Showing papers in "The Engineering Economist in 1971"
TL;DR: In this paper, it is shown that in an unconstrained situation under certainty, with complete freedom to borrow or lend at one rate of interest, the present worth index and its equivalents are correct while indices inconsistent with present worth are wrong.
Abstract: In the traditional literature of engineering and managerial economics, a variety of different and not generally consistent indices have been proposed for deciding whether a given capital investment project should be undertaken. Using mathematical programming, it is shown herein that in an unconstrained situation under certainty, with complete freedom to borrow or lend at one rate of interest, the present worth index and its equivalents are correct while indices inconsistent with present worth are wrong. However, in the presence of further constraints, e.g., on allowed borrowing or on available scarce material, even the present worth index is unsatisfactory, and, in general, a complete mathematical programming solution is required.
46 citations
TL;DR: The Laplace Transforms for the Economic Analysis of Deterministic Problems in Engineering as discussed by the authors is a seminal work in the area of deterministic problems in engineering, which is used in this paper.
Abstract: (1971). Laplace Transforms for the Economic Analysis of Deterministic Problems in Engineering. The Engineering Economist: Vol. 16, No. 4, pp. 247-263.
29 citations
TL;DR: In this paper, the authors study how to simultaneously take risk and the effect of interrelationships of various kinds into account in order to determine the best overall combination of projects to approve.
Abstract: When evaluating proposals for capital investment, two important factors are risk and the effect of interrelationships of various kinds. This paper studies how to simultaneously take both considerations into account in order to determine the best overall combination of projects to approve. Adopting present value (treated as a random variable) and expected utility of present value as criteria, it focuses on a basic model developed in the author's monograph, The Evaluation of Risky Interrelated Investments, and extends it further in terms of formulation and interpretation needed for implementation.
14 citations
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TL;DR: In this paper, the authors developed an accurate method for determining the after-tax cost of leasing and considered the effects and implications of this method on leasing decisions and the determination of the cost of capital.
Abstract: Most of the literature on leasing concentrates on methods of analysis that employ net present value techniques. The cost of leading, expressed as a rate of return after taxes, has been generally overlooked. This article develops an accurate method for determining the after-tax cost of leasing and considers the effects and implications of this method on leasing decisions and the determination of the cost of capital.
8 citations
TL;DR: A Singer, Jr. as discussed by the authors states that "one cannot desire anything without simultaneously desiring an increased ability to attain it (even if what the person desires is to desire nothing).
Abstract: …one cannot desire anything without simultaneously desiring an increased ability to attain it (even if what the person desires is to desire nothing). E.A Singer, Jr.
2 citations
2 citations
1 citations
TL;DR: In this article, the decision-makers' perspective and the capital budgeting process are explored and several communication strategies are suggested to assist the engineer in more effectively presenting his capital investment proposals.
Abstract: Effective communication of capital investment proposals can be critically important to an engineer's professional development. Engineers frequently have difficulty developing this effective communication, however, primarily because they lack a clear understanding of the corporate decision-makers' commercial perspective and related informational needs. The decision-makers' perspective and the capital budgeting process are explored and several communication strategies are suggested to assist the engineer in more effectively presenting his capital investment proposals. The value of communication technique and the importance of recognizing and dealing effectively with certain psycho-social factors in inter-personal communication are briefly described.
1 citations
1 citations
TL;DR: In this article, it is suggested that engineering economics courses seek to bring their analytic resources to bear on the many possible topics included in this set of disciplines, such as operations research, microeconomics, managerial economics, and finance.
Abstract: In its development as academic subject matter, engineering economics started as a set of simple determinations of alternative costs for engineering projects, predominately in the civil and mechanical fields. It subsequently began using later-developed techniques of quantitative analysis such as operations research, microeconomics, managerial economics, and finance. To reinforce its position in the engineering curriculum for the ever more important environmental sciences, it is suggested that engineering economics courses seek to bring their analytic resources to bear on the many possible topics included in this set of disciplines.
TL;DR: The major conclusion of this paper is that the presence of any type of binding constraint in the planning problem, regardless of its origin, renders a single-item decision rule potentially non-optimal.
Abstract: Decision rules for the make-buy decision most often assume the form of single-item, incremental cost rules which, for application, require decisions to be made for each item in isolation from all others. While it has been recognized that such decision rules may be non-optimal in situations where equipment capacity limits exist, the literature has not considered other cases where non-optimality arises. The purpose of this paper is to use linear programming as a framework for evaluating the optimality of single-item, incremental cost rules. The major conclusion of this paper is that the presence of any type of binding constraint in the planning problem, regardless of its origin, renders a single-item decision rule potentially non-optimal. A set of optimal screening decision rules is developed to be used in conjunction with a linear programming model for make-buy decisions in cases where such binding constraints exist.
TL;DR: This paper considers the problem of investment allocation in a multistage, two-sector national planning model and illustrates how discrete versions of dynamic programming and maximum principle can be applied to this problem.
Abstract: This paper considers the problem of investment allocation in a multistage, two-sector national planning model and illustrates how discrete versions of dynamic programming and maximum principle can be applied to this problem