Engineering Economic Analysis

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After Completing This Chapter...

The student should be able to:

·Evaluate project cash flows using theinternal rate of return(IRR) methodology.

.Plot a project's present worth (PW) against the interest rate.

.Useanincrementalrate of returnanalysisto evaluatecompetingalternatives.

.Develop and use spreadsheets to make IRR and incremental rate of ret~ calculatio~

QUESTIONS TO CONSIDER

1. Imagine that you are a manufacturer who is considering using RFID chips to track YOI
   products.What cost and benefitfactors would you considerin deciding whether to embt
   chips in your products, and how much to invest in the necessary technology?


2. Now assume that you are a retailer who is also considering the RFID technology.Ho'
   would your cost and benefit considerations differ from those of a product manufactureI
   What specific factors would you consider? What if the manufacturers you buy product'
   from have already adopted the technology? How would this affect your decision?


3. Since October 2000, the U.S. military has been using RFID technology in its Joint Tou
   Asset Visibility(ITAV) program, which tracks equipmentand supplies.ITAV has reduce
   duplicate orders, helped speed up troop deployment, and allowed mi~tary planners t,
   accomplish missions with fewer ships, planes, and ground vehicles. How is the ITA'
   program likely to affect the pace qf RFID's adoption by priva~ industry?


4. Some consumers have already expressed concern about RFID chips, calling them aJ
   invasion of privacy.What ethical and social concerns are raised by RFID chips?


5. In response to consumer worries, RFID chip manufacturers are developing "kill" tech
   nologies that can allowconsumers to disable RFID chips after they havepurchasedgood:
   containing these miniature tracking devices. How might this affect consumer attitudes~

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