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Problem 1

Problem 1

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Zohaib Javed
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6 views

Problem 1

Problem 1

Uploaded by

Zohaib Javed
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Problem 1.

12
ANSWER
Problem:
Determine the least expensive way to set up production capacity for drill bits.

Assumptions:
Revenue per unit is the same regardless of the machine; startup costs are minimal;
breakdowns are rare; past employee data is reliable; manufacturing methods are the same
regardless of the setup choice; in-house technicians can extend the old machine's life to
match a new machine; neither machine has resale value; there’s no union influence on
keeping the work in-house.

Options:

Modify the old machine using in-house technicians.

Buy a new machine for $450,000.

Hire McDonald Inc. to modify the machine.

Outsource the work to another company.

Decision Criteria:
Choose the option with the lowest total cost for the expected production runs, assuming
quality and delivery time are not impacted.

Risks:

The old machine may be less reliable than a new one.

The old machine could cause environmental hazards.

Modifying the old machine in-house might be ineffective.

The old machine might be less safe than a new one.

Non-monetary Considerations:

Safety.

Environmental impact.

Differences in quality or reliability.


Flexibility with a new machine.

Job security for in-house employees.

Public perception from having updated technology.

Post-Evaluation:

Did the chosen option consistently produce high-quality products on time?

Were maintenance costs reasonable?

Did the total production costs allow for an acceptable profit?

Problem 1.13:
ANSWER

Problem:
Mary is a senior civil engineering student who is tired from job hunting and low on money.
She has a tempting job offer at her brother’s manufacturing company. If she accepts, she
could take a break from school, earn money, and then come back later to finish her degree.
However, she’s worried that if she leaves now, she might never return to complete her
degree.

a. Two Ways to Frame Mary’s Problem:

1. Long-Term Goal vs. Immediate Need:


o Should Mary prioritize her long-term goal of completing her degree over her
immediate need for money and rest?
2. Temporary Job Break vs. Risk of Not Graduating:
o Should Mary take the job, knowing it could turn into a permanent situation,
which might make returning to finish her degree harder?

b. Possible Solutions for Each Formulation:

1. For Long-Term Goal vs. Immediate Need:


o Solution 1: Take a part-time job that provides income without dropping out,
allowing her to finish her studies while earning.
o Solution 2: Accept her brother's job but set a strict deadline to return to school
(e.g., after one year) and sign a written agreement with her family to ensure
she sticks to it.
2. For Temporary Job Break vs. Risk of Not Graduating:
o Solution 1: Accept the job offer but enroll in one or two online courses to
keep up with her studies and stay engaged in school.
o Solution 2: Delay the job start date until after graduation, allowing her to earn
money and finish her degree without taking a break.
Problem 1.13:
ANSWER
Problem:
You and two friends want a pizza delivered while studying, and you have two options: "Pick-
Up-Sticks" and "Fred’s." Which pizza option gives you the best value for your money?

a. Define the Problem Clearly:

Decide which pizza delivers the most food for the lowest cost, considering both price and
volume.

b. Applying the Seven Principles of Engineering Economy:

1. Develop Alternatives:
o The two alternatives are the "Pick-Up-Sticks" pizza and the "Fred's" pizza.
2. Focus on the Difference:
o Compare the pizzas based on cost per volume (size and thickness).
3. Use a Consistent Viewpoint:
o Measure the value in terms of cost per unit of pizza volume.
4. Use a Common Unit of Measure:
o The common measure here is dollars per cubic inch (cost per volume).
5. Consider All Relevant Criteria:
o Consider cost, size, and delivery fees.
6. Make Uncertainty Explicit:
o Each option has fixed prices and fees, so uncertainty is minimal.
7. Revisit Decisions:
o If unsure, double-check by comparing both the costs and sizes to ensure the
best choice.

c. Cost per Volume Calculation:

o Calculate the cost per cubic inch for each pizza.


o For "Pick-Up-Sticks," find the volume of a 20-inch square pizza that’s 1.25
inches thick.
o For "Fred’s," find the volume of a 20-inch round pizza that’s 1.75 inches
thick. Then, divide the total cost (price + tax + delivery) by the volume to see
which pizza has the lower cost per cubic inch.

d. Other Selection Criteria:

o Taste preference: Which pizza tastes better?


o Thickness and Toppings: Do you prefer the thinner or thicker pizza?
o Convenience: Delivery fees or extra charges might affect the final choice.
o Timing: Which pizza can be delivered faster?
Problem no 1.15

ANSWER

Defining the Need:


Homeowners need to find out if adding a storm door will solve their issue. If it will, they
should install the storm door. If not, they should look for other solutions.

Understanding the Problem:


The problem seems to be that the house is losing heat or doesn’t look the way the homeowner
wants. So, one way to look at the problem is:
"How can we stop heat from escaping from the house?"

Possible Solutions:

• Apply caulk around windows.


• Add weather stripping around doors and windows.
• Upgrade to better heating equipment.
• Install a storm door.
• Add more insulation to the walls, ceiling, etc.
• Combine some of these solutions.

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