June 14, 2009
June 14, 2009
June 17, 2009
14.552.1 - 14.552.8
Engineering Economics: Time for New Directions?
John H. Ristroph University of Louisiana at Lafayette
This paper questions the appropriateness of devoting a significant portion of an engineering eco- nomics course to the use of factors, a computational technique originally necessitated by slide rules. An alternative pedagogy is proposed that reduces this component of the course to allow more coverage within engineering economics courses of important topics such as cash flow es- timation, as well as benefiting students who only receive an introductory treatment within other engineering courses.
The teaching of engineering has evolved over time, and today’s students are expected to have an understanding of the phenomena that they model and the means to evaluate those models. Some calculations can be done quickly on a calculator, whereas others, such as least squares curve fit- ting, typically are done on a computer. In fact, some topics might not be taught at all if computa- tional aides were not available, such as optimization or finite differences. This paper examines the evolution of engineering economics and technology-driven opportunities for improvement.
A hundred years ago, tables were used to provide the values of interest formulas that were diffi- cult to evaluate using slide rules. The slide rules have disappeared, but not the tables. At first, tables seem to be a convenience, but they require spending valuable classroom time to teach the mechanics of factors. For example, consider the problem shown in Figure 1. Given deposits of $3,000 at times 2, 3, …, 30, what equal amounts can be withdrawn at times 39, 40, …, 63? This is a three-step problem using factors. 1. Determine the equivalent (i.e., the account E30 E38 balance) at time 30: 3,000 E30 = 3,000(F|A, i, 30-1) (1) ••• 39 40 63 2. Compute the equivalent at time 38: 1 2 3 30 38 E38 = E30(F|P, i, 38-30) (2) •••
3. Calculate the final answer: X X = E38(A|F, i, 63-38) (3) Figure 1. Unknown Withdrawals
Teaching the students how to solve this problem might involve the following classroom ac- tivities: 1. Develop the formulas for F|A, F|P, and A|F. 2. Explain that F|A requires:
Ristroph, J. (2009, June), Engineering Economics: Time For New Directions? Paper presented at 2009 Annual Conference & Exposition, Austin, Texas. https://peer.asee.org/4501
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