Economics and Decision Analysis for Engineers (PET685)
This course teaches the skills required for a key component of an Engineer's job - creating value by making decisions that yield optimal returns on the allocation of human and financial resources.
Course description for study year 2024-2025
Course code
PET685
Version
1
Credits (ECTS)
10
Semester tution start
Autumn
Number of semesters
1
Exam semester
Autumn
Language of instruction
English
Content
NB! This is an elective course and may be cancelled if fewer than 10 students are enrolled by August 20th. The course will not be offered after the fall semester of 2024.
Engineers perform technical work to support the "business" objectives of the organization they work for (corporation, government). It is therefore important that they understand that "business" because it will influence the judgments they make. Economic evaluations provide the main source of the organization's information by which investment and operational decisions are made regarding the most effective use of resources. It is these decisions corporate value is being created (or destroyed).
There are many subtleties and assumptions that underlie the apparently straight-forward economic calculations that are often seen. Consequently, a fundamental understanding of the concepts behind economic evaluation and of techniques for performing them within a corporate decision making context, are essential skills. Furthermore, as all investment decisions are made without knowing what the future holds, understanding the uncertainties we face in any given decision situation is essential for good decision-making.
This course provides the tools necessary for engineers to economically evaluate their uncertainties and decisions. It also allows engineers to communicate with the "business" world, which is generally more interested in monetary values, and their risks, than engineering tolerances and specifications. It also provides understanding and knowledge of economic and business concepts, time-value of money, discounted cash flow, cash-flows, net present value and other economic decision criteria, the decision-making process, multi-objective decision making, decision-tree analysis, and value-of-information & flexibility. Some of the psychological and judgmental aspects of how people respond to uncertain and complex decision situations will be discussed.
Moreover, we delve into the transformative potential of Artificial Intelligence (AI) in this space. AI, one of the most momentous technological advancements, harnesses Machine Learning and data analysis to predict future outcomes, enhancing the efficiency of investment decisions. By rapidly processing vast data, including social sentiment and financial reports, AI provides insights on company performance and optimizes financial operations. Join us to understand how AI reshapes economic evaluations and decision-making in today's digital age.
Learning outcome
Required prerequisite knowledge
Recommended prerequisites
Exam
| Form of assessment | Weight | Duration | Marks | Aid |
|---|---|---|---|---|
| Written exam | 1/1 | 4 Hours | Letter grades | - 1) |
1) Access to Python, Excel and DLP.
The assessment consists of a digital on-campus exam. Students will not have access to ChatGPT or other LLM models.The students must hand in and pass four assignments during the semester in order to be allowed to take the final exam.
Coursework requirements
Portfolio containing five assignments that needs to be approved in to access the final exam.
The students may cooperate on the assignments.
