Engineering Economics is an Efficiency Improvement Tool for Industrial Engineers

An Article to Note

The Role of IE in Engineering Economics.

By Riel, Philippe F.
IIE Solutions, April 1998


Industrial engineering (IE) plays a significant role in engineering economics. IE promotes investment justification processes that determine the appropriateness and value of projects. It also supports investment analyses correlated with the overall corporate strategy. Moreover, IE advocates evaluation processes that advance interdisciplinary thinking among company employees who design cost models and evaluation frameworks that are utilized in decision support systems for a variety of technological projects.


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The idea that I advocate in this article is that the set of evaluation methods of Engineering Economics is an efficiency improvement tool in the hands of industrial engineer. Industrial engineering is human effort engineering and system efficiency engineering.


The system functional designers come out with an effective system design that produces an output acceptable to the customer and may also be profitable with reference to the rate of return prescribed by the organization. That does not mean that it is the most efficient solution. In the system engineering process, there is a step in which the proposed basic system is evaluated in various dimensions and further optimization is done. Industrial engineers make efficiency evaluation in various dimensions and further improve the efficiency. Engineering economics is one such area. Engineering economics indicates that search for economic efficiency has to take place on either side of currently proposed engineering equipment. Industrial engineers have to consider various engineering alternatives to the one currently proposed by the system synthesizer to evaluate the current efficiency and if needed propose alternatives that improve the system efficiency using engineering economics methods.




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A Quote


Engineering Economics is applicable to all the fields of engineering since engineers design and make things that people buy. However, it is especially significant to Industrial Engineering, Systems Engineering, and Management Engineering, since these disciplines often are involved in the cost management of engineering systems.


http://www.download-it.org/free_files/Pages%20from%20Chapter%2016%20-%20Engineering%20Economics%20-1faea7ed1d0c63b4b3980e536ad46e1e.pdf


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Engineering Economic Appraisal - A Special Role for Industrial Engineers

Engineering economic analysis is to be carried out by all engineers. These analysis reports must be appraised by IE department engineers. IEs can evaluate whether sufficient technical alternatives were considered in proposing the technical solution now recommended and then check the data and calculations of the economic analysis. From IE department, the proposal can go the project appraisal committee.


Engineering Economics is part of Industrial Engineering Tool Kit

Industrial Engineering Tool Kit

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Bibliography


Engineering Economics, John M.Watts, Jr., and Robert E. Chapman
http://fire.nist.gov/bfrlpubs/build02/PDF/b02155.pdf




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Related Knols

Engineering Economy or Engineering Economics: Economic Decision Making by Engineers
Engineering Economics - Knol Book
ngineering Economy or Engineering Economics - Videos

Article originally posted at
http://knol.google.com/k/narayana-rao/engineering-economics-is-an-efficiency/ 2utb2lsm2k7a/ 2270

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