Engineering Economic Analysis

Problems 23

----------------------- 1-32

possible to achieve her boss's criterion. She asks

your advice. What would you tell her?

Willie Lohmann travels from city to city in the con-

duct of his business. Every other year he buys a used

.car for about $12,000. The auto dealer allows about

$8000 as a trade-in allowance with the result that

the salesman spends $4000 every other year for a car.

Willie keeps accurate records, whi.ch show that all

other expenses on his car amount to 22.3~per mile

for each mile he drives. Willie's employer has two

plans by which salesmen are reimbursed for their car

expenses:

(a) Willie will receive all his operating expenses, and

in addition will receive $2000 each year for the

decline in value of the automobile.

(b) Willie will receive 32~ per mile but no operating

expenses and no depreciation allowance.

If Willie travels 18,000 miles per year, which method

of computation gives him the larger reimbursement?

At what annual mileage do the two methods give the

same reimbursement?

Maria, a college student, is getting ready for three final

examinations at the end of the school year. Between

now and the start of exams, she has 15 hours of study

time available. She would like to get as high a grade

average as possible in her math, physics, and engi-

neering economy classes. She feels she must study at

least 2 hours for each course and, if necessary, will set-

tie for the low grade that the limited study would yield.

How much time should Maria devote to each class if

she estimates her grade in each subject as follows:

on the two graphs:

$2000

$1900

$1800

$1700

$1600

$1500

$1400

$1300

~G't $1200$1100

~ $1000

§' $900,.

$800

$700

$600

$500

$400

$300

$200

$100

,

o

------------------

50 100 150 200 250

Output (unitslhr)

1-33

~c..

lS'" $12

'0

Qas $11

u

ifbI) $10

.S

~tI) $9

Mathematics Physics

Engineering

Economy

---;----I

II I

I II I

tI J____I

II II II

$8I- -- - ~-- -- ~-- -- ~-- --I I I I

II II II II

$71 ~I ~I ~I ~----I

I I I I

Study

Hours Grade

Study

Hours Grade

Study

Hours Grade

o 50 100 150 200 250

Output (unitslhr)

(a)Select an appropriate economic criterion and

estimate.the production rate based upon it.

(b)Joy's boss told Joy: "I want you to maximize

output with minimum input." Joy wonders if it is

1-34 Two manufacturing companies, located in cities

90 miles apart, have discovered that they both send

,their trucks four times a week to the other city full of

cargo and return empty. Each company pays its driver

r I
~.

i;, c.. ~,._~_. <>;,~,;~;.;:" '¥"~~~;';' ;,"d;.7Ji;~._'i.:.;h,,"~;:.: ~''''~,~...''''''.J-i-i.:,., h~ "; 0 ~ --;,,:,'-."-~ ; - ~;>~ --:',.";~- _~';'~.c=,.:c"ii:~~

$16

$15

$14

.....

'8

$13

2 25 2 35 2 50

3 35 3 41 3 61

4 44 4 49 4 71

5 52 5 59 5 79

6 59 6 68 6 86

7 65 7 77 7 92

8 70 8 85 8 96