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IE 2311 ECONOMIC ANALYSIS IN ENGINEERING CONTEXTS

Course Catalog Description:
(3) Prerequisite: MATH 1351. Theory and practice of economic decision-making in engineering, business, and
personal contexts, including selection between alternatives, break even, risk vs. return, depreciation, taxes, and
inflation. Fulfills Core Social and Behavioral Sciences - Individual or Group Behavior requirement.

Course Purpose:
The primary purpose of this course is to develop in students an understanding of how human beings make
economic decisions in engineering, business and personal contexts, such as the capital budgeting process,
personal financial management, and project management. Students will learn a variety of analytical techniques
used to predict, explain and inform human economic behavior, as well apply these techniques to case study
problems with societal and ethical components in engineering, business and personal contexts, such case
studies on the relative economic attractiveness of hybrid vehicles, plant location decisions, and the economics
of healthcare systems. Another key focus of the course will be understanding how human beings deal with
risk, such as uncertainty in investment timeframe and future costs and benefits, and what analytic techniques
are available to support decision-making under risk, including when one or more risks is societal in nature.
Finally, throughout the course, course lectures and problem-solving exercise (in-class and exams) will apply
the scientific methods to assess and critique how well a structured, rational decision-making process appears to
describe human behavior in making economic choices in engineering, business and personal contexts.

This course satisfies the Texas Tech University core curriculum requirement in social and behavioral science.

Courses in this category focus on the application of empirical and scientific methods that contribute to the
understanding of what makes us human. Courses involve the exploration of behavior and interactions among
individuals, groups, institutions, and events, examining their impact on the individual, society, and culture.

The objective of a social and behavioral science component of a core curriculum is to increase the students
knowledge of how social and behavioral scientists discover, describe, and explain the behaviors and
interactions among individuals, groups, institutions, events, and ideas. Such knowledge will better equip
students to understand themselves and the roles they play in addressing the issues facing humanity.

Students graduating from Texas Tech University should be able to demonstrate the ability to assess critically
claims about social issues, human behavior, and diversity in human experiences.

Instructor: Dr. Steve Peterson
IE 210B
Office phone: 742-3543
Office hours: MWF 12 1 PM, or by appointment
E-mail: Stephen.peterson@ttu.edu

Class Meeting Time and Room: Section 1: 9:00 9:50 AM, IE Room 205
Section 2: 10:00 10:50 AM, IE Room 205
Section 3: 11:00 11:50 AM, IE Room 205

I ndustrial Engineering Department
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Teaching Assistant: Harshvardin Gazula, IE Room 105, harshvardin.gazula@ ttu.edu

Course Website:
Course handouts (example problems), homework problems, practice exams, and other relevant course
materials will be posted on the Blackboard course website. Quiz and exam solutions will be posted online
after the assignment has been handed back.

http://www.depts.ttu.edu/lms/index.php

Text:
Newnan, D.G., T.G. Eschenbach , and J.P. Lavelle (2011). Engineering Economic Analysis, (12th ed.), Oxford
University Press, Oxford. Any recent edition will suffice for the course.

Grading Policy:
The grading scale is as follows:
89.5 - 100 A
79.5 89.4 B
69.5 79.4 C
59.5 69.4 D
Below 59.5 F

Grades will be calculated based on the following:
Participation 8%
Quiz Average 20%
Exam Average 72%
100%

1. There will be four exams, including the final (Exam 4). The exam portion of your grade will be 72%
of your course grade (the exams will be equally weighted). Only your three highest exam scores will
be used to determine the exam portion of your course grade (i.e., each of the three exams counted is
worth 24% of your final course grade). Thus, if you miss any one exam for a non-excusable reason,
you will receive a zero for that exam, but it will not hurt your grade if you take the three other exams.
There will be no make-up exams except in the cases noted below (see sixth bullet point).

2. There will be 10 in-class quizzes (see course schedule). There will be no make-up quizzes except in the
cases noted below (see sixth bullet point). The quiz portion of your grade will be 20% of your course
grade (the quizzes will be equally weighted).

3. Participation will be graded through 2 essays on economic decision making, drawing on class
discussion of risk and human behavior, including ethical considerations.

4. Homework problems for each chapter will be assigned (see course website) but will not be collected or
graded. Therefore, please feel free to work together on the homework problems. Completing the
homework problems is an excellent way to prepare for the quizzes and exams.

5. A practice exam will also be posted to the course website before each exam. The practice exam will
not be collected or graded.

6. Make-up exams and quizzes will only be permitted for officially documented absences. All
documented absences due to religious observances and officially approved trips (see the Texas Tech
University Catalog) will be guaranteed a make-up opportunity. Absences due to other unavoidable
reasons (e.g., death in the family, illness) will be considered on a case-by-case basis, with appropriate
documentation required. Except in the case of an emergency, the student must always seek instructor
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consent prior to the absence. Make-up work will be scheduled at the discretion of the instructor, and
might occur before the scheduled absence. Typically, make-up work will be scheduled as close to the
original assignment date as possible. Generally, students who miss quizzes for officially documented
absences will be allowed to use grade replacement with the next quiz.

Course Calculator Policy:
The approved calculators for this course will follow the NCEES website guidelines. The list of approved
calculators for the FE exam, can be found at the NCEES website (http://www.ncees.org/Exams/Exam-
day_policies/Calculator_policy.php). To protect the integrity of its exams, NCEES limits the types of
calculators that may be brought to the exam room. The only calculator models acceptable for use during
the FE exam (and for this course) are listed below. Any student found using a calculator during an exam,
quiz, or any other tested in class assignment that is not on the approved list will result in a grade of zero
on that test, quiz or assignment.
Approved List:
Casio: All fx-115 models. Any Casio calculator must contain fx-115 in its model name. Examples of
acceptable Casio fx-115 models include (but are not limited to) o fx-115 MS
o fx-115 MS Plus
o fx-115 MS SR
o fx-115 ES

Hewlett Packard: The HP 33s and HP 35s models, but no others.

Texas Instruments: All TI-30X and TI-36X models. Any Texas Instruments calculator must contain
either TI-30X or TI-36X in its model name. Examples of acceptable TI-30X and TI-36X models include
(but are not limited to) o TI-30Xa
o TI-30Xa SOLAR
o TI-30Xa SE
o TI-30XS Multiview
o TI-30X IIB
o TI-30X IIS
o TI-36X II
o TI-36X SOLAR


E-mail Communications:
You are required to use your TTU email address for the purposes of this class. The instructor will not be
responsible for: 1) Emails from that do not reach you because you do not check or use your TTU address;
or 2) Emails that I do not receive because they are filtered into junk mail because they do not come from
your TTU address; or 3) Emails that you do not receive to your TTU account because your mailbox is full

Learning Outcomes and Assessment Methods:
TTU Course Learning Outcomes Assessment Methods
Identify and critique alternative
explanations for claims about social issues
and human behavior
Short-answer and essay-based exam and
quiz questions
Class discussions and in-class problem-
solving
Demonstrate knowledge of the appropriate
methods, technologies, and data that social
and behavioral scientists use to investigate
the human condition.
Multiple-choice and numeric response
exam and quiz questions
Short-answer and essay-based exam and
quiz questions
Class discussions and in-class problem-
solving
Class polling (e.g., poll everywhere)
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Describe how human beings make economic
decisions in engineering, business and personal
contexts, including the identification of
appropriate analysis tools and techniques
Short-answer and essay-based exam and
quiz questions
Class discussions and in-class problem-
solving
Apply economic analysis techniques to case
study problems with societal and ethical
components in engineering, business and
personal contexts
Multiple-choice and numeric response
exam and quiz questions
Short-answer and essay-based exam and
quiz questions
Class discussions and in-class problem-
solving
Class polling (e.g., poll everywhere)
Identify, formulate, and solve problems in
engineering contexts (related to ABET
Outcome e).

Multiple-choice and numeric response
exam and quiz questions
Class discussions and in-class problem-
solving
Class polling (e.g., poll everywhere)
Coordinating Board Learning Objectives Assessment Methods
Critical Thinking Skills: to include creative
thinking, innovation, inquiry, and analysis,
evaluation and synthesis of information
Class discussions and in-class problem-
solving
Short-answer and essay-based exam and
quiz questions
Communication Skill: to include effective
development, interpretation and expression
of ideas through written, oral and visual
communication
Class discussions and in-class problem-
solving
Impromptu group and individual
presentations
Short-answer and essay-based exam and
quiz questions
Empirical and Quantitative Skills: to
include the manipulation and analysis of
numerical data or observable facts resulting
in informed conclusions
Class discussions and in-class problem-
solving
Multiple-choice and numeric response
exam and quiz questions
Class polling (e.g., poll everywhere)
Social Responsibility: to include
intercultural competence, knowledge of
civic responsibility, and the ability to
engage effectively in regional, national, and
global communities
Class discussions on ethics in engineering
economic decision-making and existence
and impact of the ethical and societal
factors that exist in case-study problems
Short-answer and essay-based exam and
quiz questions
TTU College-Level Competency Assessment Methods
Critically assess claims about social issues,
human behavior, and diversity in human
experience
These competencies are assessed throughout
the course by way of class discussions and in-
class problem solving, objective (multiple
choice, numeric response) and short-term
answer and essay-based exam questions, and
class polling.

Administrative Issues:
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1. Class will begin promptly. Please let the instructor know in advance if you have a planned
absence from recitation.

2. While in class, please turn off (or silence) your cell phone and turn off all music listening
devices.

3. All exams and quizzes are open book, closed notes. You are only allowed to bring your course
text, calculator, and a writing utensil to all exams. Use of unauthorized aids on exams will result
in a grade of zero; additional penalties may follow.

4. I reserve the right to amend this syllabus as needed.

Academic Integrity:
Individual effort must be demonstrated on all exams and quizzes. Any instance of academic misconduct will be
reported to the Dean of students for appropriate action (which includes possible failure in the course and/or
dismissal from the University). See the Operating Policy/Procedure 34.12 of Texas Tech University for more
details.

ADA:
Any student who, because of a disability, may require special arrangements in order to meet the course
requirements should contact the instructor as soon as possible to make any necessary arrangements. Students
should present appropriate verification from Student Disability Services during the instructors office hours.
Please note instructors are not allowed to provide classroom accommodations to a student until appropriate
verification from Student Disability Services has been provided. For additional information, you may contact
the Student Disability Services office in 335 West Hall or 806-742-2405.

Topics:
The course schedule on the next page shows which topics will be covered each class day, along with the
assigned readings and assignments. Course handouts containing the example problems corresponding to these
topics will be posted to the course website by 11:00pm the night before class.


Making Economic Decisions, Chapter 1
Engineering Costs and Cost Estimating, Chapter 2
Interest and Equivalence, Chapter 3
Interest Formulas, Chapter 4
Present Worth Analysis, Chapter 5
Annual Cash Flow Analysis, Chapter 6
Rate of Return Analysis, Chapter 7 & 8
Other Analysis Methods, Chapter 9
Depreciation and Taxes, Chapters 11 & 12
Replacement Analysis, Chapter 13
Inflation and Deflation, Chapter 14
Uncertainty and Risk, Chapter 10
Selecting a MARR, Chapter 15
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I E 2311 Engineering Economic Analysis
Course Schedule Spring 2014

Wk Date Topic Reading Assignments
1
W 15-Jan Course Introduction

F 17-Jan
The Economic Decision Making
Process
Ch. 1

2
M 20-Jan NO CLASS

W 22-Jan Engineering Costs Ch. 2

F 24-Jan Cost Estimating Ch. 2 Quiz 1, Ch. 1-2
3
M 27-Jan Cash Flow Diagram Ch. 2

W 29-Jan
Interest and Equivalence,
Nominal Interest Rates
Ch. 3

F 31-Jan
Effective Interest Rates,
Continuous Compounding
Ch. 3 Quiz 2, Ch. 2, 3
4
M 3-Feb Uniform Series Ch. 4

W 5-Feb
Uniform Series Cont., Gradient
Series
Ch. 4

F 7-Feb Gradient Series Cont. Ch. 4 Quiz 3, Ch. 4
5
M 10-Feb Present Worth Analysis Ch. 5

W 12-Feb Present Worth Analysis Cont. Ch. 5

F 14-Feb Present Worth Analysis Cont. Ch. 5 Quiz 4, Ch. 5
6
M 17-Feb Annual Cash Flow Analysis Ch. 6

W 19-Feb
Annual Cash Flow Analysis
Cont.
Ch. 6

F 21-Feb Exam 1 - IN CLASS
Newnan 1-5, Course
Notes, HW, Quizzes
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M 24-Feb
Annual Cash Flow Analysis
Cont.
Ch. 6

W 26-Feb Rate of Return Analysis Ch. 7

F 28-Feb Rate of Return Analysis Cont. Ch. 7 Quiz 5, Ch. 6, 7
8
M 3-Mar Rate of Return Analysis Cont. Ch. 7

W 5-Mar
Incremental Rate of Return
Evaluation
Ch. 8

F 7-Mar
Incremental Rate of Return
Evaluation Cont., Multiple Rates
of Returns
Ch. 8, Ch. 7A Quiz 6, Ch. 7, 8
9
M 11-Mar Multiple Rates of Return Cont Ch. 7A

W 13-Mar Future Worth Analysis Ch. 9

F 15-Mar
Benefit Cost Ration Analysis,
Payback Period Analysis
Ch. 9 Quiz 7, Ch. 7A, 9
10
M 17-Mar No Class

W 19-Mar No Class

F 21-Mar No Class

11
M 24-Mar
Sensitivity Analysis and
Breakeven Analysis
Ch. 9

W 26-Mar Depreciation Ch. 11

F 28-Mar Exam 2 - IN CLASS
Newnan 6-9, Course
Notes, HW, Quizzes
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Wk Date Topic Reading Assignments
12
M 31-Mar NO CLASS

W 2-Apr Depreciation Cont. Ch. 11

F 4-Apr Depreciation Cont. Ch. 11 Quiz 8, Ch. 11
13
M 7-Apr Basics of Taxation Ch. 12

W 9-Apr After Tax Cash Flow Ch. 12

F 11-Apr After Tax Rate of Return Ch. 12 Quiz 9, Ch. 12
14
M 14-Apr Replacement Analysis Ch. 13

W 16-Apr Replacement Analysis Cont. Ch. 13

F 18-Apr Inflation and Deflation Ch. 14 Quiz 10, Ch. 13
15
M 21-Apr No Class

W 23-Apr Inflation and Deflation Cont. Ch. 14

F 25-Apr Exam 3 -IN CLASS
Newnan 11-14,
Course Notes, HWs,
Quizzes

16
M 28-Apr Estimation of Future Events Ch. 10

W 30-Apr Selecting MARR Ch. 15

F 2-May Selecting MARR Cont. Ch. 15

17 M 5-May
Course Wrap Up-LAST DAY OF
CLASS
Final S 10-May
FINAL EXAM 10:30 AM 1:00
PM.
Newnan 1-15, Course
Notes, HWs, Quizzes
Exam 4 (Final
Exam)





Note: The FINAL EXAM is a common exam for all sections, meaning all sections will take the exam at
the same time in the same place. Announcements of the FINAL EXAM place and time will be made in
lectures before 30 Apr. It will NOT be at the time scheduled for finals that will be listed in the TTU
website for your sections time.