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CH #1 Numericals

This document contains 10 numerical problems related to engineering economics. Problem 1 asks a student named Stan to consider factors like fuel costs, mileage, environmental costs when deciding whether to drive farther for cheaper gas. Problem 2 discusses using engineering economic principles to examine NASA's decision to abandon rocket launches. Problem 3 compares the cost per kilowatt-hour of a AAA battery to the local electric utility cost.

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Ms Noor ul Ain
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81 views2 pages

CH #1 Numericals

This document contains 10 numerical problems related to engineering economics. Problem 1 asks a student named Stan to consider factors like fuel costs, mileage, environmental costs when deciding whether to drive farther for cheaper gas. Problem 2 discusses using engineering economic principles to examine NASA's decision to abandon rocket launches. Problem 3 compares the cost per kilowatt-hour of a AAA battery to the local electric utility cost.

Uploaded by

Ms Noor ul Ain
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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The University of Faisalabad

Department of Electrical Engineering


Numerical Engineering Economics

1. Stan Moneymaker needs 15 gallons of gasoline to top off his automobile’s gas tank. If he drives
an extra eight miles (round trip) to a gas station on the outskirts of town, Stan can save $0.10
per gallon on the price of gasoline. Suppose gasoline costs $3.90 per gallon and Stan’s car gets
25 mpg for in-town driving. Should Stan make the trip to get less expensive gasoline? Each
mile that Stan drives creates one pound of carbon dioxide. Each pound of CO2 has a cost
impact of $0.02 on the environment. What other factors (cost and otherwise) should Stan
consider in his decision making?
2. The decision was made by NASA to abandon rocket-launched payloads into orbit around the
earth. We must now rely on the Russians for this capability. Use the principles of engineering
economy to examine this decision.
3. A typical discounted price of a AAA battery is $0.75. It is designed to provide 1.5 volts and
1.0 amps for about an hour. Now we multiply volts and amps to obtain power of 1.5 watts from
the battery. Thus, it costs $0.75 for 1.5 Watt-hours of energy. How much would it cost to
deliver one kilo Watt-hour? How does this compare with the cost of energy from your local
electric utility at $0.10 per kilo Watt-hour?
4. The Russian air force is being called on this year to intercept storms advancing on Moscow
and to seed them with dry ice and silver iodine particles. The idea is to make the snow drop on
villages in the countryside instead of piling up in Moscow. The cost of this initiative will be
180 million rubles, and the savings in snow removal will be in the neighborhood of 300 million
rubles. The exchange rate is 30 rubles per dollar. Comment on the hidden costs and benefits of
such a plan from the viewpoint of the villagers in terms of dollars.
5. A large electric utility company has proposed building an $820 million combined cycle, gas-
powered plant to replace the electric generation capacity at one of its coal-fired facilities.
Develop three other alternatives for replacing this electric generation capacity.
6. While studying for the engineering economy final exam, you and two friends find yourselves
craving a fresh pizza. You can’t spare the time to pick up the pizza and must have it delivered.
“Pick-Up-Sticks” offers a 1-1/4-inch-thick (including toppings), 20-inch square pizza with
your choice of two toppings for $15 plus 5% sales tax and a $1.50 delivery charge (no sales
tax on delivery charge). “Fred’s” offers the round, deep-dish Sasquatch, which is 20 inches in
diameter. It is 1-3/4 inches thick, includes two toppings, and costs $17.25 plus 5% sales tax
and free delivery.
i. What is the problem in this situation? Please state it in an explicit and precise manner.
ii. Systematically apply the seven principles of engineering economy to the problem you have
defined in Part (a).
iii. Assuming that your common unit of measure is dollars (i.e., cost), what is the better value for
getting a pizza based on the criterion of minimizing cost per unit of volume?
iv. What other criteria might be used to select which pizza to purchase?
7. Bad news: You have just wrecked your car! You need another car immediately because you
have decided that walking, riding a bike, and taking a bus are not acceptable. An automobile
wholesaler offers you $2,000 for your wrecked car “as is.” Also, your insurance company’s
claims adjuster estimates that there is $2,000 in damages to your car. Because you have
collision insurance with a $1,000 deductibility provision, the insurance company mails you a
check for $1,000. The odometer reading on your wrecked car is 58,000 miles. What should
you do? Use the seven-step procedure to analyze your situation. Also, identify which principles
accompany each step.
8. A deep-water oil rig has just collapsed into the Gulf of Mexico. Its blowout-preventer system
has failed, so thousands of barrels of crude oil each day are gushing into the ocean. List some
alternatives for stopping the unchecked flow of oil into the Gulf.
9. Assume that your employer is a manufacturing firm that produces several different electronic
consumer products. What are five nonmonetary factors (attributes) that may be important when
a significant change is considered in the design of the current bestselling product?
10. For every penny that the price of gasoline goes up, the U.S. Postal Service (USPS) experiences
a monthly fuel cost increase of $8 million. State what assumptions you need to make to answer
this question: “How many mail delivery vehicles does the USPS have in the United States?”

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