A risk-analytic approach to learning engineering economy

Anil K. Goyal, James M. Tien, Pieter A. Voss

Research output: Contribution to journalConference article

1 Scopus citations

Abstract

The traditional approach to learning Engineering Economy in the undergraduate program focuses on solving problems in a deterministic manner. Students generally have little exposure to the uncertain and stochastic nature of, as examples, project cash flows and interest rates. Unfortunately, this traditional approach does not provide students with the skills to deal with real world situations, which inherently involve uncertainty and thereby, risk. Typically, most Engineering Economy texts for undergraduate students deal with uncertainty and risk only in brief chapters, usually at the end of the book. The uncertain environment is introduced as a special case, rather than as the norm. In this paper, we propose an approach to learning Engineering Economy that is characterized by treatment of uncertainty and is motivated by risk; in fact, it considers the deterministic case as a special case. The availability of computers today facilitates introducing this risk-analytic approach. Computer spreadsheets and software can provide students with the ability to analyze entire probability distributions. Such a junior or senior level Engineering Economy course would build on an earlier course in probability and statistics, as well as courses in design and computing. A new Engineering Economy text is also proposed and outlined herein.

Original languageEnglish (US)
Pages (from-to)251-260
Number of pages10
JournalASEE Annual Conference Proceedings
StatePublished - Dec 1 1996
Externally publishedYes
Event1996 ASEE Annual Conference Proceedings - Washington, DC, United States
Duration: Jun 23 1996Jun 26 1996

ASJC Scopus subject areas

  • Engineering(all)

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