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Question & Answer:

  • 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 actually recognized this morning and upon which you made a conscious decision.
  • Some of the following problems would be suitable for 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?
    (b) Should an automatic machine be purchased to replace three workers now doing a task by hand?
    (c) Would it be wise to enroll for an early morning class so you could avoid traveling during the morning traffic rush hours?
    (d) Would you be better off if you changed your major?
    (e) One of the people you might marry has a job that pays very little money, while another one has a professional job with an excellent salary. Which one should you marry?
  • Which one of the following problems is most suitable for analysis by engineering economic analysis?
    (a) Some 45jt candy bars are on sale for 12 bars for $3. Sandy, who eats a couple of candy bars a week, must decide whether to buy a dozen at the lower price.
    (b) A woman has $150,000 in a bank checking account that pays no interest. She can either invest it immediately at a desirable interest rate or wait a week and know that she will be able to obtain an interest rate that is 0.15% higher.
    (c) Joe backed his car into a tree, damaging the fender. He has automobile insurance that will pay for the fender repair. But if he files a claim for payment, they may change his "good driver" rating downward and charge him more for car insurance in the future.
  • If you have $300 and could make the right decisions, how long would it take you to become a millionaire? Explain briefly what you would do.
  • The owner of a small machine shop has just lost one of his larger customers. The solution to his problem, he says, is to fire three machinists to balance his workforce with his current level of business. The owner says it is a simple problem with a simple solution. The three machinists disagree. Why?
  • Every college student had the problem of selecting the college or university to attend. Was this a simple, intermediate, or complex problem for you? Explain.
  • The college bookstore has put pads of engineering computation paper on sale at half price. What is the minimum and maximum number of pads you might buy during the sale? Explain.
  • Consider the seven situations described. Which one situation seems most suitable for solution by engineering economic analysis?
    (a) Jane has met two college students that interest her. Bill is a music major who is lots of fun to be with. Alex, on the other hand, is a fellow engineering student, but he does not like to dance.
    Jane wonders what to do.
    (b) You drive periodically to the post office to pick up your mail. The parking meters require 10jt for 6 minutes-about twice the time required to get from your car to the post office and back. If parking fines cost $8, do you put money in the meter or not?
    (c) At the local market, candy bars are 45 it each or three for $1. Should you buy them three at a time?
    (d) The cost of automobile insurance varies widely from insurance company to insurance company. Should you check with several companies when your insurance comes up for renewal?
    (e) There is a special local sales tax ("sin tax") on a variety of things that the town council would like to remove from local distribution. As a result a store has opened up just outside the town and offers an abundance of these specific items at prices about 30% less than is charged in town. Should you shop there?
    (f) Your mother reminds you that she wants you to attend the annual family picnic. That same Saturday you already have a date with a person you have. been trying to date for months.
    (g) One of your professors mentioned that you have a poor attendance record in her class. You wonder whether to drop the course now or wait to see how you do on the first midterm exam. Unfortunately, the course is required for graduation.
  • An automobile manufacturer is considering locating an automobile assembly plant in your region. List two simple, two intermediate, and two complex problems associated with this proposal.
  • Consider the following situations. Which ones appear to represent rational decision making? Explain.
    (a) Joe's best friend has decided to become a civil engineer, so Joe has decided that he, too, will become a civil engineer.
    (b) Jill needs to get to the university from her home. She bought a car and now drives to the university each day. When Jim asks her why she didn't buy a bicycle instead, she replies, "Gee, I never thought of that."
    (c) Don needed a wrench to replace the spark plugs in his car. He went to the local automobile supply store and bought the cheapest one they had. It broke before he had finished replacing all the spark plugs in his car.
  • Identify possible objectives for NASA. For your favorite of these, how should alternative plans to achieve the objective is evaluated?
  • Suppose you have just 2 hours to answer the question, How many people in your home town would be interested in buying a pair of left-handed scissors? Give a step-by-step outline of how you would seek to answer this question within two hours.
  • A college student determines that he will have only $50 per month available for his housing for the coming year. He is determined to continue in the university, so he has decided to list all feasible alternatives for his housing. To help him, list five feasible alternatives.
  • Describe a situation where a poor alternative was selected, because there was a poor search for better alternatives.
  • Choose the better of the undesirable alternatives. The three economic criteria for choosing the best alternative are minimize input, maximize output, and maximize the difference between output and input. For each of the following situations, what is the appropriate economic criterion?
    (a) A manufacturer of plastic drafting triangles can sell all the triangles he can produce at a fixed price. As he increases production, his unit costs increase as a result of overtime pay and so forth. The manufacturer's criterion should be _'
    (b) An architectural and engineering firm has been awarded the contract to design a wharf for a petroleum company for a fixed sum of money. The engineering firm's criterion should be_.
    '(c) A book publisher is about to set the list price (retail price) on a textbook. The choice of a low list price would mean less advertising than would be used for a higher list price. The amount of advertising will affect the number of copies sold. The publisher's criterion should be _'
    (d) At an auction of antiques, a bidder for a particular porcelain statue would be trying to
  • As in Problem 1-18, state the appropriate economic criterion for each of the following situations.
    (a) The engineering school held a raffle of an automobile with tickets selling for'50~each or three for $1. When the students were selling tickets, they noted that many people had trouble deciding whether to buy one or three tickets. This indicates the buyers' criterion was _'
    (b) A student organization bought a soft-drink machine for use in a student area. There was considerable discussion over whether they should set the machine to charge Sot, 75~, or $1 per drink. The organization recognized that the number of soft drinks sold would depend on the price charged. Eventually the decision was made to charge 75~. Their criterion was.
    (c) In many cities, grocery stores find that their sales are much greater on days when they have advertised their special bargains. However, the advertised special prices do not appear to increase the total physical volume of groceries sold by a store. This leads us to conclude that many shoppers' criterion is _'
    (d) A recently graduated engineer has decided to return to school in the evenings to obtain a master's degree. He feels it should be accomplished in a manner that will allow him the maximum amount of time for his regular day job plus time for recreation. In working for the degree, he will
  • Seven criteria are given in the chapter for judging' which is the best alternative. After reviewing the list, devise three additional criteria that might be used.
  • Suppose you are assigned the task of determining the route of a new highway through an older section of town. The highway will require that many older homes must be either relocated or torn down. Two possible criteria that might be used in deciding exactly where to locate the highway are:
    (a) Ensure that there are benefits to those who gain from the decision and that no one is harmed by the decision
    (b) Ensure that the benefits to those who gain from the decision are greater than the losses of those who are harmed by the decision. Which criterion will you select to use in determining the route of the highway? Explain.
  • Identify benefits and costs for Problem 1-21.
  • In the fall, Jay Thompson decided to live in a university dormitory. He signed a dorm contract under which he was obligated to pay the room rent for the full college year. One clause stated that if he moved out during the year, he could sell his dorm contract to another student who would move into the dormitory as his replacement. The dorm cost was $2000 for the two semesters, which Jay had already paid. A month after he moved into the dorm, he decided he would prefer to live in an apartment. That week, after some searching for a replacement to fulfill his dorm contract, Jay had two offers. One student offered to move in immediately and to pay Jay $100 per month for the eight remaining months of the school year. A second student offered to move in the second' semester and pay $700 to Jay. Jay estimates his food cost per month is $300 if he lives in the dorm and $250 if he lives in an apartment with three other students. His share of the apartment rent and utilities will be $200 per month. Assume each semester is 41/2months long. Disregard the small differences in the timing of the disbursements or receipts.
    (a) What are the three alternatives available to Jay?
    (b) Evaluate the cost for each of the alternatives.
    (c) What do you recommend that Jay do?