Economy

Economy
An economy is the total sum of product and service transactions of value
between two agents in a region, be it individuals, organizations or states.
An economy consists of the economic system, comprising the production,
distribution or trade, and consumption of limited goods and services
between two agents, the agents can be individuals, businesses,
organizations, or governments. Transactions only occur when both parties
agree to the value or price of the transacted good, commonly expressed in
a certain currency (Wikipedia, 2013)

aktiviti manusia mengguna secara optimum sumber

ekonomi yang terhad untuk memenuhi kehendak yang
tidak terbatas (Rosnah, 2007)
Economy agents
Individual user : to spend money for products and services
Manufacturer : to invest money for manufacturing and gain profits
Government : to manage money from tax and develop country
 EngineeringEconomy
Engineering Economy

Definition :
o involves the systematic evaluation of the
economic merits of proposed solutions to
engineering problems (Sullivan et. al., 2012)

melibatkan penilaian sistematik suatu projek

kejuruteraan berasaskan kebolehlaksanaan di segi
ekonomi (Rosnah, 2007))

Economics analysis technique(s) will be used in

evaluating and selecting the best alternative (based
on several engineering candidates)
Why Engineering Economy is important to Engineers?

to makehave
Engineers decision
in purchasing / selling / disposal of
Material, Machines, Tools, Equipments

to determine cost of manufacturing

to decide the most economical / profitable project for

industry

to prepare for concurrent engineering practice

rather than classical engineering practice
Sale
s

1995
Corel Corp.
 Classical Engineering (Sequential Approach)

DESIGN

CUSTOMER

MANUFACTURING
Design Engineer

Process Engineer
Design product
Product spec. Production Engineer
Material Setup process
Machine capability Quality
Eng. drawing Run production Control Engineer
Process drawing Monitor machine
Monitor output Confirm spec.
 Classical Engineering Problem

Expectation

End Product
 Concurrent Engineering

Concurrent engineering is a systematic

approach to the integrated, concurrent
design of products and their related
processes, including manufacture and
support
Involves the formation of cross-
functional teams, which allows
engineers and managers of different
disciplines to work together
simultaneously in developing product
and process design
This approach is intended to cause the
developers, from the outset, to consider
all elements of the product life cycle
from concept through disposal,
including quality, cost, productivity,
speed (time to market & response
time), and user requirements (include
functional and reliability)."
Concurrent Engineering Vs Sequential Approach
Concurrent Engineering Vs Sequential Approach
Concurrent Engineering Vs Sequential Approach

Reduction in the number of design changes

large number of design changes are identified and
implemented at the beginning or in the early phase of
product development cycle

Cost of changes in design

The cost of introducing a design change in a product
progressively increases as the development proceeds
through design and manufacturing

Holistic approach to product development

Concurrent engineering approach introduces a new
philosophy in product development.
Participation of planning, manufacturing, quality,
service, vendor development and marketing personnel
Concurrent Engineering Vs Sequential Approach

- Robust products

Concurrent approach to product design results in products with fewer

errors and therefore avoids the loss of goodwill of the customers due to
poorly engineered products
The entire product development team looks at each and every aspect of
products cost, specifications, aesthetics, ergonomics, performance and
maintainability. The resulting product will naturally satisfy the
customer.

- Reduction in lead time for product development

Concurrent engineering reduces the product development time

significantly as the preparatory work in all downstream functions can
take place concurrently
Engineering economy analysis can play a role in
many types of situations

Choosing the best design for a high-efficiency gas

furnace
Selecting the most suitable robot for a welding
operation on an automotive assembly line
Making a recommendation about whether jet
airplanes for an overnight delivery service should
be purchased or leased
Determining the optimal staffing
plan for a computer help desk
Seven (7) fundamental Principles of Engineering
Economy

Develop the alternatives

Focus on the differences
Use a consistent viewpoint
Use a common unit of measure
Consider all relevant criteria
Make uncertainty explicit
Revisit your decisions
 Engineering economy analysis procedures

Problem definition
Development of alternatives
Development of prospective outcomes
Selection of a decision criterion
Analysis and comparison of alternatives
Selection of the preferred alternative
Performance monitoring and post-evaluation of
results
 Problem

UTHM students looking for accommodation

during the beginning of the semester. Apply the
EE analysis procedures for this case

Problem definition
Development of alternatives
Development of prospective outcomes
Selection of a decision criterion
Analysis and comparison of alternatives.
Selection of the preferred alternative.
Performance monitoring and post-evaluation of
results.
 Solutions to engineering problems must

promote the well-being and survival of an

organization,
embody creative and innovative technology and
ideas,
permit identification and scrutiny of their
estimated outcomes, and
translate profitability to the bottom line through
a valid and acceptable measure of merit.
 Important
Important Concepts
Concepts ininEngineering
EngineeringEconomy
Economy

The roles of Engineering activity to the society:

to produce goods and services
- building, house
- transport, car
- electronics devices computer, mobile
to sell at a marketable price RM1 bil.
- suit for consumer buying power
Consider social importance:
- High quality
- Good for environment / sustainability
- Follow country rules and regulations
 Example

Syarikat bercadang mengeluarkan basikal kanak-

kanak berumur 3 tahun. Jika anda seorang jurutera
yang mengendalikan pengeluaran produk tersebut,
huraikan ciri rekabentuk, kos pengeluaran dan harga
keluaran kilang.

Huraian:
Ciri penting basikal ialah keselamatan, tahan lama dan stabil.
Minimum 3 tayar, saiz kecil, ringan dan tiada bucu tajam.
Bahan tidak merbahaya kepada kanak-kanak, tidak mudah
patah atau terbakar, bukan kaca, plastik dan besi bersalut
adalah bahan yang sesuai.

Kos Pengeluaran: -bergantung kepada bahan, buruh, mesin,

kadar faedah dan inflasi.
Harga: -mampu dibeli oleh pengguna sederhana.