_..-..-Problems 19- Select the criterion for choosing the best alternative: possible criteria include
political, economic, environmental, and humanitarian. The single criterion may
be a composite of several different criteria. - Mathematically modelthe various interrelationships.
- Predict the outcomes for each ilIiemative.
- Choose the best alternative.
- Audit the results.
Engineering decision making refers to solving substantial engineering problems in
which economic aspects dominate and economic efficiency is the criterion for choosing
from among possible alternatives. It is a particular case of the general decision-making
process. Some of the unusual aspects of engineering decision making are as follows:- Cost-accounting systems, while an important source of cost data, contain allocations
of indirect costs that may be inappropriate for use in economic analysis. - The various consequences--costs and benefits---of an alternative may be of three
types:
(a) Market consequences-there are established market prices
(b) Extra-market consequences-there are no dii-ectmarket prices, but prices can
be assigned by indirect means
(c) Intangible consequences-valued by judgment, not by monetary prices - The economic criteria for judging alternatives can be reduced to three cases:
(a) For fixed input: maximize benefits or other outputs.
(b) For fixed output: minimize costs or other inputs.
(c) When neither input nor output is fixed:maximize the difference between benefits
and costs or, more simply stated, maximize profit.
The third case states the general rule from which both the first and second cases
may be derived. - To choose among the alternatives, the market consequences and extra-market con-
sequences are organized into a cash flow diagram. We will see in Chapter 3 that
engineering economic calculations can be used to compare differing cash flows.
These outcomes are compared against the selection criterion. From this comparison
plusthe consequences not included in the monetary analysis, the best alternative is
selected. - An essential part of engineering decision making is the postaudit of results. This
step helps to ensure that projected benefits are obtained and to encourage realistic
estimates in analyses.
Problems
1-1 Think back to your first hour after awakening this
morning. List 15 decision-making opportunities that
existed during that hour. After you have done that,
mark the decision-making opportunities that you
actuallyrecognized this morning and upon which you
made a conscious decision.
1-2 Some of the followingproblemswouldbe suitablefor
solution by engineering economic analysis. Which
ones are they?
(a)Would it be better to buy an automobile with a
diesel engine or a gasoline engine?