Ch 1-1 © 2004 Pearson Education, Inc. Pearson Prentice Hall, Pearson Education, Upper Saddle River,...
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Transcript of Ch 1-1 © 2004 Pearson Education, Inc. Pearson Prentice Hall, Pearson Education, Upper Saddle River,...
Ch 1-1
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Cost Analysis and Estimatingfor Engineering and Management
Chapter 1
Importance
Ch 1-2
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Overview The Design Process Economic Evaluations
UsersResultsReasons
Business Strategies Information International Business
Ch 1-3
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Reasons for Study
The Goal of Business Is to Make Money
Desire to Know Outcome Before Making a Commitment
Need for Cost and Price Estimates
Ch 1-4
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Design
Every Design Is a New Combination of Pre-Existing Knowledge that Satisfies an Economic Want
New Combination – CreativityEconomic Want – Driver
Ch 1-5
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Elements of Design
Identification and Definition of Problem Development of Concepts Engineering Models Evaluation Design Implementation
Ch 1-6
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Engineering Design Process
Ch 1-7
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Problem
Recognize a NeedEconomic Want
Good Description = Good Solution Detailed Specification of Requirements
Ch 1-8
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Concept
New Combinations of Existing Knowledge
Need to Collect a Lot of KnowledgeRelative to the Problem
Unrestricted Generation of Concepts Then Select and Refine
Ch 1-9
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Engineering Models
Representation to Explain an Aspect Prediction Discover Pertinent Parameters Flexibility Simplistic
Ch 1-10
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Evaluation
Compromise Iterative Process with Modeling Satisfies Requirements? Cost Profit Fit with Capabilities
Ch 1-11
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Sources of Cost
Largely Determined by Design 50% Purchased Material / Parts 30% Overhead 15% Factory Labor
Ch 1-12
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Design
Addresses All Requirements throughComputingDraftingChecking
AnswersWhat It Looks LikeHow Shall It Be BuiltHow Will It Work
Ch 1-13
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Implementation
Requires a Decision to Proceed Must Be Assured:
It Satisfies All RequirementsIt Will Yield a Profit
Needs an Economic Evaluation
Ch 1-14
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Economic Evaluation
Market Defines “Economic Want” Cost Needs to Satisfy Cost Model Should Parallel the Design Detail and Accuracy of Estimate
Depends on Amount of Info AvailableDepends on the Time for the Estimate
Ch 1-15
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Users
Economic Evaluation Produces:Dollar EstimatesLabor Hour EstimatesMaterial Requirements
Used By:Engineering –ManufacturingMarketing –Materials Mgmt.Accounting/Financial Planning
Ch 1-16
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Results from Economic Evaluation
Requires Answers to 2 Questions“What Does It Look Like?”“How Many?”
Selects from Design Alternatives Determines Manufacturing Methods Decisions to Proceed
Ch 1-17
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Other Reasons Cost to Manufacture Profit Prediction Labor Requirements Time (Scheduling) Control of Operations Improvement Budgets Equipment Justification
Ch 1-18
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Strategies
Mass ProductionLarge Quantities / Little Variation
Batch ProductionSmaller Quantities / Large VariationSimilar Processes
ProjectsVery Small Quantities / Specialized
Ch 1-19
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Strategies
Ch 1-20
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
What Determines Cost and When
Ch 1-21
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Modes of Competition Design Uniqueness or Superiority Price and Cost Quality Reliability Innovation / First to Market Customer Support Custom Design / Manufacturing Commodity Products
Ch 1-22
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Business Classification
TraditionalEstablished Products
Slow Evolution
Incremental Changes
History of Costs
High-TechRapid Changes
Short Cost Recovery Period
Fast Time to Market
Flexibility
Concurrent Engineering
Challenging Cost Analysis
Ch 1-23
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Information
Available Information VariesBy Point in the DevelopmentAmount of Uniqueness of Product
Historical Data (Accounting Records) Measured Data Policy Data
Ch 1-24
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Sources of Information Accounting Personnel Department Operating Departments Purchasing Sales/Marketing Supervisors/Managers Trade Associations / Media
Ch 1-25
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
About the Estimate
Amount of Information Available Time Allotted to Make the Estimate Overall Size (Amount) of the Estimate Intended Use for the Estimate All Impact the Quality and Accuracy of
the Estimate
Ch 1-26
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
International Business
Global EconomyCompetitorsMarkets
Measurements in SI Units Monetary Transactions in Multiple
Currencies
Ch 1-27
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Currency Exchange
Exchange Rates Conversion FactorsConstantly Varying
Spot and Future Rates Rates Obtained from:
Banks, Newspapers, Internet
Ch 1-28
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Effects of Exchange Rates
Strong DollarImport Goods Cost
LessExport Goods Cost
More – Lose to Foreign Competition
Requires Price Cuts
Weak DollarExpensive ImportsExports Are More
CompetitiveHigher Trade and
Budget DeficitsOverall – Worse for
the U.S. Economy
Ch 1-29
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Significant Digits
Addition and SubtractionRound to 1 Significant Digit to the Right of the Number with the Least Significant Digits
Multiplication and DivisionNo More Significant Digits than the Number with the Least Significant Digits
Ch 1-30
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Layout of the Book
Ch 1-31
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
The Book
Chapter 1 – Introduction Chapter 2 – Labor Calculations Chapter 3 – Material Calculations Chapter 4 – Accounting Practice Chapter 5 – Statistics and Indexing for
Forecasting
Ch 1-32
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
The Book
Chapter 6 – Estimating Methods Chapter 7 – Operation Estimating Chapter 8 – Product Estimating Chapter 9 – Cost Analysis Chapter 10 – Engineering Economy Chapter 11 – Enterprise and
Entrepreneurship
Ch 1-33
© 2004 Pearson Education, Inc.Pearson Prentice Hall, Pearson Education, Upper Saddle River, NJ 07458Ostwald and McLaren / Cost Analysis and Estimating for Engineering and Management
Summary
How the Design Process Works Where Economic Analyses Fit How Businesses Are Organized and
Compete The Role of Information Global Aspects