviro Issues In Materials Selection Randolph KirchainMassachusetts Institute of Technology Department of Materials Science & Engineering Massachusetts Institute of TechnologyDepartment of Materials Science & EngineeringEngineering Econ Example: Comparing Alternatives BIG DIG $$$$ $$ $$Where Should You Build? Far or Near Figure by MIT OCW. Page 1 Example: Comparing Alternatives Cost Site A Site B Cost to build @ site $250,000 $500,000 Monthly Costs Average Hauling Distance 6 5 miles Hauling Expense $15 $15 /mile Shipments 250 250 /month Total Monthly Cost $22,500 $18,750 Monthly Savings $3,750 Econ & Enviro Issues In Materials Selection Massachusetts Institute of TechnologyMassachusetts Institute of TechnologyDepartment of Materials Science & EngineeringDepartment of Materials Science & EngineeringRandolph Kirchain Engineering Economic Analysis: Slide 3 Example: Comparing Alternatives simple payback : Site B is preferred after 5 years ($500,0)
•Simple payback: – Site B is preferred after 5 years ≈ 67months $3,750/ month •Considering reasonable business assumptions (15% discount rate) – Site B is preferred after > 12 years How do we come up with such a difference? … 3.080 Econ & Enviro Issues In Materials Selection Massachusetts Institute of Technology
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