ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
Question
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Chapter 2, Problem 1QTC
To determine

Way to estimate the cost-and ultimately the benefits- of a ‘hybrid’ operation with the traditional utility segment of the business which minimizes cost, while the LighTUBe segment works to maximize profit.

Expert Solution & Answer
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Explanation of Solution

There are several general models and techniques to estimate costs and benefits which can be used to estimate the costs and benefits. Such as:

Per unit model:

This model uses cost per factor such cost per square foot, square meters in order to estimate the desired.

Segmenting Model:

In this model, estimation is decomposed into individual components. And after the estimation of all the individual components all the estimation is added together in order to find out the total estimation is added together in order to find out the total estimation cost or benefits .This approach is fairly common in various engineering estimation applications and for any level of accuracy needed.

COSTS AND PRICE INDEXS:

Indexes are numerical values that reflect historical change in costs and prices. They can reflect relative change in cost or price either as individual components or of group of costs. In this model the ratio of the costs or index number at two points in time is equal to the dollar cost ratio of the dollar cost ratio of the item at same time.

Conclusion:

By using the above stated models the LighTUBe segment works to minimize the cost and maximize the benefits.

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