decision making and ethics presentation
TRANSCRIPT
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Decision Making&
Ethics ET-377Engineering Economics
Spring 2011
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This course will help develop the toolsneeded to properly analyze and solve theeconomic problems that are commonly
faced by engineers.
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Simple Problems Should I buy prepaid oil or pay every time?
Should our company pay the vendor cash or credit?
Intermediate Problems Should I buy or lease my next car?
Which SCR machine should the company purchase?
Complex Problems
Feasibility study of a new lube oil purification system. Planning for shipyard/outage.
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A systematic tool for comparing alternativesby their economic merits. Most suitable forproblems of significance that require
organized analysis of the economic aspects.
Could apply to Product, Process, Design,Purchase, Expansion Projects, Investment,and many other decision-makingprocesses.
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1. Recognize Problem / Opportunity
2. Define Goals/Objectives
3. Assemble Relevant Data
4. Identify Feasible Alts
7. Predict Alts Outcomes
8. Choose the Best Alt.9. Audit the Results
Overall Mission /Objectives
5. Select the Criterion
6. Construct a Model
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Identify Needs for New or ImprovedProducts, Processes, or Facilities General or specific goals
Multiple goals
Conflicting goals
Systems perspective
Limiting factors
SWOT (Strengths, Weaknesses,Opportunities, and Threats) Analysis
Investment/Financing
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Importance of Data Collection Relevance of Information Prioritization Dollar Amount and Time Horizon Sources of Information
Financial Accounting System Cost Accounting Records Market Research Quotations Economic Indicators Other Published Information
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Vast amount of information What is relevant? How to categorize it? From whos viewpoint?
From the Logyard Forman Alt. 1 $1250/4 wire rope slings made in house in 2 days
vs. Alt. 2 $750/ Outside Vendor in 4 weeks
From General Manager $1250 vs $750 Operational changes
Maintenance changes Resource changes
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Include as many as possible alternatives: Do-nothing option Simple solutions
Change slings planned obsolescence
Change sling material Retrain operators
Bounded rationality Number ofalternatives should be keep reasonable sothat each can be thoroughly explored
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Multiple criteria Conflicting criteria
Integrating criteria
Most common criterion Maximizeprofit/Minimize downtime
Category Economic Criterion
Fixed input Maximize the benefits or other outputs
Fixed output Minimize the costs or other inputs
Neither inputnor output fixed
Maximize the profits (Value of outputs cost of inputs)
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Real systems and models
A model describes the interrelationshipsamong the relevant data and predicts the
outcomes of various alternatives.
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Comparable outcomes Single criterion
Risk and uncertainty
Search for more information (loop) Modification of alternatives (loop)
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Selection criterion
Other intangible considerations Effect on stakeholders
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Reality vs. prediction
Learn from mistakes
Replacement analysis
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The concept of distinguishing between rightand wrong in decision-making.
Ethics includes: Establishing systems of beliefs and moral
obligations Defining values and fairness
Determining duty and guidelines for conduct
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Engineers, in the fulfillment of their professional duties,
shall:1. Hold paramount the safety, health, and welfare of
the public.2. Perform services only in areas of their competence.3. Issue public statements only in an objective and
truthful manner.4. Act for each employer or client as faithful agents or
trustees.5. Avoid deceptive acts.6. Conduct themselves honorably, responsibly,
ethically, and lawfully so as to enhance the honor,reputation, and usefulness of the profession.(http://www.nspe.org/ethics/eh1-code.asp)
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Decision Process Step Example Ethical Lapses
1. Recognize the problem Looking the other way, or not torecognize the problem due to bribes orfear of retribution
2. Define goals/objectives Favoring one group of stakeholders byfocusing on their objective
3. Assemble relevant data Using faulty or inaccurate data
4. Identify feasible alts. Leaving legitimate alts out ofconsideration
5. Select criterion todetermine best alt
Considering only monetary consequenceswhen other significant consequences exist
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Decision Process Step Example Ethical Lapses
6. Construct a model Using a short horizon that favors one altover another
7. Predict alts outcomes Using optimistic estimates for one alt andpessimistic ones for the other alts
8. Choose the best alt Choosing an inferior alt, one that isunsafe, adds unnecessary cost for user,harms the environment
9. Audit the result Hiding past mistakes
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How well and how honestly the decision-making process is conducted the data,method of analysis, recommendations, andfollow-up
Recognize ethical issues exist and make theman explicit part of decision-making process
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Gaining knowledge & building trust vs. favorsfor influence
Cost, quality, & functionality tradeoffs
Environmental concerns
Safety & cost
Firms priorities & globalization
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If results of the decision occur in a very shortperiod of time, costs and benefits can beadded up quickly.
Was the evaluation process comprehensive?
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1982 Assembly of 1800 ft. TV communications
tower Missouri City, Texas
Antenna Engineering Inc designed andmanufactured the antenna Moderate sized firm that had similar previous
contracts
Riggers Inc was contracted to erect antenna Small sized local firm that had a lot of experience
assembling similar towers
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Antenna construction without incident toabove 1000 foot mark.
Two final sections arrived on site
Different than the rest of the sectionsbecause of the pre-installation of themicrowave baskets
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Sub-assemblies could be lifted horizontallybut during uprighting, the cabling fouled onthe baskets
Antenna Engineering had previouslysubmitted the subassemblies lifting lugsplan to Riggers Inc for approval & signoffwhich was received
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SHOW VIDEO
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Figure 1 Riggers Inc onsite
engineeringanalysis of
improvised liftinglug arrangement
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Figure 2 Riggers Inc onsite
engineering analysisof improvised lifting
lug arrangement Did not include affect
of moment arm ofimprovised lifting lug
and the shearimposed on theattachments
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U-Bolts
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U-Bolts Shear stress analysis of boltmaterial was half of specification
Bolt manufacturer sued settled out of court
Antenna Engineering suffered no monetarylosses
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Ethics? Morals?
Social Responsibility?
Legal Responsibility?
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