TABLE OF CONTENTS Over the years professionals working in the management field have been trying to develop various types of tools for use in management activities. In particular, since World War II, there has been a considerable growth in the development of quantitative management techniques and methods. The new developments in computer technology and the complexities of modern management decision making problems have enhanced the importance of many of these quantitative approaches. Some examples of these methods are linear and nonlinear programming techniques.
Today's engineering and technology managers make use of various types of methods, including the ones developed for use in general management decision making. This chapter presents many approaches taken from published literature considered useful for making effective engineering and technology management decisions. These approaches include discounted cash flow analysis, depreciation analysis, decision trees, optimization techniques, learning curve analysis, fault tree analysis, and forecasting.
In many engineering and technology management decisions, the time value of money plays an important role. This section presents some fundamental aspects of engineering economics useful to perform discounted cash flow analysis.
In the case of compound interest, at the end of each specified period, the earned interest is added to the original amount or principal. This new principal or amount acts as a principal for the next specified period and the process continues. Consequently, the interest is compounded into principal. Mathematically, at the end of the first period the amount is expressed by
