ENGINEERING ECONOMICS RELATED WITH SHIP BUILDING/ REPAIR
1) RISK ANALYSIS:-
Risk analysis comprises of risk assessment, risk management and risk communication.
Risk analysis = Risk assessment + Risk management + Risk communication
Risk assessment involves identifying source of potential harm, assessing the likelihood of harm occurring and its consequences.
Risk management evaluates the identified risks, requiring attention and implements plan and actions required to address the risk.
Risk communication involves an interactive dialogue between risk assessors, risk managers and stake holders.
Risk analysis is frequently used when carrying out non routine jobs or those with a potential to cause accident or harm. e.g. when carrying out ship side painting in a dry dock, a risk analysis is carried to identify hazard, ( hazard to man and environment) and plans and actions are put in place to address the identified risk.
Risk analysis plays an important role in ship repair/ building, as at its various stages risky jobs have to be taken up. Hence before going through with the job, it has to be thoroughly analysed using the risk analysis method. On doing so, this job can be carried out successfully.
2)BREAK EVEN ANALYSIS:-
It is a technique widely used in production management. It is based on categorizing production cost between those which are 'variable' ( costs that changes when production output changes) and those that are fixed( cost not directly related to volume of production)
Total variable and fixed costs are compared with sales revenue in order to determine the level of safe volume, sale value or production at which the business makes neither profit nor a loss known as break even point.
OA - Variation of income with production.
OB -- Total fixed cost
As output increases, variable costs are incurred. At low level of production costs are greater than income At point 'P' total cost = Income and this is the break even point.
Break even analysis is frequently used for the capacity planning of a new port or terminal and for a service capacity such as a number of ships that can be simultaneously attended to.
3) SENSITIVITY ANALYSIS:-
It measures the impact on project outcomes, of changing one or more key input values, about which there is uncertainty. It reveals how profitable or unprofitable the project might be if input values to the analysis turn out to be different from that assumed.
e.g. If a pessimistic, expected and optimistic values be selected for a variable, a sensitivity analysis may be performed to see the outcome changes with change to each of the three selected values in turn.
Sensitivity analysis helps identify critical inputs in order to facilitate choosing where to spend extra resources. It also helps in anticipating and preparing for questions asked when defending a project. Sensitivity analysis is a major of project worth.
Such evaluation can be used as a tool for ship construction where raw material price is a variable.
4) MULTISTAGE SEQUENTIAL ANALYSIS:-
Managing today's organization require continuous decision making. The results from these decisions must be continuously monitored and the original decision may need to be revised or new alternatives sought. the sequence of decisions and uncertain events link the initial decision to the final outcome. It involves 'starting' at the end and 'rollback' towards the initial decision. Decision trees then display the effect of successive decisions over a time horizon where outcome is uncertain.
Capital budgeting for new ventures, production scheduling and inventory replacement policies use multistage sequential analysis.
5) MULTI-ATTRIBUTE DECISION MAKING:-
It is process of selecting a particular option from a set of possibilities, so as to best satisfy the aims or goals of the decision maker. Options are decomposed into different dimensions X usually called attributes. According to this decomposition each option O is first described by a vector of value V of corresponding attribute. The vectors are then evaluated by utility function F. Functions should be defined by decision maker goal. When applied on a particular option O then function F yields a utility F(O). According to this value the option can be ranked and the best one chosen. In multi attribute paradigm the decision maker knowledge about particular problem is therefore described by attributes X and utility function F. In addition there is data base of option O of vector V.
Options O Attributes
O1= V11, V12 .....V14 X1, X2, X3, X4 (
O2= V21, V22, ... V24
O3= V31, V32, .... V34 Utility function (F)
O4= V41, V42, ..... V44
F(O1), F(O2) F(O3) F(O4)
e.g. Selection of dry dock. In MADM problems the decision maker is often faced with the problem of selecting alternatives that are associated with non commensurate of conflicting attributes.
Risk analysis comprises of risk assessment, risk management and risk communication.
Risk analysis = Risk assessment + Risk management + Risk communication
Risk assessment involves identifying source of potential harm, assessing the likelihood of harm occurring and its consequences.
Risk management evaluates the identified risks, requiring attention and implements plan and actions required to address the risk.
Risk communication involves an interactive dialogue between risk assessors, risk managers and stake holders.
Risk analysis is frequently used when carrying out non routine jobs or those with a potential to cause accident or harm. e.g. when carrying out ship side painting in a dry dock, a risk analysis is carried to identify hazard, ( hazard to man and environment) and plans and actions are put in place to address the identified risk.
Risk analysis plays an important role in ship repair/ building, as at its various stages risky jobs have to be taken up. Hence before going through with the job, it has to be thoroughly analysed using the risk analysis method. On doing so, this job can be carried out successfully.
2)BREAK EVEN ANALYSIS:-
It is a technique widely used in production management. It is based on categorizing production cost between those which are 'variable' ( costs that changes when production output changes) and those that are fixed( cost not directly related to volume of production)
Total variable and fixed costs are compared with sales revenue in order to determine the level of safe volume, sale value or production at which the business makes neither profit nor a loss known as break even point.
OB -- Total fixed cost
As output increases, variable costs are incurred. At low level of production costs are greater than income At point 'P' total cost = Income and this is the break even point.
Break even analysis is frequently used for the capacity planning of a new port or terminal and for a service capacity such as a number of ships that can be simultaneously attended to.
3) SENSITIVITY ANALYSIS:-
It measures the impact on project outcomes, of changing one or more key input values, about which there is uncertainty. It reveals how profitable or unprofitable the project might be if input values to the analysis turn out to be different from that assumed.
e.g. If a pessimistic, expected and optimistic values be selected for a variable, a sensitivity analysis may be performed to see the outcome changes with change to each of the three selected values in turn.
Sensitivity analysis helps identify critical inputs in order to facilitate choosing where to spend extra resources. It also helps in anticipating and preparing for questions asked when defending a project. Sensitivity analysis is a major of project worth.
Such evaluation can be used as a tool for ship construction where raw material price is a variable.
4) MULTISTAGE SEQUENTIAL ANALYSIS:-
Managing today's organization require continuous decision making. The results from these decisions must be continuously monitored and the original decision may need to be revised or new alternatives sought. the sequence of decisions and uncertain events link the initial decision to the final outcome. It involves 'starting' at the end and 'rollback' towards the initial decision. Decision trees then display the effect of successive decisions over a time horizon where outcome is uncertain.
Capital budgeting for new ventures, production scheduling and inventory replacement policies use multistage sequential analysis.
5) MULTI-ATTRIBUTE DECISION MAKING:-
It is process of selecting a particular option from a set of possibilities, so as to best satisfy the aims or goals of the decision maker. Options are decomposed into different dimensions X usually called attributes. According to this decomposition each option O is first described by a vector of value V of corresponding attribute. The vectors are then evaluated by utility function F. Functions should be defined by decision maker goal. When applied on a particular option O then function F yields a utility F(O). According to this value the option can be ranked and the best one chosen. In multi attribute paradigm the decision maker knowledge about particular problem is therefore described by attributes X and utility function F. In addition there is data base of option O of vector V.
Options O Attributes
O1= V11, V12 .....V14 X1, X2, X3, X4 (
O2= V21, V22, ... V24
O3= V31, V32, .... V34 Utility function (F)
O4= V41, V42, ..... V44
F(O1), F(O2) F(O3) F(O4)
e.g. Selection of dry dock. In MADM problems the decision maker is often faced with the problem of selecting alternatives that are associated with non commensurate of conflicting attributes.
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