ENGINEERING DECISION MAKING FOR CURRENT COSTS AND EXAMPLES.

Some of the easiest forms of engineering decision making deal with problems of alternate designs, methods, or materials. If results of the decision occur in a very short period of time, one can quickly add up the costs and benefits for each alternative. Then, using the suitable economic criterion, the best alternative can be identified. Three example problems illustrate these situations.

EXAMPLE 1

A concrete aggregatemix is required to contain at least 31% sand by volume for proper batching.

One source of material, which has 25% sand and 75% coarse aggregate, sells for $3 per cubic meter (m3).Another source, which has 40% sand and 60% coarse aggregate, sells for $4.4O/m3.

Determine the least cost per cubic meter of blended aggregates.

SOLUTION

The least cost of blended aggregates will result from maximum use of the lower-cost material.

The higher-cost material will be used to increase the proportion of sand up to the minimum level (31%) specified.

Let x = Portion of blended aggregates from $3.00/m3.source
1 - x =Portion of blended aggregates from $4.40/m3 source

Sand Balance

Thus the blended aggregates will contain

60% of $3.00/m3 material
40% of $4.40/m3 material

The least cost per cubic meter of blended.aggregates is

EXAMPLE 2

A machine part is manufactured at a unit cost of 40 C for material and 15C for direct labor. An investment of $500,000 in tooling is required. The order calls for 3 million pieces. Halfway throughthe order, a new method of manufacturecan.be put into.effect that wi11 reduce the until costs to 34 C for material and 10 C for direct labor but it: will require $10000 for additional tooling. This tooling will not be useful for future orders. Other cost are allocated at 2.5 times the direct labor  cost. What, if anything , should be done?

SOLUTION

Since there is only one way to handle first 1.5 million pieces, our problem concerns only the second half of the order

Before making a final decision, one should closely examine the Other costs to see that they do, in fact, vary as theDirect labor cost varies.Assuming they do, the decisionwould be to change the manufacturingmethod.

EXAMPLE 3

In the design of a cold-storage warehouse, the specifications call for a maximum heat transfer through the warehouse walls of 30,000 joules per hour per square meter of wallwhen there is a 30°C temperature difference between the inside surface and the outside surface of the insulation.

The two insulation materials being considered are as follows:

SOLUTION

There are two steps required to solve the problem. :First, the required thickness of each of the alternate materials must be calculated. Then, since the problem is one of providing a fixed.output (heat transfer through the wall limited to a fixedmaximum amount), the criterion is to minimize the input (cost).

The foamed insulation is the lesser cost alternative.However, there is an intangible constrain that  must be considered.How thick is the available wall space? Engineering economy and the time  value of money are needed to decide what the maximum heat transfer should be.What is the cost of more insulation versus the cost of cooling the warehouse over its life?