WHAT IS ENGINEERING ECONOMICS ?
Just as the role of the engineer in society has changed over the years, so has the nature of engineering economics. Originally, engineering economics was the body of knowledge that allowed the engineer to determine which of several alternatives was economically best—the least expensive, or perhaps the most profitable.
In order to make this determination properly, the engineer needed to understand the mathematics governing the relationship between time and money. Most of this book deals with teaching and using this knowledge. Also, for many kinds of decisions, the costs and benefits are the most important factors affecting the decision, so concentrating on determining the economically “best” alternative is appropriate
In earlier times, an engineer would be responsible for making a recommendation on the basis of technical and analytic knowledge, including the knowledge of engineering economics, and then a manager would decide what should be done. A manager’s decision could be different from the engineer’s recommendation because the manager would take into account issues outside the engineer’s range of expertise.
Recently, however, the trend has been for managers to become more reliant on the technical skills of the engineers, or for the engineers themselves to be the managers. Products are often very complex, manufacturing processes are fine-tuned to optimize productivity, and even understanding the market sometimes requires the analytic skills of an engineer. As a result, it is often only the engineer who has sufficient depth of knowledge to make a competent decision.