ENME 464

Cost Analysis for Engineers

(An Introduction to Engineering Economics and Product Cost Modeling)
Spring 2016
Course Description:
The objective of this course is to provide students with an introduction to the financial and cost
analysis aspects of product engineering. This course introduces key elements of traditional
engineering economics including interest, present worth, depreciation, taxes, inflation, financial
statement analysis, and return on investment. This course also provides an introduction to cost
modeling as it applies to product manufacturing and support. Cost modeling topics will include:
manufacturing cost analysis, life-cycle cost modeling (reliability and warranty), and cost of
ownership.
Prerequisites:
ENME 392 or equivalent
Texts:
Required Engineering Economy, 7th Edition, L. Blank and A. Tarquin, McGraw Hill, 2012.
Required Cost Analysis of Electronic Systems, P. Sandborn, World Scientific, 2nd Edition,
2016.
Paper or electronic are acceptable.
Course Schedule (tentative):
Date
January 26
January 28
February 2

February 4
February 9
February 11
February 16
February 18
February 23
February 25
March 1
March 3
March 8
March 10

Topic
Course Introduction, Eng. Econ
Intro
Time Value of Money, Simple
Interest
Compound Interest, Notation, Cash
Flow and Diagramming, Uniform
Series
Sinking Fund, Arithmetic
Gradient, Geometric Gradient
Combining Factors
Economic Equivalence
Discount Rate Calculation/WACC,
Present Worth
Future Worth, Capitalized Cost
Analysis
Bonds, Annuities, Rate of Return
Rate of Return
Inflation
Review
Exam 1
Start-up Company Financing

Book Sections
BT: 1.1, 1.2

Comments

BT: 1.4, 1.8, 2.1, 4.1, 4.2, 4.8

BT: 1.5, 1.6, 2.2

BT: 2.3, 2.5, 2.6, 2.7

BT: 2.7, 3.1, 3.2
BT: 5.1
Sandborn: Appendix B
BT: 10.2, 5.2, 5.3
BT: 5.4, 5.5
BT: 7.1, 7.2
BT: 7.3, 7.4
BT: 14.1, 14.2

Homework 1 Due

Homework 2 Due

Homework 3 Due

Homework 4 Due
Homework 5 Due

Dye - Mtech

March 15
March 17
March 22

Spring Break
Spring Break
Depreciation and Taxes

March 24
March 30

Real Options Analysis

Cost Modeling Introduction,
Process Flow Modeling
Parametric and CERs
Overhead and ABC
Financial Statement Analysis
Yield and Test
Test and Rework
Review
Exam 2
Cost Benefit Analysis
Learning Curves
Life-Cycle Cost and Sustainment
Introduction, Reliability
Reliability and Warranty
Class cancelled
Review
Final exam (8-10 am)

March 31
April 5
April 7
April 12
April 14
April 19
April 21
April 26
April 28
May 3
May 5
May 10
May 13

BT: 16.1, 16.2, 16.3, 16.4,

17.1, 17.2
Sandborn 22
Sandborn: Part I Intro
Sandborn: 2
Sandborn: 6
Sandborn: 5
Cui - ENCE
Sandborn: 3, 7
Sandborn: 7, 8

Homework 6 Due

Homework 7 Due
Homework 8 Due

Sandborn: 21
Sandborn: 10
Sandborn: Part II Intro, 11

Homework 9 Due

Sandborn: 11, 13
Homework 10 Due

BT = L. Blank and A. Tarquin, Engineering Economy, 7th edition, McGraw Hill, 2012.
Sandborn = P. Sandborn, Cost Analysis of Electronic Systems, World Scientific, 2nd edition, 2016.

University Delayed Openings

If the University has a late opening at 10 am (due to weather), we will start class at 10 am.
Grading Policy:
30% Homework
20% Exam 1
20% Exam 2
30% Final Exam
Homework:
Homework assignments will be collected in the lecture on the day the assignment is due. Late
homework will be marked 10% off if it is handed in before solutions are posted; homework will
not be accepted after the solutions are posted.
Homework Format:
Use one side of the paper only
Pen or pencil
Staple pages together
All pages numbered at the top (e.g., 1/3 means page 1 out of 3)
Student name must appear at the top of every page
Box your answers
Answers must include units (if applicable)
Neatness counts if I cant read it, I cant grade it
Show all your work (no work, no points).

Make-Up Exams:
Make-up exams are only allowed for justifiable reasons if notified in advance (i.e., University
approved religious observance) or with a documented reason for an un-notified emergency
absence (i.e., family or medical emergency).
Honor Code:
The University of Maryland, College Park has a nationally recognized Code of Academic
Integrity, administered by the Student Honor Council.
This Code sets standards for academic integrity at Maryland for all undergraduate and graduate
students. As a student you are responsible for upholding these standards for this course. It is
very important for you to be aware of the consequences of cheating, fabrication, facilitation, and
plagiarism. For more information on the Code of Academic Integrity or the Student Honor
Council, please visit http://www.studenthonorcouncil.umd.edu/whatis.html.