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engineering economy
Basics Of Engineering Economy 3rd Edition Leland T. Blank, Anthony Tarquin - Solutions
2-22 Bob Johnson decided to buy a new home. After look- ing at tracts of new homes, he decided that a custom- built home was preferable. He hired an architect to prepare the drawings. In due time, the architect com- pleted the drawings and submitted them. Bob liked the plans; he was less pleased
2-21 Last year to help with your New Year's resolutions you purchased a $500 piece of fitness equipment. However, you use it only once a week on average. It is December, and you can sell the equipment for $200 (to someone with a New Year's resolution) and rely on the university gym until you
2-20 A pump has failed in a facility that will be completely replaced in 3 years. A brass pump costing $6000 installed will last 3 years. However, a used stainless steel pump that should last 3 more years has been sit- ting in the maintenance shop for a year. The pump cost $13,000 new. The
2-19 An assembly line can produce 90 units per hour. The line's hourly cost is $4500 on straight time (the first 8 hours). Workers are guaranteed a minimum of 6 hours. There is a 50% premium for overtime, how- ever. productivity for overtime drops by 5%. What are the average and marginal costs per
2-18 Heinrich is a manufacturing engineer with the Miller Company. He has determined the costs of producing a new product to be as follows:
2-17 A labor-intensive process has a fixed cost of $338.000 and a variable cost of $143 per unit. A capital- intensive (automated) process for the same product has a fixed cost of $1.244,000 and a variable cost of $92.50 per unit. How many units must be produced and sold at $197 each for the
2-16 A firm believes a product's sales volume (S) depends on its unit selling price (P) as S = $100-P. The production cost (C) is $1000+105. (a) Draw a graph with the sales volume (S) from 0 to 100 on the x axis, and total cost and total income from $0 to $2500 on the y axis. On the graph draw the
2-15 A small company manufactures a certain product. Variable costs are $20 per unit and fixed costs are $10,875. The price demand relationship for this product is P = -0.25 D + 250, where P is the unit sales price of the product and D is the annual?
2-14 Mr. Sam Spade, the president of Ajax, recently read in a report that a competitor named Bendix has the following relationship between cost and production quantity:
2-13 Company A has fixed expenses of $15,000 per year and each unit of product has a $0.20 variable cost. Company B has fixed expenses of $5000 per year and can produce the same product at a $0.50 variable cost. At what number of units of annual produc- tion will Company A have the same overall
2-12 A painting operation is performed by a production worker at a labor cost of $1.40 per unit. A robot spray- painting machine, costing $15,000, would reduce the labor cost to $0.20 per unit. If the device would be valueless at the end of 3 years, what is the minimum number of units that would
2-11 Three alternative designs have been created by Snakisco engineers for a new machine that spreads cheese between the crackers in a Snakisco snack. The costs for the three designs (where x is the annual production rate of boxes of cheese crackers) follow:
2-10 Quatro Hermanas, Inc. is investigating implement- ing some new production machinery as part of its operations. Three alternatives have been identified, and they have the following fixed and variable costs:
2-9 Consider the accompanying breakeven graph for an investment, and answer the following questions.
2-8 Two new rides are being compared by a local amuse- ment park in terms of their annual operating costs. The two rides are assumed to be able to generate the same level of revenue (thus the focus on costs). The Tummy Tugger has fixed costs of $10,000 per year and variable costs of $2.50 per
2-7 A privately owned summer camp for youngsters has the following data for a 12-week session: Charge per camper $480 per week Fixed costs $192,000 per session Variable cost per camper $320 per week Capacity 200 campers (a) Develop the mathematical relationships for total cost and total revenue.
2-6 Two automatic systems for dispensing maps are being compared by the state highway department. The accompanying breakeven chart of the compari- son of these systems (System I vs. System II) shows total yearly costs for the number of maps dispensed per year for both alternatives. Answer the
2-5 A small machine shop, with 30 hp of connected load, purchases electricity at the following monthly rates (assume any demand charge is included in this schedule) per hp of connected load: First 50 kWh at 12.6 per kWh Next 50 kWh at 10.6 per kWh
2-4 (a) 75 (b) 125 (c) 250 Venus Computer can produce 23,000 personal com- puters a year on its daytime shift. The fixed manu- facturing costs per year are $2 million and the total labor cost is $9,109,000. To increase its production to 46.000 computers per year Venus is considering?
2-3 A new machine comes with 100 free service hours over the first year. Additional time costs $75 per hour. What are the average and marginal costs per hour for the following quantities?
2-2 One of your firm's suppliers discounts prices for larger quantities. The first 1000 parts are $13 each. The next 2000 are $12 each. All parts in excess of 3000 cost $11 each. What are the average cost and marginal cost per part for the following quantities? (a) 500 (b) 1500 (c) 2500 (d) 3500
2-1 Electricity is sold for $0.12 per kilowatt-hour (kWh) for the first 10,000 units each month and $0.09/kWh for all remaining units. If a firm uses 14,000 kWh/month, what is its average and marginal cost? (Answer: average cost is $0.111/kWh)
4. Are there any ethical issues related to economics, the environment, safety, and so on that project sponsors, consumers, and/or the U.S. government should consider?
3. Should large-scale infrastructure projects be required to meet the same internal rate of return requirements as smaller, shorter-completion-time projects? Why or why not?
2. When a project is estimated to take 5 to 10 (or more) years from concept to com- pletion, should cost estimates be adjusted for the greater influences and impacts of inflation, adverse government regulatory changes, and changing local economic environment? Why or why not?
1. When large-scale projects compete for limited corporate capital funds, what type of cost estimating should be utilized? Can you develop a philosophical statement, from the firm's perspective, regarding the detail needed and confidence justifiable in a cost estimate?
1-55 If you rent a car, you can (1) return it with a full gas tank, (2) return it without filling it and pay $3.45/gallon, or (3) accept a fixed price of $35 for gas. The local price is $3.15/gallon for gasoline, and you expect this car to get 28 miles per gallon. The car has a 20-gallon tank. What
1-54 Toyota has a long history of engineering-driven. high-quality production processes. However, more recently a series of problems with acceleration and braking has raised questions about quality and ethics. Summarize what seems to have produced the problems, how they have been addressed, and how
1-53 One of the elements in the flooding of New Orleans during Hurricane Katrina was the failure of some of the levees that protected the city. Out- line the role that ethical failures by engineers may have played in this situation. How could soci- ety structure decision making to minimize such
1-52 The decision-making process used to launch the Challenger shuttle has been extensively analyzed. Briefly summarize the key institutional groups, how the decision was made, and the ethical principles that may have been compromised.
1-51 In the 1970s the Ford Motor Company sold its sub- compact Pinto model with known design defects. In particular, the gas tank's design and location led to rupture, leaks, and explosion in low-speed, rear- impact collisions. Fifty-nine people burned to death in Pinto accidents. In a cost-benefit
1-50 At the international level, questions arise about whether the U.S. ban on bribery is practical or appropriate. In some countries government work ers are very poorly paid, and they can support their families only by accepting money to "grease" a process. (a) What are some of the ethical issues
1-49 At the international level, engineering decisions are critical in matters of "sustainable development" a common ethics issue. (a) What are some of the ethical issues that can arise? (b) Summarize and analyze an example situation from the local newspaper, your hometown news- paper, or a news
1-48 At the international level, a common ethics issue important to engineering and project justification is that of worker health and safety. Often different nations have different standards, and a project or product could be built in either location. (a) What are some of the ethical issues that
1-47 At the international level, a common ethics issue important to engineering and project justification is that of environmental regulation. Often differ- ent nations have different environmental standards, and a project or product might be built in either location. (a) What are some of the
1-46 At both state and federal levels, legislators can be involved in "pork barrel" funding of capital projects. These projects may even bypass the eco- nomic evaluation using engineering economy that normal projects are subject to.
1-45 At the federal government level, the economic con- sequences of decisions can be very large. Firms hire lobbyists, legislators may focus on their constituents, and advocacy organizations promote their own agen- das. In addition, sometimes some of the players are willing to be unethical. (a)
1-44 In the U.S., regulation of payment for overtime hours is done at the state and federal levels. Because most engineering work is accomplished through projects. it is common for engineers to be asked or required to work overtime as projects near deadlines. Some- times the overtime is paid at
1-43 Many engineers work in state governments, and some are in high-profile roles as legislators, department commissioners, and so on. Many of these individu- als move between working in the private and public sectors.
1-42 State governments use a variety of advisory and regu- latory bodies. Example responsibilities include over- sight of professional engineering licensing and the pricing and operation of regulated utilities. Engineers bring skills, knowledge, and perspectives that are use- ful in this context.
1-41 Economic development and redevelopment often require significant acreage that is assembled by acquiring smaller parcels. Sometimes this is done through simple purchase, but the property of an "unwilling seller" can be acquired through the pro- cess of eminent domain.
1-40 Increasing population and congestion often are addressed through road improvement projects. These may pit the interests of homeowners and business owners in the project area against the interests of people traveling through the improvement project.
1-39 One of the important responsibilities of municipal assemblies and school boards is public infrastructure, such as roads and schools. Especially for this respon- sibility, engineers bring skills, knowledge, and per- spectives that can improve public decision making. Often the public role is a
1-38 Use a personal example or a published source to analyze what went wrong or right with respect to ethics at the assigned stage(s) of the decision-making process.
1-37 Find the ethics code for the professional society of your major. (a) Summarize its key points. (b) What are its similarities and differences in comparison to NSPE's ethics code?
1-36 Suppose you are a engineer working in a private engineering firm and you are asked to sign docu- ments verifying information that you believe is not true. You like your work and your colleagues in the firm, and your family depends on your income. What criteria can you use to guide your
1-35 Analyze the ethical aspects of Problem 1-6.
1-34 What are ethics? Contributed by D. P. Loucks, Cornell University
1-33 When you make professional decisions involving investments in engineering projects, what criteria will you use? Contributed by D. P. Loucks, Cornell University
1-32 One strategy for solving a complex problem is to break it into a group of less complex problems and then find solutions to the smaller problems. The result is the solution of the complex problem. Give an example in which this strategy will work. Then give another example in which this strategy
1-31 Apply the steps of the decision-making process to your situation as you decide what to do after grad- uation.
1-30 Describe a major problem you must address in the next two years. Use the techniques of this chapter to structure the problem and recommend a decision.
1-29 Identify the alternatives, outcomes, criteria, and cess for the selection of your college major. Did you make the best choice for you?
1-28 A farmer must decide what combination of seed. water, fertilizer, and pest control will be most prof- itable for the coming year. The local agricultural college did a study of this farmer's situation and prepared the following table.
1-27 Bill Jones's parents insisted that Bill buy himself a new sport shirt. Bill's father gave specific instruc- tions, saying the shirt must be in "good taste," that is, neither too wildly colored nor too extreme in tailor- ing. Bill found three types of sport shirts in the local department store:
1-26 An electric motor on a conveyor burned out. The foreman told the plant manager that the motor had to be replaced. The foreman said that there were no alternatives and asked for authorization to order the replacement. In this situation, is any decision making taking place? If so, who is making
1-25 In decision making we talk about the construction of a model. What kind of model is meant?
1-24 In the fall, Jay Thompson decided to live in a uni- versity 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
1-23 You must fly to another city for a Friday meeting. If you stay until Sunday morning your ticket will be $200, rather than $800. Hotel costs are $100 per night. Compare the economics with reasonable assumptions for meal expenses. What intangible con- sequences may dominate the decision?
1-22 For the project in Problem 1-21, identify the major costs and benefits. Which are market consequences. which are extra-market consequences, and which are intangible consequences?
1-21 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 be either relocated or torn down. Two possible criteria that might be used in deciding exactly where to locate the highway are: (a)
1-20 Seven criteria are given in the chapter for judg- ing which is the best alternative. After reviewing the list, devise three additional criteria that might be used.
1-19 As in Problem 1-18, state the correct economic crite- rion for each of the following situations.. (a) The engineering school raffled off a car; tickets sold for $2 each or three for $5. When the stu- dents were selling tickets, they noted that many people had trouble deciding whether to buy
1-18 The three economic criteria for choosing the best alternative are maximize the difference between out- put and input, minimize input, and maximize output. For each of the following situations, what is the correct economic criterion?
1-17 If there are only two alternatives available and both are unpleasant and undesirable, what should you do?
1-16 Describe a situation in which a poor alternative was selected because there was a poor search for better alternatives.
1-15 A college student determines that he will have only $250 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 alter- natives for his housing. To help him, list five feasible alternatives.
1-14 Suppose you have just 2 hours to determine how many people in your hometown would be interested in buying a pair of left-handed scissors. Give a step- by-step outline of how you would seek to find out within the time allotted.
1-13 Identify possible objectives for NASA. For your favorite of these, how should alternative plans to achieve the objective be evaluated?
1-12 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 will also become a civil engineer. (b) Jill needs to get to the university from her home. She bought a
1-11 A car manufacturer is considering locating an assem- bly plant in your region. List two simple, two inter- mediate, and two complex problems associated with this proposal.
1-10 Consider the seven situations described. Which one situation seems most suitable for solution
1-9 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.
1-8 Toward the end of the twentieth century, the U.S.gov- ernment wanted to save money by closing a small portion of its domestic military installations. While many people agreed that saving money was a desir- able goal, people in areas potentially affected by a closing soon reacted negatively.
1-7 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.
1-6 The owner of a small machine shop has just lost one of his larger customers. The solution to his prob- lem, 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
1-5 Many people write books explaining how to make money in the stock market. Apparently the authors plan to make their money selling books telling other people how to profit from the stock market. Why don't these authors forget about the books and make their money in the stock market?
1-4 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.
1-3 Which one of the following problems is most suitable for analysis by engineering economic analysis? (a) Some 75 candy bars are on sale for 12 bars for $6. 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
1-2 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 a car 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)
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 actually recognized this morning and upon which you made a conscious decision.
4. Are there any ethical aspects to the conversion from gasoline power vehicles to alternative-fuel vehicles? List these, and determine how they could be or should be resolved and by whom.
3. From a manufacturer's viewpoint, what are the major concerns potential problems, and overriding goals of producing an alternative-fuel vehicle? How do these affect the vehicle's price?
2. Develop a list of concerns and questions that consumers might have regarding the conversion to alternative-fuel vehicles. Which are economic and which are noneconomic factors?
1. What marketplace dynamics drive or suppress the development of alternative-fuel vehicles? What role, if any, does government have in these dynamics? What addi- tional charges should government have?
9. 8.72 A call center has a capacity of 1,400,000 calls annually. The fixed cost of the center is $775,000 with an average variable cost of $1 and revenue of $2.50 per call. The percentage of the call capacity that must be placed each year to break even is closest to:1. 29% 2. 33% 3. 37% 4. 41%10.
8. 8.71 Two methods of weed control in an irrigation ditch are under consideration. Method A involves lining at a first cost of $4,000, a life of 20 years, and M&O costs of $3 per mile per year. Method B involves spraying a chemical that costs $40 per gallon. One gallon will treat 8 miles, but the
7. 8.70 Process X has fixed costs of $40,000 per year and a variable cost of $60 per unit. Process Y has an unknown fixed cost, but with this process 200 units can be produced each month at a total variable cost of $2000. If the two processes break even at a production rate of 2000 units per year,
4. $1,481,100
6. 8.69 A 2-lane road surface can be finished with concrete or asphalt. Concrete will cost $2.3 million per mile and will last for 20 years. If signing, mowing, and winter maintenance are not included, the basic maintenance cost for concrete and asphalt roadways averages $48,300 and $77,400 per
5. 8.68 The landfill in Wellsburg has an area of 30 acres available for receiving waste from the city of 40,000 people who generate 0.625 tons per person of municipal solid waste (MSW) each year. If the fixed cost of the landfill is $300,000 per year and the operating cost is $12 per ton, the
4. 8.67 A manufacturing process at Simplicity XP has a fixed cost of $40,000 per month. A total of 100 units can be produced in one day at a cost of $3000 for materials and labor. If the MARR is 12% per year compounded monthly, the number of units that must be sold each month at $50 per unit to
3. 8.66 Four mutually exclusive alternatives are evaluated using three estimates or strategies (pessimistic, most likely, and optimistic) for several parameters. The resulting PW values over the LCM are shown. Table Summary: Table divided into two columns compares four types of strategies based on
2. 8.65 An engineer with EP Gas and Electric is evaluating alternative equipment for maintaining gas wells using a no-return payback analysis. The minimum number of years required to recover the initial investment is closest to: 1. 6 2. 5 3. 4 4. 3 First cost = $−185,000 n = 10 years NCF =
1. 8.64 Cost and revenue data per year for a steel-joining process are shown. If the profit was $100,000, the number of units sold was closest to: 1. < 8,000 2. 10,000 3. 11,500 4. 12,000 Fixed cost = $500,000 per year Production cost per unit = $200 Revenue per unit = $250
5. 8.63 Janice is a process engineer for Upland Chemicals. Yesterday, she was handed the following information about a piece of air quality sampling equipment that she earlier requested be purchased for her department. The request was denied by the Corporate Finance Manager based on the large
4. 8.62 Carl, a colleague in Europe working for the same company that you do, estimated the most likely cash flows after taxes (CFAT) for a project he is working on. Table Summary: Table divided into two columns shows the estimated amount of money to be invested in a project. The column headers are
3. 8.61 Use the Excel© help utility to determine what the following functions are designed to do: (a) VLOOKUP, and (b) RANDBETWEEN.
2. 8.60 Use the RAND()*100 spreadsheet function to generate 100 values from a uniform distribution with the range of 0 to 100. Then use other spreadsheet functions to calculate (a) the average and compare the sample value to 50, and (b) the standard deviation and compare the sample value to 28.87.
1. 8.59 When using Monte Carlo sampling to obtain random numbers from the probability distributions of varying parameters, what is a fundamental assumption that must be made?
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