Engineering Economy Module
Course facts
- Payment: Free, no certificate
- Credits: Non Credit
- Learning style: Self-paced, start anytime
- Resources: Lecture Notes; Problem Sets
MIT OpenCourseWare details
- As taught in: Fall 2009
- Department: Engineering Systems Division, Civil and Environmental Engineering
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Spreadsheet techniques for engineering analysis: NPV, Data Table, Goal Seek, simulation, modeling uncertainties and flexibility.
Many people think they know Excel but overlook efficient tools such as Data Table and Goal Seek. This intensive micro-subject teaches spreadsheet modeling for engineering systems analysis, with its crux in dynamic modeling more than general deterministic models. Each recitation-style session alternates lecture material with trying out the techniques: NPV and sensitivity analysis, simulation, modeling uncertainties and analyzing flexibility.
What You Will Achieve
- Set up a spreadsheet properly and test sensitivity with Data Table and Goal Seek
- Simulate an NPV thousands of times and draw a histogram
- Generate triangular, normal and lognormal random variables
- Build contingency rules into a spreadsheet to analyze flexibility
Program Overview
Spreadsheet Set-up and Data Table
Sound spreadsheet setup and quick what-if testing.
- Proper set-up of spreadsheets
- One-way and two-way Data Table
- Goal Seek
- An optional introduction for Excel beginners
Simulation and Uncertainties
Replacing single estimates with distributions.
- Random number generator functions
- Histogram and cumulative distribution function
- Exponential growth of demand
- Stock price realization paths
Logical Functions and Solver
Decision rules and how to judge them.
- Logical functions
- Value at Risk and Gain chart
- Using a spinner for sensitivity analysis
- Introduction to using Solver
Course Completion
Job Outlook
Spreadsheet modeling of this kind is useful in engineering systems analysis and in other subjects that need to compare plans under uncertainty.
Good for: Engineers and analysts who already know Excel basics and want to model uncertainty and flexibility in plans.
Keep in mind: This is a short 2009 module, and menus may differ in current Excel. Spreadsheets come in pairs, one set up for you to work in and one completed, so you can check yourself.
Bottom line: A compact, highly practical module that makes spreadsheets far more useful for decisions under uncertainty.
Frequently Asked Questions
Can I check my spreadsheets?
Yes. Each session has two versions of the spreadsheet: one set up before class for you to work in, and one that reflects the completed work.
How can I tell whether I need this?
The assignments page has an Excel self-assessment exercise that students used to judge whether they needed the course, along with an end-of-course assignment.
What is the optional first session?
Session 0 is an introduction for Excel beginners. The module otherwise assumes basics such as referencing, names, functions and formulas.
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