MIE 754 - Class #12 Manufacturing & Engineering Economics. Concerns and Questions Quick Review Today’s Focus: Chap 5 Estimating for Economic Analyses Hmwk #6 Due in 1 Week: Chap 5 - 3(e), 4, 6, 9, 13, 17, 23, 26. Concerns and Questions?. Term Project - distributed in 1-2 weeks
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MIE 754 - Class #12 Manufacturing & Engineering Economics
1.Time-series - when cost (revenue) elements are a function of time. Collect data; study underlying relationships.
2.Subjective- expert judgment is applied to the results of time-series techniques (how future might differ from the past)
3.Cost Engineering - identify and utilize various revenue/cost drivers to compute estimates
y = a + bx
Makridakis, S. and Wheelwright, S. Forecasting Methods and Applications, John Wiley & Sons.
Correlation Coefficient - relative measure of the association between two variables
r = 0 no correlation
r = 1 perfect correlation
Operating costs Production volume
($M) (hundreds of units)
with ’= smoothing constant,
St = ‘xt + (1 - ‘)St-1 (0’1)
made in period t) =
’(Actual data point in period t)
+ (1-’)(Forecast for period t,
made in period t-1)
’ = 1 implies?
’ = 0 implies?