ENGINEERING ECONOMICS: A COURSE NEED TO BE STUDY BY AN ENGINEERING STUDENT

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1 International Journal of Mechanical Engineering and Technology (IJMET) Volume 9, Issue 7, July 2018, pp , Article ID: IJMET_09_07_119 Available online at ISSN Print: and ISSN Online: IAEME Publication Scopus Indexed ENGINEERING ECONOMICS: A COURSE NEED TO BE STUDY BY AN ENGINEERING STUDENT Dr. Binod Sinha Professor of Marketing, BIMM Pune, India ABSTRACT Engineering integrates physical environment and economic environment. Physical environment outlines produce goods and services, depending upon physical laws and economic environment assess worth of goods and services. So learning Engineering Economics equips the budding engineers with the analytical tools of Economics and applies the same to rational decision-making. It further seeks to develop economic way of thinking in dealing with practical business problems and challenges. Engineering economics deals with engineering orientation of economics. In today s business environment engineers should It is a fundamental skill that all successful engineering firms employ in order to retain competitive advantage and market share. Many schools across the country have integrated courses in engineering economics for their students, thereby providing them with the tools to optimize profits, minimize costs, analyze various scenarios, forecast fluctuations in business cycles etc. This paper highlights the growing importance of engineering economics and its role in developing sound engineers. Key words: Engineering economics, physical and economic environment, Analytics, Accredited Programme, Outcomes. Cite this Article: Dr. Binod Sinha, Engineering Economics: A Course Need to be Study by an Engineering Student, International Journal of Mechanical Engineering and Technology 9(7), 2018, pp INTRODUCTION Engineering economics outlines business problems connected to engineers in a variety of industries. The course has a strong conceptual and quantitative components conducive towards understanding interdisciplinary material. This paper presents an analysis on importance of engineering economics course and its contents with respects to 21 st century engineers of our country. 2. LITERATURE REVIEW Mr. Shervin Zoghi, California State University, Fresno published a research paper title Engineering Economics and Its Role in The Engineering Curricula. It is published in American Society for engineering education, 2015.He highlighted the importance of editor@iaeme.com

2 Engineering Economics: A Course Need to be Study by an Engineering Student engineering economics. He pointed out that it is the field of study which addresses the dynamic environment of economic calculations and principles through the prism of engineering. Mr. Frank Gill in his research paper On Engineering economics highlighted the importance on studying engineering economics subject in engineering degree programme. His paper was published in 1943 in Journal of the institution of electrical engineers,vol 90, issue 33,September The aim of his paper was to show the importance of the subject and how readily a knowledge of it can be taught; and to set out in an orderly manner one form in which estimates may be made and summaries presented for final judgment. Mr. A.Vijaya Madhavan in his research paper on Engineering Economic Analysis - A Case Study highlighted Economic analysis is an effective tool in the decision-making process. The Economic Analysis process is an iterative procedure for evaluating and ranking alternatives that meet an objective. In present case study of problem faced by a small scale industrialist in choosing best alternative manufacturing method is discussed. His research paper published in International Journal of Scientific Research Publication Vol 4 issue 6, June 2014,ISSN SAMPLE SYLLABUS AND CONTENTS OF ENGINEERING ECONOMICS Topic : Microeconomics Role of microeconomic analysis in decision in view of complexity of the modern economy, Resources and Scarcity, Demand Analysis and demand management(domestic), Determinants, estimations and uses of elasticity of demand, Supply and Price, Elasticity of supply, Demand Forecasting, Indifference Curve, Production and output estimation in short run and long run, Cost theory and estimation, Production Possibility Curve and its importance in business decision making. Topic :Macroeconomics Gross Domestic Product(GDP) and Gross National Product(GNP),Consumer Price Index(CPI),Wholesale Price Index(WPI) and GDP Deflator, Capital accumulation and economic growth, level of Investment, Inflation, Theory of employment, interest and money by Keynes and contrasting with Say s theory, and Balance of Payment, Deficit financing, Globalisation and Division of labour, Business Cycle, Fiscal and Monetary Policy, Exchange Rate Policy (Comparison with a few leading economies),ginni Coefficient and Purchasing Power Parity(PPP),Poor economics, Free Market Economics Topic: Firms and Market Motive of existence of firm, Profit Maximising output,goals of non profit firm and public sector firms, Global Firms,The competitive and Monopoly model, Monopolistics Competitions, Theory of competitive advantages, Alternate pricing practices-pricing of multiple product and price discrimination, National Market, International Market,Sensex,Nifty editor@iaeme.com

3 Dr. Binod Sinha Topic :Time Value of Money Concepts and application. Capital budgeting; Traditional and modern methods, Payback period method, IRR, ARR, NPV, PI (with the help of case studies) Topic :Behavioral Economics Behavioural Decision making, Choice under uncertainty and certainty, Probalistics Judgment, Departure from perfect rationality, Choice involving time, risk and strategy, System I and System II theory and its impact on business decision making, Nudge Theory and its success in today s world. Topic :Financial Institutions and Trade Organisations (National and International) Reserve Bank of India(RBI), Security and Exchange Board of India(SEBI),Banks-Public, Private, Foreign and International Apex Bank-World Bank, Asian Development Bank, New Development Bank BRICS etc. National Trade Organizations (CII, FICCI and ASSOCHAM),International Trade Blocks( NAFTA, SAFTA,EU etc.) and International Trade Organisation -WTO The sample 12 lecture plans is mentioned for helping the faculty to teach this very important EE. Lecture-1 Content of the Lecture Role of microeconomic analysis in decision in view of complexity of the modern economy, Resources and Scarcity. a) Understand the economics and its importance in engineering. b) Identify micro economic variables and its role in economic decision. c) Understand the importance of resources. Discuss the full syllabus and relation of economics with engineering. Explain concept of micro and macroeconomics. Explain role of microeconomic variables in economic decision making. Question Answer Session Lecture-2 Content of the Lecture: - Demand Analysis and demand management(domestic), Determinants, estimations and uses of elasticity of demand. 1) Analyze demand and its determinants. 2) Explain elasticity of demand and its uses editor@iaeme.com

4 Engineering Economics: A Course Need to be Study by an Engineering Student 1) Taking review of previous lecture. 2) Explain the concept of demand and its determinants. 3) Discuss elasticity of demand. 4) Question Answer Session Lecture-3 Content of the Lecture: - Supply and Price, Elasticity of supply, Demand Forecasting, Indifference Curve. 1) Analyze the relationship between price and supply. 2) Forecast demand. 1) Taking review of the concepts of previous lecture. 2) Explain concepts of supply and its relationship with price. 3) Explain demand forecasting methods. 4) Numerical examples on demand forecasting. 5) Question /Answer Sessions. Lecture-4 Content of the Lecture: - Production and output estimation in short run and long run. Understand the concept of Production. Analyze input and output relationship in short run and long run. 1) Take review of previous lecture. 2) Explain the concept of Production. 3) Explain the Production estimation in short run and long run. 4) Question /Answer Session. Lecture-5 Content of the Lecture: - Cost theory and estimation. 1) Understand concept of cost. 2) Analyze the cost output relationship. 1) Taking review of the last lecture. 2) Explain Concept of cost 3) Practical problems on cost out relationship 4) Question Answer Session Lecture-6 Content of the Lecture: Production Possibility Curve and its importance in business decision making editor@iaeme.com

5 Dr. Binod Sinha 1) Analyze importance of Production Possibility Curve 1) Taking review of the last lecture. 2) Discuss the concept and importance of production possibility curve. 3) Discuss the use of PPC in decision making in country economy. 4) Q/A Session Lecture-7 Content of the Lecture: Gross Domestic Product(GDP) and Gross National Product(GNP),Consumer Price Index(CPI),Wholesale Price Index(WPI) and GDP Deflator, Capital accumulation and economic growth, level of Investment, 1)Analyze national income. 2) Analyze different Price Index. Explain Concept & method of national income measurement(gdp, GNP)(25 Min) Explain Consumer Price Index(CPI) and measurement Question Answer Session Lecture-8 Content of the Lecture: Inflation, Theory of employment, interest and money by Keynes and contrasting with Say s theory. 1) Analyze inflation and its impact. 2) Analyze Keynes and Says theory 1) Taking review of the concepts teach in the previous lecture. 2) Discuss inflation and its impact. 3) Explain Keynes and Says theory 4) Question Answer Session. Lecture-9 Content of the Lecture: Balance of Payment, Deficit financing. 1) Analyze balance of payment. 2) understand the concept of deficit financing. 1) Taking review of the last lecture 2) Explain Balance of Payment. 3) Discuss the concept of deficit financing editor@iaeme.com

6 Engineering Economics: A Course Need to be Study by an Engineering Student 4) Question Answer Lecture-10 Content of the Lecture: Globalisation and Division of labour, Business Cycle, Fiscal and Monetary Policy. 1) Analyze the concept of Globalization and division of labour. 2) Analyze the concept of Business Cycle, fiscal and monetary. 1) Taking review of the last lecture. 2) Explain the concept of Globalization. 3) Explain Business Cycle and fiscal and monetary policy 4) Question Answer Lecture-11 Content of the Lecture: Exchange Rate Policy (Comparison with a few leading economies). 1) Understand concept of concept of Exchange rate policy. 2) Analyze impact of exchange rate comparison. 1) Taking review of the last lecture 2) Explain concept of concept of exchange rate. 3) Practical problems on Exchange rate. 4) Question Answer Sessions Lecture-12 Content of the Lecture: Ginni Coefficient and Purchasing Power Parity(PPP),Poor economics, Free Market Economics. Analyze Gini Coefficient and PPP. Understand Poor economics 1) Practical problems on Gini Co-efficient Discuss Poor economics 3) Q/A Session 4. THE IMPORTANCE OF ENGINEERING ECONOMICS The application of economics concepts in engineering projects is important for its success. Most of the autonomous engineering college in India have incorporated this course in the curriculum of B.Tech engineering Programme. It poses numerous benefits because it allows those in industry to make strategic decisions for their companies. It provides a mechanism for decision-making. It helps engineers to think carefully in selecting best alternative in everyday editor@iaeme.com

7 Dr. Binod Sinha operations, such as process configurations, materials, production size, and other economic factors. Mechanical engineers are responsible for design and manufacture machinery. This can range from the delicate design of small parts of machines as well as handling large-scale machinery. Engineering economics concepts help them in understanding and analyzing costs and expected market for the machinery. Civil Engineering Engineering economics helps them in understanding and analyzing micro economics and macroeconomics variables. It also help them in understanding time value of money which deals with Payback period analysis, Accounting rate of return, Net present value and Internal rate of return. Time value of money is guiding Civil engineers in design, build and operate construct and maintain infrastructure projects and systems in the public and private sector, including roads, buildings, airports, tunnels, dams, bridges, and systems for water supply and sewage treatment. This all components are associated with success of small and big infrastructural projects. This concept of TVM (Time Value of Money) is helpful for analyzing project cost, delay project cost, financial feasibility of that projects which is vital for the sustainability and success of the infrastructural projects. Today these projects are skeleton of socio economic development of any country especially developing and underdeveloped country. In addition to engineering economics a civil engineering has to go through infrastrure economics course which gives them knowledge of specialized discipline. Automobile engineering- Automobile engineers study various other disciplines that are of prime importance to a car such as: Safety engineering, fuel/economic emissions, vehicle dynamics, NVH (Noise, Vibration, Harshness) engineering, vehicle economic, performance, programme timing, quality management, drivability, cost and so on. So fundamentally, automobile engineers hold a wide variety of responsibilities. Engineering economics helps in analyzing fuel economy of Sports Utility Vehicles, High Utility Vehicles and Light Utility Vehicles to improve the efficiency of these vehicles. Technology/cost analysis, a combination of analytical methods from the disciplines of economics and automotive engineering is generally used for the same. Electronic engineering: Electronic engineering is a rapidly advancing profession and is the driving force behind the development of the world s information technology. Electronic engineers make, plan and create regular gadgets like the cell phone, compact music gadgets and PCs. Electronic designing offers a wide scope of energizing profession challenges including delivering new advancements and improvements in media communications, mechanical autonomy computing hardware and power and electrical equipment. Micro and macroeconomics variables are helpful in analyzing demand, cost, and production and profitability of new product and existing products. The changes in electronic sector especially in telecommunication is very fast so sound knowledge of engineering economics concepts can deliver better result for an organization. Electrical Engineering: The concepts of cost and its analysis help electrical engineers in designing, testing and developing electrical equipment equipment manufacturing. The success of power generation and distribution company depends upon how good they are able to design the tariff system which is based on economic concepts and principles. Computer Science Engineering: the concepts of economics helps in design, implementation and management of information system of both hardware and software editor@iaeme.com

8 Engineering Economics: A Course Need to be Study by an Engineering Student 4.1. Engineers and Economic Development Engineers have contributed significantly in the process of global economic development and the eradication of poverty. Development and improvement in infrastructure is treated as a catalyst for reducing the significance of factors inhibiting development, such as the spread of waterborne and other contagious diseases. Simultaneously, it strengthens the impact of those factors that can speed up the development process, such as improved transport links that in turn contribute to growth in trade, enhance the prospects for access to schooling and encourage labour mobility. Investment in communications networks, enabling access to information, the internet and mobile telephony also plays a key role in economic development and growth. 5. CONCLUSIONS The integration between economics and engineering can plays vital in the success of engineers in the present century. John Hayford rightly said integration of economics and engineering helps to develop the very valuable habit of thinking in terms of groups rather than of individuals. Engineers are getting greater insight in the evaluation of design and engineering alternatives with the help of economic techniques. The engineering economics course ultimately help to evaluate and optimize engineering decisions, and discusses the principles of benefit-cost analysis. REFERENCES [1] Lavelle, J., K. Needy, H. Umphred. Engineering Economy: A Follow-up Analysis of Current Teaching Practices. ASEE Annual Conference Proceedings, 1997, Session [2] Johnson, D., R. Johnson, and K. Smith, Maximizing Instruction Through Cooperative Learning, ASEE Prism, February 1998, pp [3] O Conner, John. Turning Average Instruction Into Great Instruction. R&L Publication, [4] Bloom, B. S.; Engelhard, M. D.; Furst, E. J.; Hill, W. H.; Krathwohl, D. R. Taxonomy of educational objectives: The classification of educational goals. Handbook I: Cognitive domain. New York: David Mckay Company [5] Resnick, L., Levine, J. & Teasley S. Perspectives on socially shared cognition. Washington: American Psychological Association, [6] Johnson, R. T., & Johnson, D. W. Action research: Cooperative learning in the science classroom. Science and Children, 24, [7] Mavrovouniotis, Michael. The Role of Engineering Economics in the Chemical Engineering Curricula. ASEE Annual Conference [8] Hazelberg, G. A. Rethinking the curriculum. ASEE Prism, pg. 56. December Harford, J. F. The Relation of Engineering to Economics. Journal of Political Economy (1917): Chicago Journals. [9] N. Shyamananda Singh, Construction Equipment Productivity and Cost Economics in Highway Projects: Case Study Part II (Seasonal Variation Study). International Journal of Advanced Research in Engineering and Technology, 9(3), 2018, pp editor@iaeme.com