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Cases in Engineering Economy

Second Edition

William R Peterson and Ted G Eschenbach

Publication Date - November 2009

ISBN: 9780195397833

256 pages
8 1/2 X 11 inches

Providing 54 unique case studies in engineering economy, this casebook is an ideal supplement to your engineering economic text.


Designed to bring real-world complexity into the classroom, Cases in Engineering Economy provides 54 unique case studies in engineering economy. An ideal supplement to your engineering economic text, this casebook helps students to hone their analytical, logical, and communicative skills. The cases are authored by Ted Eschenbach and William Peterson, with contributions from engineering economy professors from ten different universities.

Previous Publication Date(s)

February 1989

Table of Contents

    1. New Office Equipment: Student develops requirements with little given data for activities to be supported by new copier machines. Organizational thinking required.
    2. Budgeting Issues: Strategies for a group's operating budget request. One focus is ethics.
    3. Wildcat Oil in Kasakstan: Rough order of magnitude estimation of total facility cost and annual revenue. Option for NPV and different size facility.
    4. Balder-Dash Inc.: Standard cost and allocated costs vs. true marginal cost (IE's).
    5. Can Crusher: Basic time value of money, costs, and breakeven analysis.
    6. Lease a Lot: Compares leasing and ownership. Results show importance of separating financing and investing decisions.
    7. The Board Looks to You: Bond valuation with realistic business details including early-call premium. Medium difficulty. Good example of employer taking a small fact and making big assumptions about individual talents--why engineering students must keep learning.
    8. Picking a Price: Simplified real estate analysis. Demonstrates analysis to screen before acquiring more data and further decision-making.
    9. Recycling?: Financial analysis supports recycling cardboard and selling unusable pallets to recycler.
    10. The Cutting Edge: Make vs. buy and machine selection.
    11. Harbor Delivery Service: Annual comparison of diesel vs. gasoline engines.
    12. Buying a Dream: Compare three alternative mortgages for a first-time home buyer.
    13. Guaranteed Return: Risk vs. expected return and choice of interest rate.
    14. Northern Gushers: Incremental oil production investment with possible double-root.
    15. Pave the Stockpile Area?: Sensitivity analysis for IRR.
    16. Great White Hall: Proposal comparison using B/C analysis for RFP with unclear specifications.
    17. A Free Lunch?: Is proposal too good-to-be true from two perspectives? Realistic (unordered) statement of facts.
    18. Gravity-Free High: New product with development stages and probability of failure.
    19. Crummy Castings: Decision tree problem with modest ambiguity. Options create more challenging problems.
    20. New World Mining: Includes inflation. Funding agency vs. national perspective. Simulation option to analyze uncertainty.
    21. Glowing in the Dark: Expected return and variance for facility of minimal size, of that plus preparation for later expansion, and of the full-size now.
    22. City Car: Decision tree analysis. Includes discussion of strategy and risk. Some assumptions must be made.
    23. Washing Away: Levee height and probability of flood damage.
    24. Sinkemfast: Decision tree with assumptions required for realistic comparisons. Info supports creation of new, better alternatives.
    25. Raster Blaster: Questions to guide students. Includes breakeven analysis.
    26. Molehill & Mountain Movers: Compare depreciation methods with option for inflation.
    27. To Use or Not To Use?: Focus is treatment of sunk costs. More complicated than most. Some discoveries in the data gathering process. Solution uses equation rather than cash flow table.
    28. Olives in Your Backyard: Emphasizes taxes and sensitivity analysis.
    29. New Fangled Manufacturing: Emphasizes taxes and sensitivity analysis.
    30. Supersonic Service?: Breakeven and sensitivity analysis.
    31. Freeflight Superdiscs: Inflation and sensitivity analysis for three alternatives. Includes taxes.
    32. Mr. Speedy: Includes two memos using different inappropriate financial comparisons. Choose optimal life for replacement of vehicles.
    33. Piping Plus: Data from case intro, three memos, income statement, and balance sheet. Computer improvement in a professional services firm. Assumptions will lead to an instructive variety of results.
    34. R&D Device at EBP: Equipment replacement cost comparison with unequal lives. Continuing demand requires careful analysis statement by the student because of detailed cost data. Before or after-tax.
    35. Northern Windows: Tax affected energy conservation project for a home with simplifying assumptions made clear. Includes inflation.
    36. Brown's Nursery (Part A): After-tax analysis of expansion opportunity.
    37. Brown's Nursery (Part B): Adds inflation.
    38. West Muskegon Mach. & Manuf.: More complex inflation and tax problem with sunk cost and leverage.
    39. Uncertain Demand at WM3: Includes inflation, taxes, and uncertainty.
    40. Olympic Bid Perspectives: Public sector with data and questions from 3 perspectives.
    41. Metropolitan Highway: Realistic variety of benefits and costs. Requires that assumptions be made.
    42. Protecting the Public: P(injury) and fraction of contact wearers must be "guestimated." Considers opportunity losses to other venues in visitor-days.
    43. Bridging the Gap: Difficulty ranges from comparing three alternative bridges with different lives to considering growth in traffic and uncertain construction costs.
    44. Sunnyside - Up or Not?: Uncertain growth rates over 30 years and setting utility rates.
    45. Transmission Intertie: Electric power project with primary and secondary benefits.
    46. Aero Tech: Capital budgeting with memos for three different approaches to ranking.
    47. Bigstate Highway Department: Capital budgeting including mutually exclusive alternatives. Includes uncertain value of a life.
    48. Dot Puff Project Selection: Public sector capital budgeting with added constraint on man-years required.
    49. The Arbitrator: Includes two memos of suggested solutions for four projects with nine alternatives. Data presented in text discussion rather than tabulated.
    50. Capital Planning Consultants: Capital budgeting including mutually exclusive alternatives. Includes uncertainties in first cost, annual benefit, and lives.
    51. Refrigerator Magnet Company: Capital budgeting including mutually exclusive alternatives.
    52. Aunt Allee's Jams and Jellies: Product costing needs activity based costs.
    53. Problems in Pasta Land: Long case statement. Includes taxes and limited uncertainty.
    54. Whirlwind Exploration Company: Modeling required economic size for development of an oil field. Detailed data in tables.

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