南京大学《工程经济学》课件-chapter 1

1Chapter1

EngineeringEconomicDecisions

工程经济决策MainContentsPart1Part2Part3Part4TypesofbusinessOrganizationTheEngineer’sRoleinBusinessTypesofStrategicEngineeringEconomicDecisionsFundamentalPrinciplesinEngineeringEconomics难点.重点)2Learningobjectives:TheroleofengineersinbusinessTypesofbusinessorganizationEngineeringeconomicdecisionsFundamentalprincipalsofengineeringeconomics

Thinkingabout:

1)Howmuchdoyouknowaboutthesecompanies?

2)Whatkindofeconomicdecisionsdothesepeoplehavetomakeinordertomakeachievements?

Aboutthesecompanies:WerestartedbyhighlymotivatedyoungcollegestudentswithtechnicalbackgroundsTheyorganizedtheircompaniesasproprietorships(独资),thenbecamepartnerships(合伙)andeventuallyconvertedtocorporations

1.Typesofbusinessorganization

Proprietorship(独资企业）Itisabusinessownedbyoneindividual.Pros:

canbeformedeasilyandinexpensivelytax---personaltaxrateCons:cannotissuestocksandbondsDifficulttoraisefund7

Partnership(合伙公司）Itisabusinessownedbymorethanoneownerbasedonawrittencontract.Pros:

lowcost/easeofformation/tax---personalincometaxrate/raisefundrelativelyeasilyCons:

cannotissuestocksandbonds/riskalltheirpersonalassetsforbusiness’sdebts/Takeoverothers’unsolvedclaims/limitedlife8

Corporation(公司）Itisalegalentitycreatedundergovernmentlaws.Itisseparatefromitsownersandmanagers.Pros:Raisefund(byissuingstocks/bonds)EasytransferofownershipbytradingsharesAllowslimitedliabilityTaxlawsfavorcorporationCons:

expensivetoestablish/subjecttoregulations9

Asafirmgrows,itneedstochangeitslegalform:

becauseofthecontrolofitsoperations/abilitytoacquirefunds/riskbornebyowners/taxes1011EngineeringEconomicDecisionsPlanningInvestmentMarketingProfitManufacturing

Engineeringeconomicdecisions:variouseconomicdecisionsrelatedtoengineeringprojects.Howtomakerational

economicdecision?Whatmaketheengineeringeconomicdecisiondifficult?Thinkingabout:13Casestudy1:personaleconomicdecisions

Dr.BoseGraduatedfromDLUTDecidedtoliveinDalianWillGetmarriedinDec.2015YetThehousingprices

AreinablurWhatshouldIdo?Buying?orRenting?1.RATIONALDECISION-MAKINGPROCESSRecognizeadecisionproblemDefinethegoalsorobjectivesCollectalltherelevantinformationIdentifyasetoffeasibledecisionalternativesSelectthedecisioncriteriontouseSelectthebestalternative17

RecognizeadecisionproblemDefinethegoalsorobjectivesCollectalltherelevantinformationIdentifyasetoffeasibledecisionalternativesSelectthedecisioncriteriontouseSelectthebestalternativeNeedanapartmentNearmyworkplace;……Sites/prices/transportation…Choices:ApartmentAorBminimumtotalcashoutlay;…DecidedtorenttheapartmentB(suppose)18Casestudy1:

Features:RequiresalargesumofinvestmentTakesalongtimetoseethefinancialoutcomesDifficulttopredicttherevenueandcoststreams

19Casestudy2:alarge–scaleengineeringprojectTherationaldecision-makingprocessisalsoapplicabletobusiness,exceptforthescaleoftheconcernComplex&Difficult

EstimatingaRequiredinvestmentForecastingaproductdemandEstimatingasellingpriceEstimatingamanufacturingcostEstimatingaproductlife20Predictingthefuture

21Casestudy2:alarge–scaleengineeringprojectToyotafirststartedtodevelopthePriusin1995.electriccarorfuel-cellcars(hydrogen)?ChoseelectriccarsIttookToyota2yearstodevelopthepowersystemCreatingamassmarketforgreencars/Runtherisk(acceptanceofthemass)“ittook20yearstobecomepopular”InitialPriusprice=$17000,costofit=$32000NobodyknewthefinalmarketwouldbeFuturedemandisuncertain

alookbackin2009,itwasansuccessfulinvestment/project

RecognizeadecisionproblemDefinethegoalsorobjectivesCollectalltherelevantinformation----complicated

Identifyasetoffeasibledecisionalternatives----hardSelectthedecisioncriteriontouseSelectthebestalternative

Typesofdecisions12345ServiceImprovementEquipmentandProcessSelectionEquipmentReplacementCostReductionNewProductandProductExpansion2.TypesofStrategicEngineeringEconomicDecisions241.ImprovementinserviceorqualityHowmanymorejeanswouldLevineedtoselltojustifythecostofadditionalrobotictailors?

HowdoyouchoosebetweentwoPETbeveragebottles?:AFive-LayerBottle:Highercapitalinvestmentcost,lowerunitcostofproductionAThree-LayerBottlewithExternalCoating:Lowercapital

investmentcost,buthigherunitcostofproductionThechoiceofmaterialwilldictatethemanufacturingprocessaswellasmanufacturingcosts.252.Equipmentandprocessselection

Nowisthetimetoreplacetheoldmachine?Ifnot,whenistherighttimetoreplacetheoldequipment?263.Equipmentreplacement

Shallwebuildoracquireanewfacilitytomeettheincreaseddemand?Isitworthspendingmoneytomarketanewproduct?274.Newproductandproductexpansion

R&Dinvestment:$750millionProductpromotionthroughadvertising:$300millionPricedtosellat35%higherthanSensorExcel(about$1.50extrapershave).Question1:Wouldconsumerspay$1.50extraforashavewithgreatersmoothnessandlessirritation?Question2:Whatwouldhappenifthebladeconsumptiondroppedmorethan10%duetothelongerbladelifeofthenewrazor?28Gillette’sMACH3ProjectExample:

Shouldacompanybuyequipmenttoperformanoperationnowdonemanually?Shouldspendmoneynowinordertosavemoremoneylater?295.Costreduction3.RoleofEngineersinBusiness30Create&DesignEngineeringProjectsEvaluateExpectedProfitabilityTimingofCashFlowsDegreeofFinancialRiskAnalyzeProductionMethodsEngineeringSafetyEnvironmentalImpactsMarketAssessmentEvaluateImpactonFinancialStatementsFirm’sMarketValueStockPrice

31PresentFuturePastEngineeringEconomyAccountingEvaluatingpastperformanceThedifferencesbetweenaccountingandengineeringeconomy.

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ThefactorsoftimeanduncertaintyarethedefiningaspectsofanyengineeringeconomicdecisionsTwofactorsinengineeringeconomicdecisions4.FundamentalPrinciplesofEngineeringEconomicsAdditionalriskisnottakenwithouttheexpectedadditionalreturnMarginalrevenuemustexceedmarginalcostAllitcountsisthedifferencesamongalternativesAnearbydollarisworthmorethanadistantdollarPrinciples

33Principle1:Anearbydollarisworthmorethanadistantdollar

Today6-monthlater34Principle2:Allitcountsisthedifferencesamongalternatives

OptionMonthlyFuelCostMonthlyMaintenanceCashoutlayatsigningMonthlypaymentSalvageValueatendofyear3Buy$960$550$6,500$350$9,000Rent$960$550$2,400$550035IrrelevantitemsindecisionmakingPrinciple3:Marginalrevenue(边际收益）mustexceedmarginalcost

（边际成本）ManufacturingcostSalesrevenueMarginalrevenueMarginalcost1unit1unit36MarginalRevenuemeanstheadditionalrevenuemadebyincreasingadditionalunit/lastunitPrinciple4:

Additionalriskisnottakenwithouttheexpectedadditionalreturn

InvestmentClassPotentialRiskExpectedReturnSavingsaccount(cash)Low/None1.5%Bond(debt)Moderate4.8%Stock(equity)High11.5%37SummaryThetermengineeringeconomi