Fall 2003
Class Meetings:
MW 2:45 – 4:00 p.m., 401 Roberts Hall
Instructor: Durward Sobek, 312 Roberts Hall, 994-7140
Email: dsobek@ie.montana.edu
Office Hours: Tu 3:00-4:30 p.m., or by appointment
Texts: J.R. Canada, W.G. Sullivan, and J.A. White, Capital Investment Analysis for Engineering and Management, 2nd Edition, Prentice Hall, Upper Saddle River, NJ, 1996.
Prerequisite: I&ME 325 or equivalent
Objectives:
· Develop increased competence in before-tax and after-tax economic analyses.
· Develop insight into advanced economic decision-making issues such as selecting a cost of capital rate, choosing time horizons, and examining the assumptions of traditional engineering economy theory.
· Learn analytical techniques for informing economic decisions taking in account such real-world issues as risk, uncertainty, and qualitative considerations.
Rules:
1. Come to class prepared.
2. Be an active learner — Participate. Ask questions. Apply the ideas.
3. Be considerate of others — Be on time. Pay attention. Listen; allow others to speak.
4. Be honest.
5. Meet deadlines.
6. Have fun.
Course Structure:
· The first few weeks will be mostly a rapid review of I&ME 325 topics with some extra attention given to some advanced issues that are not addressed in 325. Since I assume that you will be familiar with most of this material, I will cover it very quickly. Depending on your working knowledge of this material, you may need to spend some extra time studying this unit.
· Units 2 and 3 move into new material, and the pace will slow down in order for us to properly assimilate the new material.
· Please do the reading prior to class so we can spend our time together clarifying and extending the concepts rather than rehashing the textbook material. This means you may have to anticipate what we’ll be covering.
· Complete homework assignments in a timely fashion (i.e., as we cover the material). Do not wait until just before the exam to attempt the homework.
· I may also give additional assignments throughout the semester, such as writing an article synopsis or presenting a problem and solution to the class. Please take these assignments seriously, as they are intended to increase your learning and understanding, and enrich the classroom experience for everyone.
Grading
· There will be two midterm examinations and a final exam, corresponding to the three units in the course outline. The exams will cover only their respective units. The format and dates are not yet determined.
· Homework sets will be assigned for each major topic covered. Homework will be collected at each exam and evaluated based on completeness, correctness, neatness, and organization.
· Grading will be based on the following proportions
60% Examinations
10% Class preparedness and participation
10% Homework
20% Term Project
· To be determined.
|
Chap. |
Topic(s) |
Assign. |
|
1 |
Introduction and Cost Concepts |
1 |
|
2 |
Interest, Equivalence, Compounding |
2 |
|
3 |
Comparing Alternatives: Present Worth and Annual Worth Methods |
3 |
|
4 |
Comparing Alternatives: Rate of Return Methods |
4 |
|
5 |
Estimation |
5 |
|
6 |
After-Tax Analyses |
6 |
|
8 |
Replacement Analyses |
7 |
|
18 |
Inflation |
8 |
|
9 |
Capital Planning and Budgeting |
9 |
|
Chap. |
Topic(s) |
Assign. |
|
10 |
Introduction to Risk and Uncertainty |
10 |
|
11 |
Sensitivity Analysis |
11 |
|
12 |
Analytical and Simulation approaches |
12 |
|
13 |
Decision Criteria and Methods |
13 |
|
14 |
Decision Trees |
14 |
|
15 |
Statistical Decision Techniques |
15 |
|
Chap. |
Topic(s) |
Assign. |
|
16 |
Mathematical Programming |
16 |
|
17 |
Activity-Based Costing |
17 |
|
19 |
Multiple Attribute Decision-making |
19 |
|
20 |
Analytical Hierarchy Process |
20 |