Week 9 assignment
10/24/19
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EE 200: Engineering Economics 1 Labor and Project Cost Estimating
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Gender Pay Gap ?
• Google found for similar jobs o Underpaying more men o Than women
https://www.cnbc.com/2019/03/04/google-found-its- underpaying-some-men-as-it-studies-wage-equity.html
• Married Men o Earning Much More o Than Others in America o Married Men.jpeg
https://www.bloombergquint.com/onweb/u-s-married-men- earn-much-more-than-others-demographics-trends
• Gender Wage Gap o Due To Men Working Longer
Hours https://dailycaller.com/2018/12/10/gender-wage-gap-men- working-longer-hours/
• Dilbert Comic o Gender Pay Gap Solution o Dilbert Gender Pay Gap.gif
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Salary Calculator Data Used to Illustrate Computation of Labor Rates
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Labor rates.xlsx
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When does Adding Indirect Labor Reduce Total Cost?
Cost Increases • Indirect labor costs more
than direct • Indirect labor added to
perform unnecessary work
Cost Decreases • Indirect labor costs less than
direct • Indirect labor
o Does necessary work o Replaces direct labor doing
overhead tasks
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Parts Costs and Manufacturing
• In 400D and perhaps 2nd Capstones o Budget for project parts o Examples
• In manufacturing o More historical data driven o Learning curve cost model o Example: Power Law o 𝐶" = 𝐶$𝑛&'
§ 𝐶$ is the first unit cost § 𝐶" is the nth unit cost § 𝑛 is the cumulative volume. Of
production
§ 𝑎 is the elasticity of cost 11
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136 ENGINEERING ECONOMICS
ENGINEERING ECONOMICS
Factor Name Converts Symbol Formula Single Payment Compound Amount to F given P (F/P, i%, n) (1 + i)
n
Single Payment Present Worth to P given F (P/F, i%, n) (1 + i)
–n
Uniform Series Sinking Fund to A given F (A/F, i%, n) ( ) 11 + ni
i
Capital Recovery to A given P (A/P, i%, n) ( )
( ) 11 1 +
+ n
n
i ii
Uniform Series Compound Amount to F given A (F/A, i%, n)
( ) i i n 11 +
Uniform Series Present Worth to P given A (P/A, i%, n)
( ) ( )n
n
ii i +
+ 1
11
Uniform Gradient Present Worth to P given G (P/G, i%, n)
( ) ( ) ( )nn
n
ii n
ii i
++ +
11 11
2
Uniform Gradient † Future Worth to F given G (F/G, i%, n)
( ) i n
i i n+
2 11
Uniform Gradient Uniform Series to A given G (A/G, i%, n) ( ) 11
1 + ni n
i
NOMENCLATURE AND DEFINITIONS A �������������Uniform amount per interest period B �������������Benefit BV �����������Book value C �������������Cost d��������������In ation ad usted interest rate per interest period Dj ������������Depreciation in year j EV �����������Expected value F �������������Future worth, value, or amount f �������������� eneral in ation rate per interest period G �������������Uniform gradient amount per interest period i ��������������Interest rate per interest period ie �������������Annual effective interest rate MARR ����Minimum acceptable/attractive rate of return m �������������Number of compounding periods per year n��������������Number of compounding periods; or the expected
life of an asset P �������������Present worth, value, or amount r ��������������Nominal annual interest rate Sn ������������Expected salvage value in year n
Subscripts j ����������� at time j n����������� at time n †����������� F/G = (F/A – n)/i = (F/A) × (A/G)
Risk Risk is the chance of an outcome other than what is planned to occur or expected in the analysis�
NON-ANNUAL COMPOUNDING
i m r1 1e m
= + -b l
BREAK-EVEN ANALYSIS By altering the value of any one of the variables in a situation, holding all of the other values constant, it is possible to find a value for that variable that makes the two alternatives equally economical� This value is the break-even point� Break-even analysis is used to describe the percentage of capacity of operation for a manufacturing plant at which income will ust cover expenses. The payback period is the period of time required for the profit or other benefits of an investment to equal the cost of the investment�
Time Value of Money Relating Future and Present Worth Shows Unreasonable Costs
12 𝐹 is Future Worth 𝑃 is Present Worth 𝑛 is the number of compounding periods 𝐴 is Uniform Amount per interest period (Payment) 𝑖 is the interest rate per period
12
136 ENGINEERING ECONOMICS
ENGINEERING ECONOMICS
Factor Name Converts Symbol Formula Single Payment Compound Amount to F given P (F/P, i%, n) (1 + i)
n
Single Payment Present Worth to P given F (P/F, i%, n) (1 + i)
–n
Uniform Series Sinking Fund to A given F (A/F, i%, n) ( ) 11 + ni
i
Capital Recovery to A given P (A/P, i%, n) ( )
( ) 11 1 +
+ n
n
i ii
Uniform Series Compound Amount to F given A (F/A, i%, n)
( ) i i n 11 +
Uniform Series Present Worth to P given A (P/A, i%, n)
( ) ( )n
n
ii i +
+ 1
11
Uniform Gradient Present Worth to P given G (P/G, i%, n)
( ) ( ) ( )nn
n
ii n
ii i
++ +
11 11
2
Uniform Gradient † Future Worth to F given G (F/G, i%, n)
( ) i n
i i n+
2 11
Uniform Gradient Uniform Series to A given G (A/G, i%, n) ( ) 11
1 + ni n
i
NOMENCLATURE AND DEFINITIONS A �������������Uniform amount per interest period B �������������Benefit BV �����������Book value C �������������Cost d��������������In ation ad usted interest rate per interest period Dj ������������Depreciation in year j EV �����������Expected value F �������������Future worth, value, or amount f �������������� eneral in ation rate per interest period G �������������Uniform gradient amount per interest period i ��������������Interest rate per interest period ie �������������Annual effective interest rate MARR ����Minimum acceptable/attractive rate of return m �������������Number of compounding periods per year n��������������Number of compounding periods; or the expected
life of an asset P �������������Present worth, value, or amount r ��������������Nominal annual interest rate Sn ������������Expected salvage value in year n
Subscripts j ����������� at time j n����������� at time n †����������� F/G = (F/A – n)/i = (F/A) × (A/G)
Risk Risk is the chance of an outcome other than what is planned to occur or expected in the analysis�
NON-ANNUAL COMPOUNDING
i m r1 1e m
= + -b l
BREAK-EVEN ANALYSIS By altering the value of any one of the variables in a situation, holding all of the other values constant, it is possible to find a value for that variable that makes the two alternatives equally economical� This value is the break-even point� Break-even analysis is used to describe the percentage of capacity of operation for a manufacturing plant at which income will ust cover expenses. The payback period is the period of time required for the profit or other benefits of an investment to equal the cost of the investment�
Loan Payments and Total Cost
16 𝐹 is Future Worth 𝑃 is Present Worth 𝑛 is the number of compounding periods 𝐴 is Uniform Amount per interest period (Payment) 𝑖 is the interest rate per period
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