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Engineering Economy, 5/e
Leland Blank, Texas A&M University
Anthony Tarquin, University of Texas - El Paso
More On Variation and Decision Making Under Risk

Learning Objectives

Purpose: Learn to incorporate decision making under risk into an engineering economy analysis using the basics of probability distributions, sampling, and simulation.

This chapter will help you:


1. Certainty and risk

Understand the different approaches to decision making under certainty and under risk.

2. Variables and distributions

Construct the probability distribution and cumulative distribution for a variable.

3. Random sample

Develop a random sample from the cumulative distribution of a variable.

4. Average and dispersion

Estimate the expected value and standard deviation of a population from a random sample.

5. Monte Carlo and simulation

Use Monte Carlo sampling and the simulation approach to select an alternative.








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