Cornell UniversityEconomic Analysis of Engineering Systems

ORIE 4150/5150Course Syllabus

Spring 2012

Lecture: 12:20 PM to 1:10 PM, MWF, Hollister B-14Sections:1. M 2:30 PM - 4:25 PM RH 4712. T 12:20 PM - 2:15 PM RH 4713. R 10:10 AM - 12:05 PM RH 471

Sections will not start until the week of January 30, 2012.

Credits: 4. Undergraduates: register for ORIE 4150, Grad students: register for ORIE 5150.

Instructor: John Callistere-mail: jc62@cornell.eduPhone: (607) 255-5545 Grumman 291 office

(607) 255-9018 Rhodes 426 office(607) 272-7976 home (before 9 PM, please)(607) 339-7420 cell

Offices: ORIE: 426 Rhodes Hall M&AE: 291 Grumman Hall

Office Hours: 2:15 PM to 4:15 PM Thursday in 426 Rhodes. Feel free to call or stop by at any time. Office hours can be changed if this time is not convenient for you.

Teaching Assistants:

Kristina Ko (kik26) Monday section Office hour: Thurs. 3:00 to 4:00 PM, 431 RH

Carolyna Leung (cl626) Tuesday section Office hour: Wed. 1:30 to 2:30 PM, 431 RH

Megan Yonkaitis (mly23) Thursday section Office hour: Wed. 2:30 to 3:30 PM, 431 RH

Course Description from Catalog

Course topics include financial planning, including cash-flow analysis and inventory flow models; engineering economic analysis, including discounted cash flows and taxation effects; application of optimization techniques, as in equipment replacement or capacity expansion models, and issues in designing manufacturing systems.

Basically, the course deals with deciding whether or not a USA-based corporation should acquire a long term asset.

Prerequisites: ORIE 3150, Financial and Managerial Accounting.

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ORIE 4150/5150 Syllabus – Spring 2012

Required Textbook: William G. Sullivan, Engineering Economy, 15th edition, 2012. It is available for purchase for $173.50 in the Cornell Store, for $132.90 at Amazon, and for $112.96 (used) at Amazon. The rental fee at the Cornell Store is $85.39 for the semester. There is one copy on reserve in the library.

Notebook:Please take notes in lecture and in section in a notebook. You may use this notebook in exams.

GRADING

Homework (30%)Homework is due on Friday each week in class beginning in week 2. That is, the first homework set is due Friday, February 3, 2012. Please hand in the homework in the front of the class at the start of the lecture on the due date. Many of the assignments will include printouts of computer spreadsheets, so make sure you have access to a functional printer.

Examinations

Prelim (30%)The prelim will be held in Rhodes 471 and 453 on March 15th from 7:30 PM - 9:30 PM. The prelim is open textbook (no other books or bound supplements permitted), open notebook, calculator required. You will electronically submit an Excel spreadsheet showing your work, and hand in a written exam with your final answers and answers to any discussion or equation-based problems.

Final (40%)There will be a comprehensive scheduled final exam. The CUInfo Web site says that our exam will be on May 17th from 2:00 PM to 4:30 AM. Open textbook (no other bound supplements permitted), open notebook, calculator required. You will be using a lab computer in Rhodes 471 or Rhodes 453. You will electronically submit an Excel spreadsheet showing your work, and hand in a written exam with your final answers and answers to any discussion or equation-based problems.

Letter GradesScore Letter Grade

97+ A+92 A90 A–86 B+82 B80 B–76 C+72 C70 C–60 D

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ORIE 4150/5150 Syllabus – Spring 2012

Outline (subject to change):

Week Material ReadingJan. 23 Accounting Review pp. 59-66Jan. 30 Cost Estimating pp. 67-96Feb. 6 Time Value of Money I pp. 103-132Feb 13 Time Value of Money II, Loans pp. 133-162Feb. 20 Single Projects Chapter 5Feb. 27 Comparison Among Alternatives Chapter 6March 5 Depreciation Chapter 7March 12 Taxes Chapter 7March 19 Spring Break Whole book!March 26 Inflation and Exchange Rates Chapter 8April 2 Replacement Analysis Chapter 9April 9 Public Sector Chapter 10April 16 Sensitivity Analysis Chapter 11April 23 Real Options pp. 511-514April 30 Multiple Attribute Decisions Chapter 14

1. Please take careful, organized notes in lecture and in section in a notebook.

2. Since the class material is provided in lecture and in section, attendance is required. You cannot succeed in this class by skipping class and reading the book. If you are planning to miss a number of classes this semester due to poor health, job interviews, or other reasons, it is probably a good idea to take some other class.

3. You are expected to know how to perform basic operations in Microsoft Excel. If you have never used a spreadsheet, you should not take this class now. Take a class in spreadsheets first.

4. The Code of Academic Integrity will be enforced. During examinations no student may use, give, or receive any assistance or information not given in the examination or by the proctor. The student is responsible for understanding the conditions under which the examination will be taken. Violations of the code of academic integrity will be handled using the process outlined in the Code of Academic Integrity, and may result in the student being expelled from Cornell University. Homework should be done individually, and at no time should a student possess solutions worked by another student, whether in the form of written or printed material or as an electronic file. The first instance of duplicated or copied homework will get a score of zero and a warning, any subsequent instance will result in further action.

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