Wednesday, 7 October 2020

Engineering economy

 




Engineering economy, engineering is defined as the profession of designing, building, and operating the structures, machinery, and other devices of industry; That is, it is an application of knowledge and science. To solve community problems with the simplest solutions and the lowest costs; To achieve revenue.

 

There is no doubt that engineers play a vital and major role in enabling scientific uses of scientific discoveries and innovations that enhance the human ability to harness the tools of nature in his service.

 

The engineer is often responsible for making the decision from among several alternatives, taking into account the technical and economic aspects; So the engineer needs to have familiarity with the economic fundamentals; To evaluate the various installations and alternative projects, and choose the most suitable among them, in terms of economic feasibility, after verifying their technical feasibility.

 

Engineering economy are closely related. Being concerned with the rational application of engineering approaches; To achieve investment targets; This results in economical processing of production processes; So it can be said: projects, and all engineering works from the economic and engineering points of view, should be studied in a unified framework; It is: “engineering economics”.

 

The concept of engineering economics

Engineering economics; It is one of the relatively modern branches of economics, which is concerned with conducting specialized and analytical scientific studies. For production, marketing, and financing, as well as the efficiency of the performance and profitability of the existing projects, which will be established in the future.

 

Engineering economics defines the economic relationships between production processes, in a way that ensures efficient use of economic resources. To achieve the optimum utilization of those resources, given that the limited resources are the core of the economic problem.

 

And engineering economics is concerned with achieving the material requirements of individuals, to satisfy and satisfy their desires in terms of quality level, and taking into account the cost dimension. That is, the task is to duplicate the engineering to find the necessary means to achieve the benefit and the satisfaction of the process of resource exploitation. So the engineering side integrates with the economic side; To satisfy different needs.

 

It can be said that World War II - despite its tragedies - had a great advantage over-engineering economics. It was the main reason for adopting industrial engineering in America; Then it spread to all of Europe; Whereas America used to practice it in its war administration during the Second World War; Quantitative methods were used in the defense system; With the aim of making the best use of the available resources.

 

The US leadership was astonished by the results. This made it - after the end of the war - to generalize the use of industrial engineering in all its industrial establishments.

 

The importance of engineering economics:

The importance of engineering economics is returning, and increasing day by day; For several reasons:

 

1- The entanglement between the economies of different countries, whether within the economy of one country, or between it and the economies of other countries, especially in light of the globalization economy, it can be said also within the same sector, or between it and other sectors within the national economy.

 

2- The increasing role played by the capitalist system has increased competition for the optimum utilization of available resources, especially in light of their scarcity and their distribution among alternative uses.

 

3- Working on preparing specialized scientific studies to analyze all the social and financial aspects of any investment decision, especially in light of the rapid and successive technological developments, which made the process of selecting and determining which projects are more economically feasible, very difficult.

 

4- The investor's loss of his capital leads to the failure of the project; Which leads to the loss of capital accumulation at the level of the national economy as a whole.

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