Bad news: You have just wrecked your car! You need another car immediately because you have decided that walking, riding a bike, and taking a bus are not acceptable. An automobile wholesaler offers you $2,000 for your wrecked car €œas is.€ Also, your insurance company€™s claims adjuster estimates that there is $2,000 in damages to your car. Because you have collision insurance with a $1,000 deductibility provision, the insurance company mails you a check for $1,000. The odometer reading on your wrecked car is 58,000 miles. What should you do? Use the seven-step procedure  from Table 1-1 to analyze your situation. Also, identify which principles accompany each step.

Table 1-1:

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The General Relationship between the Engineering Economic Analysis Procedure and the Engineering Design Process Engineering Design Process (see Figure P1-15 on p. 18) Engineering Economic Analysis Procedure Step Activity 1. Problem/need definition. Problem recognition, definition, and evaluation. 1. 2. Problem/need formulation and evaluation. 2. Development of the feasible alter- 3. Synthesis of possible solutions (alternatives). natives. 3. Development of the outcomes and cash flows for each alternative. Selection of a criterion (or criteria). Analysis and comparison of the alternatives. Analysis, optimization, and evaluation. 4. 4. 5. 5. Specification of preferred alternative. 6. Communication. 6. Selection of the preferred alternative. 7. Performance monitoring and post- evaluation of results.