ISE 307: Engineering Economic Analysis
Term 253 (Summer 2026) — Sections 01 & F03
Instructor: Mansur M. Arief — mansur.arief@kfupm.edu.sa
Department: Industrial and Systems Engineering, College of Computing and Mathematics, KFUPM
Office: Building 22, Room 219 — Office hours: Mondays and Tuesdays 2–3 PM, or by appointment
Course Description
Introduction to concepts of economic decision-making from a cash flow viewpoint. It includes present worth analysis, cash flow equivalence, rates of return, replacement analysis, benefit-cost analysis, depreciation and taxes, and projects’ break-even point, selection, and sensitivity analysis.
Prerequisites
Junior standing.
Objectives
The course is designed to cover basic concepts of engineering economics and aims at:
- Developing students’ awareness of the concepts of cash flow approach, time value of money, product/project costing, and rate of return.
- Introducing students to the process of integrating engineering proposals with economic analysis to select among several viable alternative projects.
- Understanding and appreciating the models and measures used in decision-making in the area of engineering economics.
Learning Outcomes
Upon successful completion of this course, students should be able to:
- Identify key parameters that affect project performance based on sensitivity analysis,
- Apply decision-making procedures for selecting engineering projects,
- Compute the impact of interest rate compounding, inflation, depreciation, cost-benefit analysis, and other economic factors on projects’ feasibility,
- Assess the economic feasibility of investments related to engineering projects, and
- Evaluate policies for asset replacement.
Textbook and References
Primary: Chan Park, Fundamentals of Engineering Economics, 3rd Ed., Prentice Hall, 2013.
A course handbook, Engineering Economic Analysis, is being released chapter by chapter on the textbook page.
Other references:
- White, J., Case, K., and Pratt, D., Principles of Engineering Economic Analysis, 6th Ed., John Wiley and Sons, 2012.
- Newnan, D., Eschenbach, T., Lavelle, J., Engineering Economic Analysis, 13th Ed., Oxford University Press, 2017.
- Blank, L. T., and Tarquin, A. J., Engineering Economy, 7th Ed., McGraw Hill, 2012.
Course Outline
| Topic | Chapter |
|---|---|
| Engineering Economic Decisions | 1 |
| Time Value of Money | 2 |
| Understanding Money Management | 3 |
| Equivalence Calculations under Inflation | 4 |
| Major Exam I | |
| Present Worth Analysis | 5 |
| Annual Equivalent Analysis | 6 |
| Rate-of-Return Analysis | 7 |
| Major Exam II | |
| Depreciation and Income Taxes | 9 |
| Handling Project Uncertainty | 11 |
| Replacement Decisions | 12 |
| Final Exam |
Grading
| Component | Weight | Cumulative |
|---|---|---|
| Attendance and Participation | 5% | 5% |
| Homework | 10% | 15% |
| Classwork and Quizzes | 10% | 25% |
| Major Exam I | 25% | 50% |
| Major Exam II | 25% | 75% |
| Final Exam | 25% | 100% |
Letter grades use standard cutoffs: A+: 95–100, A: 90–94, B+: 85–89, B: 80–84, and so on, with some adjustment reserved at the end based on all-section performance.
Attendance
Attendance is recorded using a pre-class quiz submitted before class time and participation in in-class activities. Students are given two free absences (without penalty); 1.25 marks penalty for each absence after that. A DN grade is automatically assigned upon the 6th unexcused absence. Any excuses must be official, from the student affairs office.
Academic Integrity
- All quizzes and exams are the student’s individual work (zero tolerance for cheating). See the KFUPM exam conduct guidelines.
- Homework and in-class activities can be completed in groups, but the work must be written up individually.
- Any indication of plagiarism or cheating will result in a zero and an official report.
Assignments
- All assignments are graded and weighted based on the grading policy.
- If you scored between 5%–95% in a homework or quiz, you may take makeup assignments within a week after the grade is posted (with a maximum score of 95% of the original full score).
- No makeup assignments if you did not submit HWs or quizzes entirely.
- No makeup attendance (for missing pre-class quizzes or in-class activities).
- Late assignments are accepted up to 48 hours after the deadline, penalized by 20% per day.
- If you have a valid official excuse for missing a class, HW, or quiz, email the instructor before the deadline to avoid a late penalty.
Communication and Conduct
- All assignments must be in English, with proper academic formatting.
- The main communication channel is email (not MS Teams).
- For extra office hours, make an appointment.
- Regrading requests must be submitted in writing, within a week after the grade is posted.
Wellbeing
Please take care of your mental and physical health. If you feel overwhelmed, stressed, or anxious, please let the instructor know and seek proper help from the university resources. Above all else, our goal is to provide a safe and respectful learning environment for everyone. Please be respectful of others and yourself.