W.5_David King_Cost and Benefits of Moving_Mentored by AN


Problem Recognition, Definition, and Evaluation

As my current lease on my rental house expires, is it more cost effective to move or is it more cost effective to lease the current house again.

Development of the feasible alternatives

  1. Re-lease current location.
  2. Find a new house.

Develop the outcomes

B-C ratio with PW

B-C=PW (benefits of project)/PW total costs of project

B-C= PW(B) / I-PW (MV) + PW (O&M)

  1. Re-lease current location

B-C = $5000 [annual rent] (1) / ($500 [security deposit] + 0 [moving cost] +  0 [time to find house] + 5000 [annual rent])  –  0  + 500 [annual maintenance]

B-C = 5000/ 5500 – 500

B-C = 5000/5000

B-C= 1.00

  1. Find a new house

B-C = $5000 [annual rent](1) / ($500 [security deposit] + 300 [moving costs] + 200 [time to find new house] + 3000[annual rent]) – 0  + 200

B-C = 5000/4000+200

B-C = 5000/4200

B-C = 1.19

Selection of the criterion

Order of importance for criteria:

  1. Cost
  2. Internet Access Availability
  3. Location

Analysis and comparison of the alternatives

Dominance

Attribute Re-Rental New Location
Cost Higher Lower
Internet Access Availability Not available Available
Location Good Average
Dominance No No

Lexicography

Attributes Rank Alternative Rank
Cost 1 New Location > Re – Rental
Internet Access Availability 2 New Location > Re-Rental
Location 3 Re-Rental > New Location

Selection of the preferred alternative

Based on multi-attribute decision making and benefit-cost method, the new location is the preferred alternative.

Performance monitoring and post evaluation results

Based on the results there are cost and internet access benefits which are more important than location. Location can be easily compensated for with a slight increase to the already affordable transportation and extra travel time.

References:

Sullivan, W., Wicks, E., & Koelling, C. (2012). Engineering Economy (15th ed.). New Jersey: Pearson.

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Problem Recognition, Definition, and Evaluation

As my current lease on my rental house expires, is it more cost effective to move or is it more cost effective to lease the current house again.

Development of the feasible alternatives

1.      Re-lease current location.

2.      Find a new house.

Develop the outcomes

B-C ratio with PW

B-C=PW (benefits of project)/PW total costs of project

B-C= PW(B) / I-PW (MV) + PW (O&M)

1.      Re-lease current location

B-C = $5000 [annual rent] (1) / ($500 [security deposit] + 0 [moving cost] +  0 [time to find house] + 5000 [annual rent])  –  0  + 500 [annual maintenance]

B-C = 5000/ 5500 – 500

B-C = 5000/5000

B-C= 1.00

2.      Find a new house

B-C = $5000 [annual rent](1) / ($500 [security deposit] + 300 [moving costs] + 200 [time to find new house] + 3000[annual rent]) – 0  + 200

B-C = 5000/4000+200

B-C = 5000/4200

B-C = 1.19

Selection of the criterion

Order of importance for criteria:

1.      Cost

2.      Internet Access Availability

3.      Location

Analysis and comparison of the alternatives

Dominance

Attribute Re-Rental New Location
Cost Higher Lower
Internet Access Availability Not available Available
Location Good Average
Dominance No No

Lexicography

Attributes Rank Alternative Rank
Cost 1 New Location > Re – Rental
Internet Access Availability 2 New Location > Re-Rental
Location 3 Re-Rental > New Location

Selection of the preferred alternative

Based on multi-attribute decision making and benefit-cost method, the new location is the preferred alternative.

Performance monitoring and post evaluation results

Based on the results there are cost and internet access benefits which are more important than location. Location can be easily compensated for with a slight increase to the already affordable transportation and extra travel time.

References:

Sullivan, W., Wicks, E., & Koelling, C. (2012). Engineering Economy (15th ed.). New Jersey: Pearson.

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This entry was posted in Adi Nugroho, David King, Week #5. Bookmark the permalink.

One Response to W.5_David King_Cost and Benefits of Moving_Mentored by AN

  1. DrPDG says:

    EXCELLENT, David!!! Now you are starting to demonstrate an understanding of applied Engineering Economics!!!

    And many thanks for mentoring David, Adi!! Great example of team work in action. (Payback time will come when David reviews your paper for Bahasa Ingriss)

    Keep up the good work, David….. Slow down, take your time in setting up the problem and then follow the step by step development process!!

    BR,
    Dr. PDG, Jakarta

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