Engineering Design

PPC
ASME Professional
Practice
Curriculum
The Engineering
Design Series
Volume 4
2
PPC
ASME Professional Practice Curriculum
The ASME Professional Practice Curriculum:
The ASME PPC is an on-line program of study for engineering students and early
career engineers that will supplement the formal college/university engineering cur-
riculum in helping you be better prepared for entry into and early advancement in
the engineering profession. This book is the printed version of the PPC online.
It is a major aim of ASME to help colleges of engineering guide the development of

students and teach the principles of engineering practice and professionalism with-
out overburdening an already full undergraduate curriculum. The PPC Online is
meant to supplement the formal college/university engineering curriculum and aid
engineering faculty in better preparing graduates for entry into and early advance-
ment in the engineering profession.
The ASME PPC Online is a joint project of the Board on Professional Development
and the Board on Engineering Education and is funded by the ASME Foundation.
Its existence is made possible through the valuable expertise and support of the
following contributors.
Visit us at http://www.professionalpractice.asme.org
© 2003 - 2009 ASME International. All Rights Reserved.

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Volume 1 The Project Management Series

Volume 2 The Product Management Series
Volume 3 Writing Winning Proposals
Volume 4 The Engineering Design Series
Volume 5 Sustainability Series
Volume 6 Business & Legal Series
Volume 7 Entrepreneurial Series
Volume 8 Career Transition Series
Volume 9 Sales and Marketing for Engineers
Volume 10 Communications Series
Volume 11 Management & Leadership Skills Series
Volume 12 Industry Series

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The Engineering Design Series

Volume 4
Conceptual Design . . . . . . . . . . . . . . . . . . . . . . . . . 6
Analytical Design . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Parametric Design . . . . . . . . . . . . . . . . . . . . . . . . . 36

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TABLE OF CONTENTS
Introduction 7
Part 1: Deciding Which Project to Propose 7
Part 2: Cash Flow Analysis 8
Part 3: By Convention 12
Part 4: Sample Calculation 12
Part 5: Financial Parameters 14
Part 6: Risk 15
Part 7: Sensitivity Analysis 16
Part 8: Conclusion 16
Resources 17
Glossary 18

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Introduction
The goal of nearly every project is to make money for the company. With few ex-
ceptions, a project must earn more for the company than the company could earn Educational Goals
by putting the money required to fund the project into a bank or cash security.
There is no point in taking the risk of spending money to buy equipment or change After completion of this
a process, if it will not yield a profit greater than putting the money somewhere module, you will be able to:
else.
• Understand the impor-
That means that every project must be evaluated to determine how much money tance of accurate esti-
it will yield. Management can then compare these numbers to the profits other pro- mation of costs and
posed projects are expected to yield, and decide which projects to fund. (There revenue in engineering
are other considerations that go into these decisions, such as the impact a project projects
will have on employees, but those are beyond the scope of this module.) When • Understand the con-
deciding whether to fund a project, the key question is: "will it earn a bigger profit cept of cash flow analy-
here or somewhere else?" Engineers usually justify their projects by proving the sis and the terms in-
savings (and other intangible benefits) they will yield. Savings have the same ef- volved in its determina-
fect as revenues; they improve the company's profitability. As an engineer, you tion
might propose using different materials to produce a product, for example, if the • Learn several parame-
new material costs less but perform as well. Or you might propose insulating sur- ters that allow you to
faces in order to reduce heat loss, thereby cutting back on energy costs. compare various pro-
jects on a financial ba-
This module will explore how engineers evaluate and justify their projects. sis
• Appreciate the risks
NOTE: Portions of this module's material were taken from Engineering Econom- inherent in any project
ics: Principles and Concepts, a module developed at The Ohio State University and become familiar
under the NSF sponsored Gateway Coalition (grant EEC-9109794). Contributing with several methods of
members include·Gary Kinzel, Project Supervisor and Amita Danak, Primary assessing them.
Author.
1 Deciding Which Project to Propose
Once you've identified an opportunity for savings, you must determine the best way to exploit the opportunity. Let's
say, for example, that ABC Inc. is manufacturing a new product that is expected to earn $200,000 a year and in-
crease annual fixed costs by $85,000. You are an engineer at ABC and have researched semi-automatic and fully
automated machines that produce this product. Now you want to compare costs so you can earn the most for your
company.
Under Method A, you will buy the semi-automatic machines, which last 10 years and cost $250,000. Under Method
B, you will buy the fully automated machines, which also last 10 years but cost $400,000. Depreciation, out-of-
pocket expenses and interests costs for the two methods are shown on the following page. Which is the better way
to go?
An analysis of Method A shows that it will yield profits of $40,000, compared to Method B, which will earn the com-
pany $45,000 a year. You choose Method B.
Although the principles in this example are sound, analysis in the real world is much more complicated, because
projects involve a complex series of time-dependent cash flows. This is further complicated by the time value of

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money and the effects of inflation. Cash today is generally worth more than the same amount of money a year from
now because of the potential interest that could be earned during the next year (the time value of money) and the
erosion in the future buying power due to inflation.
Fortunately, you can quantify and compare projects using established, financial-evaluation techniques that take
into consideration all these factors. The most common technique is an incremental cash flow analysis.
2 Cash Flow Analysis
Overview
You determine the annual cash flow for a project by summing
all incoming and outgoing cash flows. Incoming flows might be
revenue or savings, and outgoing flows are typically material
costs and taxes. Summing both flows gives you net cash flow
for each year, illustrated in Figure 1 below. It is important that
you include only those cash flows that change because of the
project. If no additional maintenance is anticipated, for exam-
ple, do not include it.
Cash Flow Analysis Equation

Cash flow for one year can be described with the following equation:
ACF = PAT - CAP + WCC + DEP
Where:
ACF = Annual cash flow

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PAT = Profits after taxes, which can be described by: (revenue - cost of goods sold) - (fixed costs + depreciation) -
taxes
CAP = Capital investments in that year
WCC = Change in working capital DEP = Depreciation (tax; not book).
These terms are defined as follows:
Revenue is the money received for goods or services sold. Revenue represents not sales, but actual cash re-
ceipts. Revenue can also be defined as reduced costs for labor or material due to a process improvement. In this
case revenue can be treated either as a positive revenue value or a negative cost.
Costs of Goods Sold, or variable costs, are costs for labor, materials, and energy (plus overhead costs that vary
directly with production level). Also included are engineering and project management costs that are directly asso-
ciated with the project.
Fixed Costs are allocated costs that are incurred but do not change significantly with production level, such as
sales, administration, and research and development. Though fixed costs are often evaluated as a percent of reve-
nue, it is more realistic to assign them a near-constant value for certain periods, and then step up their values
when resources are added. Depreciation is the allocation of the cost of an asset over its useful life, and it is a way
to reduce tax payment cash flows in future years. Book depreciation is typically done by dividing the purchase price
of the asset by the number of years of its life. This is a straight-line method that yields a uniform annual amount. In
a project cash flow analysis, only the tax depreciation is important, because it indicates the cash savings from ap-
plying the depreciation.
Working Capital is the firm's investment in cash, short-term securities, accounts receivable, and inventory. For an
annual cash flow analysis, it is important to determine whether more or less working capital will be needed in any
annual period. This would require a company to put cash in or take cash out of the project. A first approximation for
working capital in a cash flow analysis is:
Change in working capital this year = (Revenue this year - Revenue last year) x Working Capital per unit of reve-
nue
A positive change (or increase) in working capital represents a cash drain on the company or a negative cash flow.
The following Table 2 shows revenue, variable costs, fixed costs and capital for three different kinds of projects.
Cash flows for multiple years are usually summarized on a spreadsheet, or illustrated in a cash flow diagram, for
periods ranging from five to 25 years. Table 1 is a cash flow spreadsheet without inputs. Later we will use this table
with inputs to illustrate a cash flow analysis. Note that this table is simply the equation for cash flow, above, in
spreadsheet form.
Turning to the notes at the bottom of Table 1:
1. Base Assumptions: To make preliminary evaluations easier, the model assumes some typical industry values for
Cost-of-Goods Sold/Price, Sales and Administration/Revenue, Typical Working Capital Rate, Income Tax Rate,
and Discount Rate. Typical values can be used initially, but should be replaced once project-specific values are
identified. It is important to note that the model is only as good as the inputs provided.
2. Depreciation Schedule: A sample U.S. government tax depreciation schedule is shown, though other schedule
values may be used (link to Appendix 2). Only one capital investment in year 0 is assumed. Separate schedules
must be prepared if additional capital items are purchased at different times.
3. Working Capital Schedule: This permits the working capital and change in working capital to be evaluated.

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Table 1

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Table 2

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3 By Convention
By Convention Common financial practice dictates a few simple conventions for cash
flow analyses:
1. All cash flows in a year are assumed to occur instantaneously at the end of the year
for discounting purposes. Discounting is a process that estimates the present value of
future costs, in order to reflect the time value of money and to reduce all future sums of
money to an equivalent sum of money in the base period.
2. Year #0 presents an opportunity to instantaneously make a capital investment the

night before year #1. The investment must be complete and must include any time
value of money during installation.
3. Working capital comprises cash in company accounts, the cost-of-goods-sold portion

of accounts receivable, and inventory (raw material, in-process, and finished goods),
less accounts payable to others. Net working capital is closely tied to production levels. For simple analyses, a
value between five and 10 percent of revenues is typical.
4. At the end of the model period, any built-up working capital attributable to the project is assumed to be returned
4 Sample Calculation
Table 3 (see following page) is a sample cash flow analysis for a new product. In the example, the company added
a machine to produce a new bushing for the automotive industry ($500,000 for machine, installation, startup and
engineering). Sales were expected to grow from $1,000,000 per year to $12,000,000 over five years and then level
off. The product is being sold with a 20 percent gross margin on sales, where gross margin is gross profit (revenue
less costs-of-goods sold) divided by the total revenue.
While the incremental sales and administration costs are constant, the company decided to let them vary with reve-
nue (10 percent of revenue). For this preliminary analysis, the following rates were assumed: 5 percent working
capital, 39 percent income tax, and 10 percent discount.
From this analysis, represented graphically in the cumulative cash flow chart shown in Figure 2 (see following
page), you can see that: 1) a negative cash flow occurs at the beginning of the evaluation period when the invest-
ment is made, and 2) as revenue and profits are received each year, the net cash invested in the project falls even-
tually to zero in the fourth year, indicating a payback period of approximately four years.

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5 Financial Parameters
Overview
Once you have completed a cash flow analysis, you can use your results to develop financial parameters that en-
able you to easily compare projects. In particular, net present value, internal rate of return and payback period are
valuable comparison tools.
Net present value (NPV) is the sum of present values of a series of annual, not necessarily equal, cash flows
(payments or costs) calculated for a given discount rate, k. The discount rate is the interest rate used in the dis-
counting process, and it applies to money the company borrows and money the company pays its shareholders.
Most firms have an established rate for pursuing or evaluating projects. Present value is defined as:

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where "k" is the annual discount rate, "n" is the period in years and FV is the future value of a cost or revenue.
Internal rate of return (IRR) is the discount rate that provides a net present value of zero for a project. This includes
the initial investment as well as all annual cash flows.
Payback Period is the length of time, usually in years, required for net revenue (including taxes) from an invest-
ment to return the cost of the investment (without discounting).
Calculating these values for the example in Table 3, we get a net present value of $2.2 million, an internal rate of
return of 32 percent, and a payback period of four years.
What Do the Parameters Mean?

The Parameters can be summarized in three points:
1. NPV: This is the sum of the discounted cash flows for all years (1/(1+k)n) including
the initial zero-year investment. An NPV of $2.2 million indicates that if the project pro-
ceeds as planned, the company will recover not only its initial $500,000 initial invest-
ment plus interest on this amount at a rate of 10 percent, but will also reap an additional
profit of $2.2 million.
2. IRR: This is the discount rate at which the net present value is reduced to zero. The
project in the example, with its $500,000 investment, will generate a 32 percent rate of
return over 10 years while also recovering the initial $500,000 investment. The project
will add net value to the company, since 32 percent is higher than the company's 10
percent cost of money.
3. Payback: This tells managers that it will take about 4 years of operation to recover all of the invested cash.
There is no discounting, so this is an indicator of true risk and not the time value of money. Longer payback peri-
ods have higher risk than shorter payback periods, because of the increasing uncertainty in predicting further into
the future. Typically, payback is only used with very near-term projects. Projects with similar NPVs or IRRs but with
shorter paybacks are usually more desirable (lower risk).
6 Risk
All new projects involve some level of risk or uncertainty. Short-term projects using established technologies are
typically considered low risk, while long-term projects using new, untried technologies are generally considered
higher risk.
You can use a number of approaches to account for risk during project evaluations. You can establish special
guarantee provisions in the specifications and the contract, for example. This will typically increase the price from
the suppliers, since they assume more of the risk.
You can also increase the buyer's internal contingency account in the project's cost evaluation. Another option is to
make adjustments to the discount rate to accommodate the level of risk, with higher rates applied to riskier pro-
jects. Finally, you can use combinations of these approaches.

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7 Sensitivity Analysis
Another way to gauge a project's risk is to apply a sensitivity analysis, in which all the
key parameters (revenue, operating costs, development costs, and initial investments)
are varied by a fixed percentage. This reveals the possible variations that can be ob-
served in the parameter. The changes in the NPV, IRR and payback generate a range
of values for each parameter change, thus creating a sensitivity range to be evaluated
by management when judging the merit of a project.
8 Conclusion
Evaluating the financial implications of a project is a relatively straightforward process:
• Establish the annual operating cash flow for each year over the life of the project. This accounts for revenue
(not sales), and all costs to produce the product. Don't forget to include revenues from cost reductions.
• Consistently apply taxes and depreciation according to current accounting rules.
• Add or subtract non-operating cash flows
• negative cash flow for capital investments
• positive cash flow for a reduction in the working capital requirements/negative cash flow for an in-
crease in the working capital requirement
• Use discounting to address the time value of money
• Evaluate key financial parameters
• Net present value (NPV)
• Internal rate of return (IRR)
• Payback
Assess the risk on a project to determine if it is appropriate to invest your time and money.

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Resources
1) Engineering Economics: Principles and Concepts, a module developed at The Ohio State University under the
NSF sponsored Gateway Coalition (grant EEC-9109794). Contributing members include·Gary Kinzel, Project Su-
pervisor and Amita Danak, Primary Author.
2) Economics of Doing Business: Financial Evaluation for Engineers, John B. Kitto, ASME Career Development
Series (available free to ASME International members).

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Glossary
Accounts receivable - A balance owed to the firm, typically billed invoices not yet collected.
Book depreciation - This is a deductible non-cash expense intended to allocate the cost of an initial investment
over a number of units of production in order to more accurately assess the full cost of the product. Book deprecia-
tion is typically evaluated using the straight line method, where a uniform annual depreciation amount (total pur-
chase price/years) is used.
Capital investment - The money paid to purchase tangible property which cannot easily be converted into cash
and which is usually held for a long period, such as manufacturing equipment, real estate and furniture.
Cash flow - a measure of an organization's liquidity that usually consists of net income after taxes plus non-cash
charges (such as depreciation) against income.
Discount rate - The interest rate used in the discounting process is usually the cost of money for the firm including
borrowed money (debt) and shareholder provided funds (equity). Most firms will have an established rate for pursu-
ing or evaluating projects. A simple approximation for a tax-paying corporation includes:
k = (fraction debt) x (interest rate) x (1-tax rate) + (fraction equity) x (required shareholder rate of return)
The interest rate and stockholder return already reflect the anticipated impact of inflation. The discount rate exclud-
ing inflation (constant cost) is:
where e is the inflation rate.
Inflation - an increase in the volume of money and credit relative to available goods and services resulting in a
continuing rise in the general price level.
Interest - A charge for borrowed money that is generally a percentage of the amount borrowed. Interest can also
be thought of as the cost of using borrowed money.
Overhead costs - A business expense such as rent, insurance, or heating that is not chargeable to a particular
part of the work or product manufactured by the business.
Profit - The difference between the sales receipts of goods and the cost of producing the goods.
Sensitivity analysis - Investigation into how projected performance varies along with changes in the key assump-
tions on which the projections are based.
Tax depreciation - A method of reducing tax payment cash flows in future years. Most federal/national govern-
ments provide specific "tax" depreciation schedules by class of capital item.
Time value of money - The idea that a dollar now is worth more than dollar in the future, even after adjusting for
inflation, because a dollar now can earn interest or otherwise appreciate until the time the dollar in the future would
be received.

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TABLE OF CONTENTS
Introduction 20
Part 1: The Impact of Design on Cost 21
Part 2: Component and System Optimization 23
Part 3: Design Analysis Tools 25
Part 4: Cost Comparisons 26
Part 5: Minimum-Cost Analysis 27
Part 6: Selling-Price Analysis 29
Resources 34
Glossary 35

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Introduction
People have been designing objects and processes for thousands of years. From
a simple wheel to complex computer systems, design has been a dynamic factor Educational Goals
in personal and organizational success throughout history. With early design proc-
esses, companies considered technology and markets separately. Often, engi- After completion of this
neering and marketing departments worked independently, with different and module, you will be able to:
sometimes conflicting goals.
• Understand the implica-
One example of the traditional design method is the railway engineers working in tions and importance of
the 1800's, who apparently disregarded the influence of track locations upon the accurate cost analysis
prospective costs and revenues of their railways. Arthur M. Wellington, a pioneer of engineering projects
in the field of engineering economics, published "The Economic Theory of Railway • Understand the differ-
Location," one of the first books on engineering economics, in 1877. In it, he ad- ence between concep-
dressed his disgust with the design process, stating that "There is no field of pro- tual and analytical engi-
fessional labor in which a limited amount of modest incompetence at $150 per neering design
month can set so many picks-and-shovels and locomotives at work to no purpose • Recognize some ana-
whatsoever." lytical design tech-
niques
This serious condemnation indicates that the planners didn't really plan-they didn't • Understand minimum
plan so that operating costs would be minimized and revenues maximized. Such cost analysis
concern finally led Wellington to state a classic definition of engineering as: "The • Understand selling
art of doing well for one dollar what any bungler can do for two." price analysis
In today's competitive world, companies can no longer afford such an ineffective

approach. They need innovative product-design processes to give them a com-
petitive advantage in the marketplace. In the modern design process, planning is key, and much of the work takes
place early in the process. Note that production does not occur until the very end of a process that involves prelimi-
nary, or conceptual, design, and several iterations of optimization (analytical design).
Three measurements of success of the design process are product cost, quality and time to market. This module,
the second in the series on Engineering Economics, will focus on the cost aspects of good design, specifically dur-
ing the analytical design process.
NOTE: Portions of this module's material were taken from Engineering Economics: Principles and Concepts, a module devel-
oped at The Ohio State University under the NSF sponsored Gateway Coalition (grant EEC-9109794). Contributing members
include Gary Kinzel, Project Supervisor and Amita Danak, Primary Author.

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1 The Impact of Design on Cost
The cost of the design process is usually a small part of the overall cost of the product throughout its life; however,
product design greatly affects the ability of the product to meet all three factors for success. The graph shows that
about 75 percent of the manufacturing cost of a typical product is committed by the end of the conceptual phase.
This means that only 25 percent of the product's cost can be influenced by decisions made after this time. Thus, if
decisions made during the early design phases are poor, the company stands to lose much of the money that was
committed before production even begins.
The graph (see following page) illustrates clearly how cost and time are affected by design decisions. There are
many costs to consider when designing a project or process: initial costs; operating costs; maintenance costs;
product liability costs; and the cost of borrowing money to finance the project. In order to maximize profits, the en-
gineer must understand and manage all these costs and work cooperatively with other departments such as fi-
nance and marketing.

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Every company has its own design process, but these steps are common to most successful modern design prac-
tices: concept development, system-level design, detail design, testing and refinement and production ramp-up.
Here they are depicted visually (see following page). In the engineering economics module on conceptual design,
you learned that a conceptual designer is interested in a product's overall feasibility, technically as well as eco-
nomically. Conceptual designers must take a broad economic view of a project, considering factors such as taxes,
depreciation, the time value of money, and the investment's rate of return, as they evaluate various approaches for
conducting a project or developing a product.
Analytical designers, on the other hand, are concerned with optimizing the system after the approach is selected,
usually by a manager or a conceptual designer. They select components, materials and processes to yield an opti-
mum system. Consequently, they are concerned first with detail costs, second, with the initial system costs, and
third, to some extent, with overall or life cycle costs.
REF: The Mechanical Design Process, Dav

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Analytical designers can often assume that the project is already funded, and that money for the design and con-
struction of a least one prototype has been allocated. All their decisions involve optimization of initial and operating
costs through their choices of:
• Materials
• Manufacturing Methods
• Purchased Components
• Finishing Methods
2 Component and System Optimization
Analytical designers must examine each component within a system to ensure that it is optimized for the duty it
must perform. Failure or weakness in any part of the design can jeopardize the success of the product in the mar-
ketplace, since design modifications during the later stages of the design process are extremely expensive.
In reviewing the design of a component, some general questions to ask are:
• Will the material specified be the most economical for the part?
• Can the part be fabricated at an adequate production rate?
• Will the physical shape lend itself to processing at the minimum cost and an adequate rate or volume of pro-
duction?

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• Do dimensional tolerances permit selection of the most economical production methods?

• Is the part design based on consideration of scheduled production volume?
Analytical designers incorporate into their systems those components that maximize the ratio of effectiveness to
cost, where effectiveness is the ability of a component or system to perform its intended function when it is operat-
ing in accordance with the original design concept. For example, assume that a device is required to convert rotary
motion to rectilinear motion. The "black box" for the component is represented in the figure, and the following de-
vices are being considered to perform this function:
• Cam-and-follower
• Rack-and-pinion
• Power screw (or ballscrew)
• Slider-crank
The analytical designer must first determine how well each mechanism fulfills the technical design requirements.
Such an analysis might eliminate some of the alternates from the list. The final choice, though, would be made by
comparing effectiveness-to-cost ratios such as mechanical efficiency to cost, life to cost, or power per pound per
dollar.
To evaluate a complete system, consider areas such as these listed below for possible cost savings (these are
examples appropriate to a manufacturing environment):
1. selection of materials.
2. choice of fits, limits, and tolerances between parts - generally, costs increase rapidly as the degree of precision
is increased.
3. selection of plain bearings versus anti-friction bearings - anti-friction bearings are often used for low-volume
productions while inexpensive plain bearings are used in high-volume production.
4. the quality of insulation used to reduce noise.
5. the type and amount of thermal insulation, and the associated size of pipe or duct employed.
6. the degree of precision or quality of purchased parts - a common example is the replacement of a low-class
(low precision) ball-bearing with an equivalent high-class ball bearing. Here a significant increase in life
(effectiveness) can be realized but only with a significant initial cost penalty. We trade off initial cost for perform-

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ance, and the effectiveness-to-cost ratio may increase or decrease depending on whether the cost factor reflects
the total cost.
7. the quality of surface finish employed - this can have a significant effect on cost. If hand finishing is required the
added cost is notoriously large, but a high-grade finish can have a significant effect on the fatigue life of a critically-
loaded part. 8. the type and amount of plating and/or painting which is used to protect a component in an adverse
environment. In general, this leads to large, but necessary, additional costs.
Economy is also closely associated with production volume and with the manufacturing process. The best choice
of manufacturing processes depends on the projected production volume and the desired market life. Production
volume is usually divided into three categories:
• one-of-a-kind
• low-volume manufacturing (less than 250,000 units per year)
• high-volume manufacturing (more than 250,000 units per year)
When a one-of-a-kind machine is produced, as little as possible should be spent on tooling, since hand made parts
are very expensive. Standard or purchased parts usually represent at least 60 percent of the total costs under
these circumstances. In fact, even low-volume products parts should be designed so that they can be manufac-
tured on standard tools.
If high-volume production is indicated, only then can expensive tooling be amortized effectively. The effectiveness
of forging parts, for example, can be realized because the volume of production can easily produce the necessary
money to amortize the high initial cost of the forging dies and forging machine tools.
3 Design Analysis Tools
There are a number of design analysis tools available to predict product performance, life, cost and failure modes
before the prototype stage. Some of these are:
• Finite Element Analysis (FEA)

• Boundary Element Analysis (BEA)
• Computational Fluid Dynamics (CFD)
• Design for Manufacturing (DFM)
• Tools Design for Assembly (DFA)
• Tools Fault Tree Analysis (FTA)
• Dynamic Analysis
• Fluid Flow Network Analysis
Finite element analysis, boundary element analysis, fluid flow network analysis and computational fluid dynamics
programs model products and systems, and allow the designer to determine how a product will perform. Design for
Manufacture and Assembly involves designing products with ease of manufacture in mind. DFM considers the part
count, labor, tooling method, and the actual manufacturing capabilities, while DFA considers the part count, attach-
ment time, and model complexity.
Fault tree analysis specifies an unwanted event (a fire, for example) and then identifies all the elements in the sys-
tem that could cause the event to occur. Dynamic analysis is the analysis of the properties of a running program.

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4 Cost Comparisons
In design situations, the costs which should be compared are not immediate ones, but long-range ones. While as
an analytical designer you will be more directly concerned with the initial product costs, you should keep in mind
that operating costs, maintenance costs, product liability costs, cost of capital (interest lost), etc., as well as initial
costs, will in the long run decide the fiscal success of the product.
Consider the following example.
The Smith Company has decided to manufacture a new product, and in the conceptual design process has nar-
rowed the number of possible manufacturing methods down to two. You, the analytical engineer, must select be-
tween them. The performance characteristics for both machines are similar, so at this point, the cost factor will
have the deciding effect on your final choice. A market study has produced estimates of sales volume, prices, etc.,
and its sale is expected to bring in an average of $200,000 per year, regardless of how the product is made. Fixed
costs (associated with sales, distribution, raw materials, etc.) are expected to average $85,000 per year.
Manufacturing method A uses semi-automatic

machines. The machines will cost $250,000 to
buy and install, and are expected to last 10 years
(and be practically worthless after that time.) The
additional yearly expenses for labor, mainte-
nance, and power - the out-of-pocket expenses -
are $50,000. Manufacturing method B uses auto-
matic machines that are more expensive to buy
($400,000 initial cost and 10 years of life), but cut
out-of-pocket expenses to $30,000 per year.
This includes an annual $25,000 depreciation of the semi-automatic machines, calculated here as the initial cost of
the machine divided by its life span of 10 years. Following the same steps, Method B yields a $45,000 annual
profit.
Thus, it would appear from this analysis that the Smith Company will make $5,000 more per year by adopting
method B.
This is actually not the case!
One very important item has been overlooked: method A requires an initial investment of $250,000, while method
B requires an investment of $400,000. Initial investment is a very different kind of expenditure than, for example,
wages, which are paid on a weekly basis, usually out of current income.
In order to buy machinery, the company must spend money before any products have been made and sold. If
Method A is adopted, the $150,000 savings (compared to purchasing the automatic machines) could be invested
to earn money. At 8 percent, it can earn approximately $12,000 per year. Adding this to the initial profit of $40,000
gives a more accurate profit of $52,000. This is $7,000 more than Method B. Even at an interest rate of 4%,
Method A would be more attractive economically.
The important point is that money can earn money. The question to be asked about any investment, then, is not
simply 'Will it earn a profit?' but rather 'Will it earn a bigger profit here or somewhere else?'
In a problem of this sort, in which it has already been decided that one of a group of alternatives will be used, and
in which some items are the same for all alternatives, it is possible to simplify the arithmetic considerably. You can

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Analytical Design
set up a table or a spreadsheet that includes only those costs that differ for the alternatives, and include an inter-
est-on-investment term as if it were a cost.
5 Minimum-Cost Analysis
If the cost of an alternative is a function of variables that take on a range of values, it is useful to determine when
that cost is minimized. Multiple alternatives that depend on the same variable or variables can be compared on the
basis of their minimum-cost points. This is known as minimum-cost analysis.
Example:
Suppose a mechanical engineering firm is to build a double-walk pedestrian bridge for a 1,200-foot crossing and is
considering two girder designs. The first will have a superstructure weight per foot of
where S is the span between piers. The second will have a superstructure weight per foot of
In both cases, the piers will cost $220,000 each and the superstructure will cost 22 cents per pound. The engineer-
ing firm wants to know the minimum-cost pier spacing for each design.
As the number of piers increases, the amount of superstructure required decreases, and vice versa. This situation
involves increasing and decreasing cost components, the sum of which will be a minimum for a certain number of
piers. The total cost for the superstructure and piers for design 1 can be described by:
Solving this equation yields
By taking the derivative of TC with respect to S, setting it to zero and solving for S, we find that S is 213 feet. Using
this value in the equation above to solve for TC1, we get:
Performing the same steps for design 2 results in S = 224 feet and
On the basis of this analysis, the designer would choose design 2 because of its lower cost.

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Analytical Design
Exercise # 1 - Consider that same situation at two other crossing points, but let W1 = 22(S) + X and W2
= 20(S) + Y, where X and Y range in increments of 100, from 500 to 1,500. Build a spreadsheet to allow
repeated calculations to determine the minimum cost for each situation. When you are finished, see the
solution on the following page.

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Analytical Design
Solution to problem on previous page:
6 Selling-Price Analysis
Overview
According to John H. Batten, former president of Twin Disc Inc., Racine, Wisconsin, profits and jobs are insepara-
ble. He says, "Profits build factories and buy machine tools. Profits support the cost of Research and Development.
Profits perpetuate the economic cycle that has given Americans better educations, more leisure time and a higher
standard of living than any other country in the history of the world. Profit is the food by which a company lives.
Take away that food and everyone suffers."
Profits can be increased by reducing costs, raising productivity and permitting companies to establish and charge a
price that permits a fair and reasonable return on investment. Only profitable companies are able to grow, increase
employment, and pay wages and dividends. Most likely, your job will depend on whether your company is able to
make a profit on its goods and services. You can help by providing accurate cost estimates for the projects in
which you are involved. Sometimes, selling price is the bottom line, and your job in the analytical design process is
to ensure that you can manufacture a product to realize a profit. At other times, your job is to provide your com-
pany with an estimate on selling price, given the costs and the acceptable profit margin. In both cases, you must
conduct a selling price analysis.
We will describe a basic method of analyzing the selling price for a simple system, defined as one which contains a
small number of components. A complex system such as a supersonic transport contains a large number of com-
ponents, usually arranged into what are called sub-systems. The same principles could be applied to estimate the
selling price of a complex system, with a corresponding increase in effort and an uncertainty dependent on how
accurately the costs of the various sub-systems can be quantified.
Costs
When a company develops a new process or product, there are costs associated. Initial costs are one-time ex-
penses, such as labor for installation, material, amortization and overhead, which must be covered at the start of a
project. Operating costs, such as power and maintenance, must be covered as long as the company manufactures
the product or runs the process. The analytical designer must optimize both these costs by choosing the most cost-
effective materials, for example, and the best manufacturing method.

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The analytical designer must also consider warranty costs, since original equipment manufacturers increasingly
are assuming the burden of unusual repair costs for a specified period. Car manufacturers, for example, usually
warranty their parts for a specified time. In some industries, the cost of preventing or settling legal disputes is also
a substantial portion of the product cost.
Production costs can be divided into the following four categories:
1. Direct material costs (dollars per lb x the number of lbs) and purchased parts
2. Direct labor costs (dollars per hour x the number of hrs)
3. Indirect (overhead) material and purchased parts costs
4. Indirect (overhead) labor costs
Direct costs are easy to estimate, but indirect costs are intangible and generally difficult to estimate. Usually, a
company establishes overhead factors to be used in estimating indirect costs, but the numbers are only valid for
that company. As an engineer, you will have to work closely with colleagues in finance to ensure you are using rea-
sonable estimates for both direct and indirect costs.
Additional Costs
Miscellaneous and administrative costs, sometimes called GA (general and administration) costs, cover general
manufacturing overhead items such as:
• advertising and market analysis

• warranty costs
• taxes
• equipment insurance
• lost interest
• equipment depreciation
• administrative and legal costs
• research costs
Depreciation of the physical plant (7 to 10 years) and depreciation of utilities (15 to 20 years) may or may not be
included in this list, depending on whether they are taken into account in the overhead on production labor. Like-
wise, the overhead on engineering and drafting labor may include the necessary physical plant and utilities for the
engineering department.
Facility costs include the necessary physical plant and utilities.
Determining Selling Price

Selling price is the sum of initial cost and profit,
SP = IC + P (Eq. 1)
where IC includes labor costs, overhead on labor, material costs, overhead on material costs of purchased parts,

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Analytical Design
amortization costs of all tooling, engineering and development costs, and miscellaneous overhead items. All costs
and depreciation are included in the determination of initial cost, because corporation taxes are paid on profits.
Initial Cost
It is convenient to define two types of initial costs, one that includes miscellaneous and administrative (M/A) costs,
and one, IC prime (IC'), which does not. This allows us to compute IC as the product of the estimate for IC' and the
M/A factor; IC' is the sum of the production costs multiplied by their respective overhead factors. These production
costs include: material costs, purchased parts, labor costs, and engineering and design costs. To illustrate how an
overhead factor is defined, the following computation of total material costs (TMC) is given.
TMC = Direct Material Costs + Indirect Material Costs
or
TMC = DMC + IMC
If the indirect material costs are 10 percent of the direct material costs, then
TMC = DMC + (0.10)DMC = (1.1)DMC
and the overhead factor on materials is 1.1. Totals for the other production costs are calculated similarly.
Profit
Profit normally varies from 5 percent to 28 percent of IC, depending upon various factors such as risk, competition,
safety and product image. Assuming that profit is 28 percent of the total initial cost, the selling price can be found -
using Equation 1 - to be 1.28*IC.
Example:
Estimation of Selling Price Your company is charged with designing a wheel-less dolly for stockers in warehouses.
The vehicle must operate on the air-cushion principle and use at least some of the intake air to sweep the floor.
The dolly will carry a payload of up to 1,000 pounds. It will be powered by a regular 220V, 60 cycle, 3-phase line.
The cost is to be based upon yearly production of 10,000 units, and your company wishes to attain a profit margin
of 20 percent. You have determined that direct material costs are $94.95/unit, the direct cost of purchased compo-
nents is $71.52/unit, and the overhead factor on labor, materials, and purchased parts is 1.1.
The important design criteria are that the dolly be lightweight and affordable - less than $375. Is this feasible? Let's
find out.
You can calculate the total production costs as shown above. You know direct costs of materials and purchased
components. Assuming that labor costs $4.50 per hour, and that each unit takes 26 hours to make, direct labor
costs can be calculated as:
DLC = 26 hrs x $4.50/hr = $117 per unit
Then

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Analytical Design
ICT = (DLC +DMC + DPC)*OVH or
ICT = ($117+$94.95+$71.52)*1.1 = $311.82 per unit
You calculate the selling price for a profit of 20 percent of total initial cost, Using Equation 1. The per-unit selling
price is:
SP = IC + P = 1.2(IC) = $374.18 per unit
You can do it, but only if your assumptions were accurate or conservative.
In general, cost information varies with time and location. Usually, manufacturing costs will be lower if items are
obtained locally.
Exercise #2
$4.50 may strike you as a ridiculously low hourly wage to use in a calculation, and it is, by U.S. standards. It may
not be possible to produce this wheel-less dolly in the United States if the selling price needs to be $375.
Assuming that you have been given a maximum selling price of $475, what is the highest hourly wage rate that will
allow you to achieve that, assuming that material, purchased components, the time required to make each unit,
and indirect costs remain constant? In how many countries would it be economically feasible to produce the dolly?
For your analysis, use the 2002 costs available in the "Hourly compensation costs in U.S. dollars for production
workers in manufacturing, 30 countries or areas and selected economic groups, selected years, 1975-2002," avail-
able from the Bureau of Labor Statistics at http://www.bls.gov/news.release/ichcc.t02.htm.
See next page to view the solution.

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7 Conclusion
Economics is a central concern in any engineering project, so you must understand en-
gineering economics equations and the impact of your design choices on cost as well
as performance. While these equations are easy to manipulate and simple to grasp,
their complexity increases as the component or machine being analyzed requires spe-
cial machining processes, treatment for manufacture, etc. Along with the complexities in
technical considerations are the uncertainties in making accurate estimates for material,
labor, operating, and component costs, especially if you are considering diverse loca-
tions across the globe.
The implications of engineering economics are vast, and affect many aspects of your
work, as more and more manufacturing takes place in countries around the globe, to capitalize on lower wage and
material costs.
Analytical designers aim to get the best performance for the least number of dollars, but they must also keep in
mind that it is in their company's best interest to give value to the customer at a fair price. Their designs should in-
corporate reasonable safeguards to minimize risks to the consumer, for example, to reduce product liability costs.
As competition increases, overall costs or life cycle costs will be of increasing interest to analytical designers and
their managers. Engineers are estimating costs much earlier in the design process than they once did. It's vitally
important to work closely with finance and marketing experts in the cost analysis of projects, to ensure you are us-
ing accurate estimates and making reasonable assumptions in your analyses. Many other factors contribute to
your ability to cooperate in this manner, e.g. communication and negotiation skills and your ability to present the
results of your analysis clearly and concisely.
In our free enterprise system, in the long run, your career and salary will depend on whether your company is able
to realize a profit. Accurate estimation of costs will help predict whether a profit is possible. Money will always be a
constraint, and understanding how to work with it will put you ahead in the game!

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Resources
1) Danak, Amita, Engineering Economics: Principles and Concepts, developed at The Ohio State University's De-
partment of Mechanical Engineering under the Gateway Coalition, sponsored by the National Science Foundation.
2) Thuesen, G.J. and W.J. Fabrycky, Engineering Economy, sixth edition, Englewood Cliffs, NJ: Prentice-Hall Inc.,
1984.
3) Veshagh, Ali, Analytical design techniques. (1997) Retrieved November 4, 2003 from http://www.warwick.ac.uk/
atc/cda/people/ADT.html.

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Analytical Design
Glossary
Amortization - The gradual elimination of a liability, in regular payments over a specified period of time.
Depreciation - A deductible non-cash expense intended to allocate the cost of an initial investment over a number
of units of production in order to more accurately assess the full cost of the product.
Direct cost - A cost directly attributable to the manufacturing of a product.
Indirect costs - A cost not directly attributable to the manufacturing of a product.
Life cycle costs - All the costs associated with a project, from project inception to disposal of equipment.
Overhead - All manufacturing costs other than direct labor and materials.
Profit - The positive gain from an investment or business operation after subtracting for all expenses.
Time value of money - The idea that a dollar now is worth more than dollar in the future, even after adjusting for
inflation, because a dollar now can earn interest or otherwise appreciate until the time the dollar in the future would
be received.
Warranty - An agreement between a buyer and a seller of goods or services, detailing the conditions under which
the seller will make repairs or fix problems without cost to the buyer.

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Parametric Design
TABLE OF CONTENTS
Introduction 37
Part 1: Design Phases 37
Part 2: Parametric Design Example 39
Part 3: Systematic Parametric Design 42
Part 4: Parametric Design Exercise 46
Resources 50
Glossary 51
Quiz 53
Quiz: Answer Key 55

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Parametric Design
Introduction
Imagine all the decisions that go into designing a new automobile such as deter-
mining body shape, engine size, suspension configuration, steering linkages, tire Educational Goals
type and size, legroom, and type of transmission. As mechanical engineers we
make many decisions as ideas are realized in new products. After completion of this
module, you will be able to:
Engineering design can be described as the set of decision-making processes and
activities used to determine the form of a product given a customer's desired func- • Describe the types of
tion. Parametric design is one phase in the development of a product, including decisions made in vari-
perhaps: formulation, concept design, configuration design, parametric design, ous design stages
and detail design. What makes parametric design special and particularly chal- • Identify different types
lenging is that we employ analytical and experimental methods to predict and of parameters
evaluate the behavior of each design candidate. For example we use Newton's • Identify and character-
laws of motion and the conservation of energy principle to predict the acceleration ize design variables
of an automobile design as we increase or decrease engine horsepower. • Establish solution
evaluation parameters
Let's briefly examine a five phase design process and how parametric design fits from engineering char-
into the big picture. Then we will examine a parametric design example and con- acteristics
clude with a discussion of the steps in systematic parametric design. • Develop cause and
effect relationships be-
tween design variables
and solutions which
constrain design vari-
ables and/or functional
performance
• Formulate, generate,
analyze and evaluate
alternative designs
• Use spreadsheets and
iteration to optimize a
design
1 Design Phases
A product design evolves over time in phases from the identification of a customer need to the realization of the
finished product (Eggert, 2004). Let's consider the following situation:
Our customer owns and operates a custom built machine tool which has a flywheel that cannot be stopped other
than by turning off the power and waiting about 90 seconds for the flywheel to spin-down. The customer considers
this a safety hazard and would like to actuate some device that would bring the flywheel to a quicker stop. The fly-
wheel is 4 feet in diameter, weighs 1000 lbs, is made of 4330 steel, and spins at 3000 rpm. We have been hired to
design and fabricate a solution to stop the flywheel more rapidly.
1) Initially, we investigate the stated customer need and develop a list of objective design specifications. For exam-
ple, we obtain details of the existing flywheel geometry and operating conditions in the factory including space

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Analytical Design
Parametric Design
available and electrical power. Additionally we try to clarify the type of performance that would satisfy the customer.
For example, how quickly should the flywheel stop? Would the customer be fully satisfied with 5 seconds and un-
satisfied if longer than 20 seconds? We might do some simple calculations, using simple relations from physics, to
better understand the overall mechanical forces and or torques of the system. Our activities in this initial phase fo-
cus largely on problem formulation. In other words, we are not trying to solve the problem, only understand it.
2) During the concept design phase we synthesize a variety of candidate working principles or concepts and their
abstract embodiments. For example, we might consider the following three alternative concepts:
a) surface friction as the working principle and a disk and caliper brake as the embodiment.
b) air friction as the working principle and fan blades as the embodiment.
c) opposing magnetic fields as the working principle and an electric generator as the embodiment. To complete the
concept design phase we develop a list of criteria to evaluate the concepts and select one for further development.
3) Then, we generate a variety of configurations including the arrangement of individual components or features on
parts. For example, assume that we select a disk and caliper brake as the design concept, then during configura-
tion design we consider alternative brake locations and relative sizes of the disk and caliper. No specific values are
chosen. Only general arrangements and relative dimensions. Configuration design, therefore, is the design phase
when alternative configurations are generated, analyzed and evaluated.
4) During the parametric design phase, we determine values for the controllable parameters, called design vari-
ables. Design variables deal with the form of a design, that is its shape, configuration, size, material and manufac-
turing process. For example, we determine specific values for: brake rotor diameter (outer), rotor thickness, and
brake pad width. We also select pad material type, operating pressure of the hydraulic piston and rotor manufactur-
ing processes. Then, we analyze the performance using conventional machine design formulas, equations from
physics, computer programs and or physical experiments. We check the analysis results to assure that all the con-
straints are satisfied. If not, we iterate, or redesign by selecting new values for the design variables. Then we re?
analyze and evaluate until an optimal design is achieved.
5) During the detail design phase, we determine the remaining specifications necessary to manufacture a product
such as the surface finish, pad bonding resin, and assembly procedures. We might also fabricate and test a num-
ber of critical parts. We also prepare a complete package of manufacturing specifications including detail and as-
sembly drawings, bill of materials, manufacturing process recommendations, prototype performance test results,
and product specifications such as overall height, width, depth, weight, and expected performance. The flow of in-
formation and decisions made during the five phases is summarized in figure 1. Note that the solution to a para-
metric design problem is a set of values for the design variables that do not violate any constraints and that opti-
mize product performance and customer satisfaction.
Figure 1. Information flow through the five design phases. Decisions made during a design phase are used as in-
put into the following phase.

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Parametric Design
2 Parametric Design Example
Eight bolts will be used to fasten an access cover plate to a chemical reactor. The reactor vessel normally operates
at a temperature of 350° and an operating pressure of 500 psi. Each bolt will be under tension and required to with-
stand a 4,000 lb. design overload, which is four times the typical operating load of 1,000 lbs. During configuration
design phase the design team selected a hex-head bolt as shown in Figure 2. Some of the design variables for
bolts include: bolt diameter d, overall length L, number of threads per inch, and type of material. We have been
asked to determine feasible values for the bolt diameter d.
Figure 2 Hex-head bolt parameters

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Parametric Design
The primary function of a bolt is to clamp

parts together so that they can be later dis-
assembled for maintenance or repair. As it
is tightened, a tensile force develops over its
length. The greater the force, the better the
clamping will be. Also, since the head of the
bolt consequently develops higher friction
forces, there is an improved resistance to
loosening. This is especially important for
cover plates of chemical reactor vessels that
contain liquids or gases under pressure.
The greater the clamping force the safer its
operation.
However, a bolt can fail in a number of ways including: 1. the bolt head can twist off during tightening, 2. the bolt
threads can strip off, and 3. the bolt can experience excessive tensile loads that it permanently elongates or even
fractures. For this example, let's consider only the last mode of failure, i.e. excessive tensile load. Therefore we
need to find diameter values that result in a bolt that is strong enough.
From courses in Engineering Science we learn that the ability of a bolt to withstand a tensile force without a perma-
nent measurable elongation or "set" is called the proof
load , and is directly proportional to cross section area A of the bolt and the selected material's proof
strength , by the relation:
The Society of Automotive Engineers (SAE), categorizes proof strengths of bolt materials as Grades 1 thru 9, with
strengths ranging from 33,000 psi to 120,000 psi, respectively.
Proof strength
is a parameter that we have some control over since we are free to choose a specific "Grade" of material.
Therefore Grade is often another design variable, in addition to diameter. The cost of a bolt is usually pro-
portional to the grade. Therefore to conduct a thorough analysis we would need to consider different grades as well
as diameters. For simplicity, however, let's assume that we select a Grade 5 material, whose proof strength is
85,000 psi.
For our design problem we need to design each bolt to survive the 4,000 (lbs) overload. That means that each bolt
should have a proof load that is greater than the 4,000 (lbs). This condition becomes a constraint for our design
problem and can be expressed mathematically as:
By substituting equation (1) into the constraint equation (2), we obtain:

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Parametric Design
Further, the cross sectional area of a cylinder is related to diameter d as:
We can now substitute for area and proof strength to obtain the following relation as a function of our design vari-
able d as:
Then by rearranging, we find that
and further, that
Using a machine design handbook we round up to the nominal size 0.25 in. so that a standard size can be pur-
chased .
(Don't we want to base this on the smallest diameter, which is the thread root diameter?)
Note that we started the formulation by substituting equation (1) into the constraint equation (2) along with the area
the equation (4) to arrive at the final simplified constraint equation (7) in one variable. We can use the equations to
produce a graph of proof load versus diameter. As shown in Figure 3, as we increase bolt diameter, the proof load
increases exponentially. In our problem, the required proof load is constrained to be greater than or equal to 4,000
(lbs). This is shown as a horizontal line intersecting the ordinate access at 4000 lbs. The minimum theoretical fea-
sible diameter is shown as the dashed line at 0.245 (in) and therefore, satisfies the constraint. Selecting a diameter
larger than 0.245 (in) would improve the safety and reliability of the design and should be considered in the final
design.

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Parametric Design
Figure 3 : Bolt proof load versus diameter

This parametric design problem is rather
simple, in that we have only one governing
constraint in one design variable. It was
shown that by rearranging the analysis
equations we could directly solve for the
diameter to satisfy the constraint.
The process of rearranging a system of

equations can be called inverse analysis.
The parametric design of most mechanical
parts, however, is usually more difficult
because there are a large number of con-
straint equations. And further, in some
cases, it is not mathematically possible to
rearrange the equations to explicitly solve
for the design variables.
One way to handle these difficult systems

of equations is to iterate. By this, we mean
that we substitute trial values of the design
variables for a candidate design into the constraint equations to ensure they are satisfied. If all the equations are
satisfied it is called a feasible design candidate. We reiterate to produce a collection of feasible designs.
Then we optimize our design by selecting the best candidate from the set of feasible candidates using evaluation
criteria such as minimum cost, least weight, and most miles per gallon.
In our example problem above we could have chosen a larger diameter. But we know from experience that that
would result in higher costs. So we implicitly optimized our design by selecting the smallest diameter bolt that was
still feasible.
3 Systematic Parametric Design
As design problems become larger and more complicated we need to be systematic in our approach so that we
can efficiently: 1) set up the problem correctly and 2) actually find feasible solutions and 3) select the optimal solu-
tion. This will help us to complete better designs with less effort.
Systematic parametric design has five major steps as shown in Figure 4 (Eggert, 2004):
Step 1. Formulate the problem

Step 2. Generate alternative designs
Step 3. Analyze/Predict the performance of the alternatives Step 4. Evaluate the performance of each alternative
Step 5. Refine/Optimize
Step1: Formulate the problem

As we start a parametric design problem, we need to familiarize ourselves with the problem parameters and also
plan ways complete the design. We gather appropriate data, clarify important details, consider different analytical
and or experimental analyses, and then plan how to carry out the analysis and evaluation. All these activities relate
to problem formulation.

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Solution Evaluation Parameters / Performance parameters:
We select quantitative engineering characteristics to measure the predicted performance of how a product functions
by reviewing available information such as the Engineering Design Specifications and the House of Quality chart.
These solution evaluation parameters (SEPs) are chosen as criteria to evaluate how well a candidate design
"solves" the design problem. Solution evaluation parameters are quantitative characteristics that depend upon the
product and part being designed, and often include: cost, weight, speed, efficiency, safety, and reliability. Note SEPs
measure function (i.e. performance) not forms. We also denote symbols, units (of measurement) and any lower and
or upper limits of the parameter. And lastly, we derive or look up analytical equations that predict or estimate product
performance. We can alternatively conduct experiments to develop these relations.
In the bolt example, the customer needs the bolt to clamp the cover to the reactor vessel. The clamping force can be
estimated by assuming that the bolt is tightened to the limit of the proof load. Therefore,proof load is an example of a
solution evaluation parameter. (Something is wrong with tbis sentence-maybe something is missing.) The higher it
is, the better the clamping force, and the more satisfied the customer. We selected Fp as its symbol and pounds-
force as the units. A lower limit, 4,000 (lbs), is also established. The bolt proofload is constrained to be larger than
4,000 (lbs). An analytical formula was used to predict the proof load, although experimental tension tests can also be
performed.
Figure 4 Systematic parametric

design (right)
Design variables (DVs)
Parameters, under the control of

the designer, which influence the
candidate's performance, are
called design variables. Design
variables usually define part di-
mensions, tolerances and or ma-
terial properties, more broadly
called a product's "form." In addi-
tion to the design variable names,
we establish appropriate symbols,
units, and upper and or lower lim-
its or bounds.
Diameter was selected as the de-

sign variable. Larger diameters
result in larger areas and im-
proved performance. Standard
bolt sizes were identified using
handbook data.
Problem definition parameters

(PDPs)
Parameters that describe specific

conditions of use, such as operat-
ing conditions are called problem
definition parameters. In addition
to their names, we establish ap-

44
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Parametric Design
propriate symbols, units, and values.
The operating pressure of 500 psi and the limiting temperature of 350°F are examples of PDPs for the bolt exam-
ple.
Preliminary plan for solving the problem
For more involved problems, we make a preliminary plan based on considerations including:
1) whether we have analytical models and formulas for our problem
2) whether the assumptions used in our models are similar to our problem
3) whether we need to conduct pilot scale or bench-top experiments to establish analytical formulas
4) the time and money available to solve the problem
5) whether precise or "ball-park" computations are required
6) pertinent industry standards
7) whether we are competent to complete the required design. Recognizing the simple nature of the bolt calcula-
tions, we dove into making a few calculations without making a plan. In an industrial setting, not making a plan
could cause us problems later on.
For larger design problems, design teams will consider the items above and prepare a design project proposal for
upper management to review and approve before any design work begins. Design proposals include items such as
a background information, goals or mission of the project, a scope of work (i.e. list of work tasks), schedule and
budget. Regardless of the size of our project, however, it is always a good idea to prepare an outline of what we
are going to do and when and how we are going to do it.
Step 2: Generate alternative designs
We select different values for the design variables. Each set of values constitutes a different candidate design.
These values can come from our own experience, our company's experience or from industry standards. And in
some cases we make educated guesses.
Step 3: Analyze the alternative designs
We next predict the performance of each candidate design using analytical and or experimental methods:
When using analytical methods, we recall or look up formulas from physics, mathematics, and the engineering sci-
ences. Sometimes computer-aided-design packages such as finite element analysis, computational fluid dynamics,
and motion simulation are used.
If we do not know the relationship between a design variable and a solution evaluation parameter, such as the bolt
diameter and proof strength, we could conduct tension tests using different sized bolts. In these cases or when the
complexity of a design is beyond the accuracy or assumptions of our analytical models, by using experimental
methods we build scale models and or full-size models of the product or critical parts of the product, and test their
performance.

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Parametric Design
The performance of each design candidate is checked to ensure that all constraints are satisfied. Design candi-
dates whose design variable values satisfy the constraints are called feasible designs. If any constraints are vio-
lated, we iterate back to generating another set of design variable values and then analyze those.
The formula for the area of a cylindrical cross section and the formula relating the proof load of a bolt to its area
and strength were used in the bolt example. Feasible diameters resulted in expected proof loads larger than 4,000
(lbs). Since the formulas were straight forward, we were able to juggle the equations into a sequence that did not
require iteration.
Step 4: Evaluate the results of the analyses
The feasible designs are evaluated to determine which one is the "best" design. Usually one or more criteria are
identified in the formulation phase and used to select the "best" feasible design alternative.
The proof load was established during formulation as a rough measure of customer satisfaction. We assume that
the higher the proof load, the more satisfied our customer would be. That would mean that a large bolt diameter
should be chosen as the "best" design. This however, ignores other aspects of real design problems such as
weight and cost limitations, and "standard" or "required" safety factors. Unfortunately, we do not know how the cus-
tomer feels about safety versus cost. We can only surmise that she might be satisfied with the smallest bolt that
meets the force constraint. In real parametric design problems, however, we should make every effort to ascertain
what criteria the customer considers as important.
Step 5: Refine / Optimize
If no feasible design candidates exist, we select new values for the design variables. These are subsequently ana-
lyzed for feasibility as shown by the solid "re-design" iteration loop shown in Figure 4. If after considerable effort
has been expended, we cannot find any feasible candidates, we might ask whether our design specifications are
too restrictive. Perhaps one or more constraints could be relaxed, for example. In doing so we are "re-specify"-ing
the problem. As we substitute new values for each of the design variables into the system of analysis equations we
begin to learn how each design variable affects performance. In other words, we become familiar with the causes
and effects, and can logically reason the physics of the problem. Using this "physical reasoning," we can
"guesstimate" new values that satisfy the constraints (Dixon and Poli, 1995). Then, the feasible candidates are
evaluated for optimality.
When parametric design problems have three or more design variables it may difficult to physically reason new
values. Faster and more efficient methods are needed such as optimal design methods that automatically re-
generate new values of the design variables to improve expected performance and satisfaction (Arora, 1989; Rao,
1984; Reklaitus et. al. 1983, Siddall, 1982; Vanderplatts, 1984). Optimization methods use numerical search algo-
rithms to locate and evaluate feasible points in the design space. Optimization is shown as the dashed re-generate
loop in Figure 4.
For single attribute optimization, a single evaluation criterion is chosen, such as minimizing the weight of a part.
The criterion is a function of the design variables, and is called the objective function. For example the weight of a
bolt is a function of its diameter and density. Optimization methods are built into many computer-aided-design pro-
grams. In addition, Excel's Solver can be used to optimize many typical design problems.
We can also use multi-attribute optimization methods to solve parametric design problems where more than one
criterion is needed to evaluate the "goodness" of a design. For example we may wish to select a bolt diameter that
is a balance between more safety and lower profits. These two attributes trade-off against each other, as one in-

46
PPC
Parametric Design
creases (safety) the other decreases (profits).
4 Parametric Design Exercise
You have been asked to design a tank to store chemicals. During the formulation phase your design team investi-
gated the customer's requirements and learned that the storage tank:
• customer will be satisfied with a least cost tank for the required storage volume
• must store 200 cu. meters or more of liquid at air temperature
• air temperatures range between -10 and 85 degrees C
• must be made of rolled and welded stainless sheet steel whose material and fabrication costs are $350/m2 of
surface area
• tank height is restricted 20 m due to building restrictions
• tank must be taller than 5 meters
• building codes restrict the diameter to less than 12 m
• tank height must be greater than two times the diameter to facilitate cleaning
During configuration design your design team decided upon a cylindrical shape, closed at both ends, with diameter
D, and height H.
1. Formulate the problem by reviewing the problem information and determine the design variables, solution
evaluation parameters(s), and problem definition parameter(s). Select a symbol and units for each variable. Deter-
mine constraints and specify upper and or lower limits. Select one SEP as an evaluation criterion for choosing the
optimal design. Determine analytical relations which link the design variable(s) to the solution evaluation parame-
ter. Prepare a brief plan of your solution method. Summarize this information before your begin solving the prob-
lem.
2. Prepare a spread sheet to analyze and evaluate your candidate designs. Label the spreadsheet well including
all parameters names, symbols, units, limits if any. Test your spreadsheet cell formulas by hand calculating a few
trial values. Use your spreadsheet to analyze and evaluate the six points given below (pts 1-6). Write in your
spreadsheet results on the summary table below right.
3. Examine your results. Is there any pat-

tern? Can you physically reason how the
design variables influence the solution
evaluation parameter? Generate three more
candidate designs (points a, b and c), by
guessing and or logical reasoning to guide
your re-design. Print out a copy of the
spreadsheet for the last design point tried.
4. Select the feasible design alternative that

results in the least cost.
For the solution to this exercise see following

page:

47
PPC
Parametric Design
Solution to parametric design exercise
Formulating
The performance of the Solution Evaluation Parameter(s)
tank can be characterized Name symbol lower upper units
using four solution evalua- Enclosed volume V 200 n/a cu m
tion parameters: enclosed Area A n/a n/a sq m
volume, surface area, Cleaning height Hc 2*D n/a m
cleaning height and cost. Cost C n/a $
Each of these SEPs is in-
fluenced by the two control-
Design Variable(s)
lable design variables: tank
diameter and height. Name symbol lower upper units
Diameter D 0 12 m
Height of tank H 5 20 m
Problem Definition Parameter(s)

Name symbol value units
cost/area Ca 350 $/sq m
air temp T -10 to 85 C
Recalling pertinent relations from mathematics we can derive the following analytical relations.
A = top + bottom + side V = area * height

πD 2 πD 2 πD 2
A= + + πDH V = H
4 4 4
Cost = area * cos t / area

Cleaning Ht ≥ twice * Diameter
⎛ πD 2 ⎞
C=⎜ + πDH ⎟350 Hc ≥ 2 D
⎜ 2 ⎟
⎝ ⎠
We recognize a constraint on performance/function in that the tank must store 200 cubic meters or Volume >= 200
cu m. We also can identify constraints on form in that the cleaning height is limited to twice the diameter and that
the diameter and height have upper and lower limits.
Our plan of solution will be to develop a spreadsheet that we can iterate different combinations of diameter and
height into the system of equations, check for feasibility and then select the optimal candidate.
Solving
Next we develop a spreadsheet to iterate different values of the design variables, check their feasibility and select
the best candidate. Link to the following spreadsheet to see an example: ASMEChemTank.xls. A sample printout
in reproduced on the following page.

48
PPC
Parametric Design
Parametric Design - Chemcial Storage Tank Problem
Solution Evaluation Parameter(s)

name symbol lower value upper units
Enclosed volume V 200 200.0013 n/a cu m
Area A none 198.8 n/a sq m
Cleaning height Hc 10.06 n/a m
Cost C 0 69571.87 n/a $
Design Variable(s)
name symbol lower value upper units
Diameter D 0 5.031 12 m
Height of tank H 5 10.062 20 m
Problem Definition Parameter(s)

name symbol value units
cost/area Ca 350 $/sq m
air temp T -10 to 85 C
Constraints satisfied ?
Parameter variable value relation limit value (y/n)
Volume V 200.00 >= V min 200 y
Cleaning ht. H 10.06 >= Hc max 10.06 y
Diameter D 5.03 <= D max 12 y
Height of tank H 10.06 <= H max 20 y
Height of tank H 10.06 >= H min 5 y
Solution design variables feasible? optimal value

Pt # D (m) H (m) (y/n) C ($)
1 0 0 n 0
2 2 5 n 13194
3 5 5 n 41233
4 5 10 n 68722
5 6 12 y 98960
6 5.5 11 y 83154
a
b
c
Optimal 5.030 10.060 y 69572
R. J. Eggert
12/31/2004
For each design candidate, we enter the design variable values into the yellow shaded cells. The volume, area,
cleaning height and cost are automatically calculated and shown in the blue shaded cells. We then scan down the
constraint columns to see whether any constraint is violated. If so, that candidate is not feasible and must be re-

49
PPC
Parametric Design
jected.
We see that when substituting larger values of D and H, we begin to satisfy the minimum volume constraint. In fact
candidates # 5 and 6, although somewhat costly do just that. Evaluating the two feasible alternatives, we would
select #6 as the “best.”
Using Excel’s Solver feature (Gottfried, 2000), we can set up the problem to automatically iterate different values of
D and H in the solution D=5.03 m and H=10.06 m, and a least cost of $69,572.
5 Conclusion
• Parametric Design includes decision making processes to determine the values

of the design variables that satisfy constraints and maximize the customer satis-
faction.
• Design phases include formulation, concept design, configuration design, para-
metric design and detail design.
• The five steps in parametric design are: 1. formulate, 2. generate, 3. analyze. 4.
evaluate, and 5. optimize
• During parametric design analysis we predict the performance of each alterna-
tive, reiterating when necessary to assure that all the candidates are feasible.
• During parametric design evaluation we select the best feasible alternative.
• Design problems often exhibit trade-off behavior, necessitating compromises

50
PPC
Parametric Design
Resources
Arora, J. S., Introduction to Optimum Design, McGraw-Hill, New York, 1989.
Dixon, J. R., and C. Poli, Engineering Design and Design for Manufacturing, Field Stone Publishers. Conway. MA.
1995.
Eggert, R. J. Engineering Design, Prentice Hall, New Jersey, 2004
Gottfried, B. S., Spreadsheet Tools for Engineers-Excel 2000 Version, McGraw-Hill, 2000
Rao, S. S. Optimization: Theory and Applications, 2nd. Edition, Wiley, 1984.
Reklaitis, G. V., Ravindran, A. and Ragsdell, K. M., Engineering Optimization: Method and Application, Wiley &
Sons, Inc., 1983.
Siddall, J. N., Optimal Engineering Design: Principles and Application, Marcel Dekker, Inc., New York, 1982.
Ullman, D. G., The Mechanical Design Process, 2d ed., McGraw-Hill, New York. 1997.
Vanderplaats, G. N., Numerical Optimization Techniques for Engineering Design, McGraw Hill, New York, 1984.

51
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Parametric Design
Glossary
Glossary (from Engineering Design, by Rudolph Eggert; Prentice Hall, 2004. By permission of Pearson/Prentice
Hall.)
concept design - A phase of design when the physical principles are selected; an abstract embodiment of a work-
ing principle, geometry and material.
configuration design - A phase of design when geometric features are arranged and connected on a part, or
standard components or types are selected for the architecture; the selection and arrangement of features on a
part; or the selection and arrangement of components on a product. constraints Physical, economic or legal restric-
tions on product form or function.
customer requirements - Specifications for the design of a product that originate from the customer rather than
the company. Customer requirements include functional performance, operating environment, human factors,
safety, robustness, maintenance and repair.
customer satisfaction - A measure of how well a product fulfils customer desires. decision making process The
process used to identify alternatives and the outcomes associated with each alternative; and to judge the out-
comes to make a selection.
design - A set of decision making processes used to determine the form of a product given the functions desired
by the customer; processes to prescribe the sizes, shapes, material compositions, and arrangements of parts so
that the resulting machine will perform a required task; a package of information such as drawings and specifica-
tions sufficient to manufacture a product.
design concept - The abstract embodiment of a physical principle, material and geometry; same as concept de-
sign. design evaluation The portion of the design process that assesses or weighs results from the analyses to de-
termine which alternative is the best.
design phase - A period or stage in the design of a part or product; e.g. formulation. concept design phase, con-
figuration design phase, parametric design and detail design phase.
design process - The problem solving process used to formulate a design problem, generate alternative solutions,
analyze and evaluate the feasibility and performance of each alternative and select the best alternative; reiterating
if necessary.
design variable - A parameter that can be arbitrarily selected by the designer that influences the behavior of the
design candidates; a controllable variable.
detail design - A phase of design that results in the preparation of a package of information that includes drawings
and specifications sufficient to manufacture a product.
engineering analysis - Using tools such as analytical models or empirical equations to predict the performance or
behavior of an object or system.
engineering design specification (EDS) - Document containing a comprehensive description of intended uses
and functional requirements of a product.
evaluating - The process of rating or assessing the predicted performance of feasible design candidates against
established evaluation criteria: used to determine the "best" design alternative.

52
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Parametric Design
feasible design - A design candidate that meets design specifications, and or satisfies design constraints.
formulation - A phase of design in which customer and company requirements are determined, engineering de-
sign specifications prepared, and a solution plan is prepared.
inverse analysis - Rearranging analysis equations, taking the inverse, to solve for "form;" e.g. given a=F/m, a
(acceleration) is the function, rearranging we can the form (mass) m=F/a.
multi-attribute optimization - A method to optimize a problem having more than one objective function.
objective function - A mathematical function of design variables; used to estimate the merit of alternative designs.
optimize - Selecting the best feasible design.
parametric design - A phase of design that determines specific values for the design.
problem definition parameter - A quantity whose value imposes a specific condition of use or manufacture.
redesign - Selecting new values for the design variables, reanalyzing, and reevaluating, to obtain better perform-
ance and improve customer satisfaction; the process of revising any portion of an existing product's form (i.e.
shape, configuration, size, materials or manufacturing processes).
respecification - Changing design specifications; usually because few, if any, feasible designs are possible.
solution evaluation parameter - Quantity that measures how well a product meets customer or company require-
ments; engineering characteristic chosen to evaluate candidate designs.
tradeoff - Compromise made between two favorable outcomes.

53
PPC
Parametric Design
Quiz
1. The set of decision making processes and activities used to determine the form of an object given the functions
desired by the customer is called
a) form
b) function
c) analysis
d) design
2. Restrictions on the function or form of a design candidate are called:

a) parameters
b) variables
c) constants
d) constraints
3. We make decisions about a product’s physical principles of operation and their abstract embodiment, geometry
and material in the:
a) detail design phase
b) configuration design phase
c) parametric design phase
d) concept design phase
4. We prepare comprehensive product specifications, drawings , performance tests and bills of materials in the:
a) detail design phase
b) configuration design phase
c) parametric design phase
d) concept design phase
5. Which of the following is not one of the five phases of design:

a) configuration design
b) artistic design
c) a concept design
d) formulation
e) detail design
6. Design variables are parameters that:

a) describe specific conditions of use
b) measure product performance
c) under the control of the design engineer and influence performance
7. Values of the design variables that satisfy the constraints are said to be:
a) infeasible
b) non-optimal
c) feasible
d) precise

54
PPC
Parametric Design
8. When we assess the feasible designs to determine the best design we are really:
a) analyzing
b) designing
c) evaluating
d) generating
9. A quantity that measures how well a product performs, or and engineering characteristic chosen to evaluate
candidate designs is a:
a) design variable
b) problem definition parameter
c) constraint
d) solution evaluation parameter
10. The collection of methods to automate the generation of design variable values is called:
a) robust design
b) safe design
c) optimal design
d) synthesizing

55
PPC
Parametric Design
Quiz: Answer Key
1. D
2. D
3. D
4. A
5. B
6. C
7. C
8. C
9. D
10. C

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PPC

The ASME Professional Practice Curriculum:

It is a major aim of ASME to help colleges of engineering guide the development of

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The ASME Professional Practice Curriculum:

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The ASME Professional Practice Curriculum:

Volume 1 The Project Management Series

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The ASME Professional Practice Curriculum:

The Engineering Design Series

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Part 1: Deciding Which Project to Propose 7

Part 2: Cash Flow Analysis 8

Part 4: Sample Calculation 12

Part 5: Financial Parameters 14

Part 7: Sensitivity Analysis 16

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1 Deciding Which Project to Propose

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2 Cash Flow Analysis

Cash Flow Analysis Equation

ACF = Annual cash flow

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These terms are defined as follows:

Turning to the notes at the bottom of Table 1:

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2. Year #0 presents an opportunity to instantaneously make a capital investment the

3. Working capital comprises cash in company accounts, the cost-of-goods-sold portion

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What Do the Parameters Mean?

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Evaluating the financial implications of a project is a relatively straightforward process:

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where e is the inflation rate.

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Part 1: The Impact of Design on Cost 21

Part 2: Component and System Optimization 23

Part 3: Design Analysis Tools 25

Part 4: Cost Comparisons 26

Part 5: Minimum-Cost Analysis 27

Part 6: Selling-Price Analysis 29

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In today's competitive world, companies can no longer afford such an ineffective

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1 The Impact of Design on Cost

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REF: The Mechanical Design Process, Dav

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2 Component and System Optimization

In reviewing the design of a component, some general questions to ask are:

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• Do dimensional tolerances permit selection of the most economical production methods?

4. the quality of insulation used to reduce noise.

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3 Design Analysis Tools

• Finite Element Analysis (FEA)

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