IE318 Engineering EconomyIstanbul Okan UniversityDegree Programs Industrial Engineering (English)General Information For StudentsDiploma SupplementErasmus Policy StatementNational Qualifications
Industrial Engineering (English)
Bachelor TR-NQF-HE: Level 6 QF-EHEA: First Cycle EQF-LLL: Level 6

General course introduction information

Course Code: IE318
Course Name: Engineering Economy
Course Semester: Spring
Course Credits:
Theoretical Practical Credit ECTS
3 0 3 6
Language of instruction: EN
Course Requisites:
Does the Course Require Work Experience?: No
Type of course: Compulsory
Course Level:
Bachelor TR-NQF-HE:6. Master`s Degree QF-EHEA:First Cycle EQF-LLL:6. Master`s Degree
Mode of Delivery: Face to face
Course Coordinator : Dr.Öğr.Üyesi MEHMET TEVFİK ÇOBANOĞLU
Course Lecturer(s): Dr.Öğr.Üyesi MEHMET TEVFİK ÇOBANOĞLU
Course Assistants:

Course Objective and Content

Course Objectives: I. To gain the ability of applying economic analyses in the related engineering discipline,
İİ. To understand the major capabilities and limitations of discounted cash flow analysis for evaluating proposed capital investments.
İİİ. To be able to recognize, formulate, and analyze cash flow models in practical situations. Understand the assumptions underlying these models, and the effects on the modeling process when these assumptions do not hold.
IV. To be able to communicate the results of the modeling process to management and other non-specialist users of engineering analyses.
Course Content: Terminology and cash flow diagrams. Interest factors and their use. Nominal and effective interest rates. Continuous compounding. Present worth and capitalized cost analysis. Uniform annual cash flow analysis. Rate of return analysis. Internal and external rates of return. Benefit / cost ratio analysis. Payback period analysis. Replacement analysis. Inflation-interest relations.
Depreciation. Depletion. After-tax economic analysis. Breakeven analysis. Capital budgeting under budget constraints. Sensitivity analysis and decision trees. Investment analyses under risk.

Learning Outcomes

The students who have succeeded in this course;
Learning Outcomes
1 - Knowledge
Theoretical - Conceptual
2 - Skills
Cognitive - Practical
1) Decision steps for investment in the companies and their application with different examples from industry
3 - Competences
Communication and Social Competence
Learning Competence
1) Factors and parameters during investment projects wil be discussed and measurements with several senarios
Field Specific Competence
1) Gaining the ability to make comprehensive analysis in daily decision making, business life and company practices, to determine decision criteria and to make the right decision with environmental, personal, political and mquantitative and qualitative layers.
Competence to Work Independently and Take Responsibility
1) Decision criterias for finding right decisions

Lesson Plan

Week Subject Related Preparation
1) Replacement analysis, defender and challenger, economic life
1) Basic concepts, graphs, role of engineering economics in decision making, discounting and equivalence
2) Discounting factors and their usage; usage of multiple factors; nominal and effective interest rates; continuous discounting
3) Present worth analysis; capitalized cost analysis; equal life alternatives; different life alternatives
4) Equivalent uniform annual cash flow analysis; equal life alternatives; different life alternatives; rate of return calculations; number of sign changes in cash flows and external investments
5) Incremental rate of return analysis, benefit/cost ratio analysis; future worth analysis
6) Replacement analysis, defender and challenger, economic life
8) Depreciation and depletion, income taxes, after tax cash flow, inflation and interest
9) Breakeven analysis; capital budgeting for independent investment alternatives
10) Sensitivity analysis, expected value decisions, decision trees
10) Sensitivity analysis, expected value decisions, decision trees
11) Decision making under risk, uncertainty and risk, simulation, certainty equivalent, risk adjusted cash flow approach
12) Decision making under risk, uncertainty and risk, simulation, certainty equivalent, risk adjusted cash flow approach Multiple criteria level
13) Multiple criteria evaluation of investments
14) Multiple criteria evaluation of investments

Sources

Course Notes / Textbooks: Park, C.S., Sharp-Bette, G.P. Advanced Engineering Economics, John Wiley and Sons, Inc., 1990.
References: Leland T. Blank, Anthony Tarquin, Engineering Economy, 6th Edition, McGraw-Hill, 2009.
Park, C.S., Sharp-Bette, G.P. Advanced Engineering Economics, John Wiley and Sons, Inc., 1990.

Course-Program Learning Outcome Relationship

Learning Outcomes

1

2

3

4

Program Outcomes
1) Adequate knowledge in mathematics, science and engineering subjects pertaining to the relevant discipline; ability to use theoretical and applied information in these areas to model and solve engineering problems.
2) Ability to identify, formulate, and solve complex engineering problems; ability to select and apply proper analysis and modelling methods for this purpose.
3) Ability to design a complex system, process, device or product under realistic constraints and conditions, in such a way so as to meet the desired result; ability to apply modern design methods for this purpose. (Realistic constraints and conditions may include factors such as economic and environmental issues, sustainability, manufacturability, ethics, health, safety issues, and social and political issues according to the nature of the design.)
4) Ability to devise, select, and use modern techniques and tools needed for engineering practice; ability to employ information technologies effectively.
5) Ability to design and conduct experiments, gather data, analyse and interpret results for investigating engineering problems.
6) Ability to work efficiently in intra-disciplinary and multi-disciplinary teams; ability to work individually.
7) Ability to communicate effectively i Turkish, both orally and in writing; knowledge of a minimum of one foreign language.
8) Recognition of the need for lifelong learning; ability to access information, to follow developments in science and technology, and to continue to educate him/herself.
9) Awareness of professional and ethical responsibility.
10) Information about business life practices such as project management, risk management, and change management; awareness of entrepreneurship, innovation, and sustainable development.
11) Knowledge about contemporary issues and the global and societal effects of engineering practices on health, environment, and safety; awareness of the legal consequences of engineering solutions.

Course - Learning Outcome Relationship

No Effect 1 Lowest 2 Low 3 Average 4 High 5 Highest
           
Program Outcomes Level of Contribution
1) Adequate knowledge in mathematics, science and engineering subjects pertaining to the relevant discipline; ability to use theoretical and applied information in these areas to model and solve engineering problems. 4
2) Ability to identify, formulate, and solve complex engineering problems; ability to select and apply proper analysis and modelling methods for this purpose. 3
3) Ability to design a complex system, process, device or product under realistic constraints and conditions, in such a way so as to meet the desired result; ability to apply modern design methods for this purpose. (Realistic constraints and conditions may include factors such as economic and environmental issues, sustainability, manufacturability, ethics, health, safety issues, and social and political issues according to the nature of the design.) 2
4) Ability to devise, select, and use modern techniques and tools needed for engineering practice; ability to employ information technologies effectively. 3
5) Ability to design and conduct experiments, gather data, analyse and interpret results for investigating engineering problems. 2
6) Ability to work efficiently in intra-disciplinary and multi-disciplinary teams; ability to work individually. 3
7) Ability to communicate effectively i Turkish, both orally and in writing; knowledge of a minimum of one foreign language. 2
8) Recognition of the need for lifelong learning; ability to access information, to follow developments in science and technology, and to continue to educate him/herself. 2
9) Awareness of professional and ethical responsibility. 5
10) Information about business life practices such as project management, risk management, and change management; awareness of entrepreneurship, innovation, and sustainable development. 2
11) Knowledge about contemporary issues and the global and societal effects of engineering practices on health, environment, and safety; awareness of the legal consequences of engineering solutions. 4

Learning Activity and Teaching Methods

Expression
Brainstorming/ Six tihnking hats
Individual study and homework
Lesson
Reading
Homework
Problem Solving
Role Playing
Q&A / Discussion
Application (Modelling, Design, Model, Simulation, Experiment etc.)
Case Study

Assessment & Grading Methods and Criteria

Oral Examination
Individual Project
Presentation
Case study presentation

Assessment & Grading

Semester Requirements Number of Activities Level of Contribution
Quizzes 5 % 15
Project 1 % 15
Midterms 1 % 30
Final 1 % 40
total % 100
PERCENTAGE OF SEMESTER WORK % 60
PERCENTAGE OF FINAL WORK % 40
total % 100

Workload and ECTS Credit Grading

Activities Number of Activities Duration (Hours) Workload
Presentations / Seminar 1 3 3
Homework Assignments 1 3 3
Quizzes 5 5 25
Midterms 1 1 1
Final 1 1 1
Total Workload 33