decision making and ethics presentation

8/7/2019 Decision Making and Ethics Presentation

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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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