AMOUD UNIVERSITY

FACULTY OF COMPUTING & INFORMATICS

DEPARTMENT OF BUSINESS IN INFORMATION TECHNOLOGY

Management Mathematics

LECTURE NOTES

CHAPTER SEVEN

APPLICATIONS OF CALCULUS IN BUSINESS

CLASS: Senior BBIT

SECOND SEMESTER

ACADEMIC YEAR: September, 2020 – July, 2021

LECTURER: Mr. Abdiqani M. Aden (Msc in Research & Analysis; Msc in Pure Mathematics)
 Stationary Points
 Stationary point is a point on a curve where the gradient is zero. This means, the gradient of
the tangent is parallel to the x-axis. Stationary point is also called turning point.
 The stationary points are also known as turning points.
 There are 3 types of stationary points: maximum points, minimum points and points of
inflection.
 Look at diagram below:

Note that:
At maximum
 At the maximum point, the gradient of the curve is positive at the left of the stationary point
through zero at stationary point and negative at the right of the point.

At minimum
 For the minimum point, the gradient of the tangent goes from negative through zero to
positive.

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At inflection point
 An inflection point is a point on a curve at which the sign of curve changes from Concave
upward to concave downward or vice versa. The signs of the gradient at the point of
inflection are same at both sides (left and right side) of the gradient. The two diagrams below
are summarized this information.

Finding the Stationary Point

To find stationary points, consider the following steps:
1. Make derivative of the given function
2. Put the result equal to zero
3. Solve the equation

Example (1)
Find the coordinates of the stationary points on the curve y = x2 – 8x + 10.
Solution
y = x2 – 8x+10

= 2x-8 at stationary point =0

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2x-8 = 0
2x = 8
X=4
Find y when x = 4
y = x2 – 8x+10
= 4 - 8(4) +10
= 16-32+10
=26-32
= -6
Therefore, the coordinate of stationary point of the curve is (4, -6)

Example (2)
Find the coordinates of the stationary points on the curve y = 2x3 – 3x2 – 12x + 5.
Solution
y = 2x3−3x2−12x+5

= 6x2−6x−12 at stationary point =0

0 = 6x2−6x−12
0 = x2−x−2 (by dividing each term by 6)
(x-2)(x+1) = 0
Thus, x = 2 or −1
When x = 2,
y = 2x3−3x2−12x+5
= 2(2 ) – 3(2 ) − 12(2) + 5
= 16 – 12 − 24 + 5
= 21 −36
= −15
When x = -1,
y = 2x3−3x2−12x+5
= 2(−1 ) – 3(−1 ) − 12(−1) + 5
= −2 – 3 + 12 + 5
= −5 + 17

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 = 12
Therefore, the coordinates of stationary points are (2, −15) and (−1, 12).

Note: When finding the nature of the stationary points, several techniques are possible:
1. Second derivative test. This technique uses second derivative of the function.

 If > 0 (positive), it’s a minimum point.

 If < 0 (negative), it’s a maximum point.

 If = 0 (zero), it’s an inflection point.

1. Sign test. By looking at the gradient either side of the stationary point.

Example (3)
Find the coordinates of the stationary points for the curve y = x2 + 6x+10. Determine the nature.
Solution
Step 1: differentiate the function
y = x2+6x+10

= 2x + 6

Step 2: Put zero for the place of , At stationary point =0

0 = 2x + 6
Step 3: solve the equation
2x = - 6 (Divide by 2)
x = -3
Find y when x = -3
y = x2+6x+10
= (-3)2 + 6(-3)+10
= 9 – 18 + 10
=1
Therefore, the coordinate is (-3, 1)
Step 4: Check the nature, differentiate again

= 2x + 6

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d y
=2
dx
Therefore:

> 2 (minimum)

(-3,1) is a minimum point

Example (4)
Find the coordinates of stationary points of the curve y = 2x3−3x2−12x+5. Find the nature of
each coordinate and then sketch the curve.
Solution
y = 2x3−3x2−12x+5

= 6x2−6x−12 at stationary point =0

0 = 6x2−6x−12
0 = x2−x−2 (by dividing each term by 6)
(x-2)(x+1) = 0
Thus, x = 2 or x= −1
When x = 2,
y = 2x3−3x2−12x+5
= 2(2 ) – 3(2 ) − 12(2) + 5
= 16 – 12 − 24 + 5
= 21 −36
= −15
When x = -1,
y = 2x3−3x2−12x+5
= 2(−1 ) – 3(−1 ) − 12(−1) + 5
= −2 – 3 + 12 + 5
= −5 + 17
= 12
Therefore, the coordinates of stationary points are (2, −15) and (−1, 12).
To check the nature of the stationary points, use the second derivative test

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 = 6x2−6x−12

= 12x – 6

At (2,-15)

= 12(2) – 6 = 18

= 18 > 0 (positive) , (2,-15) is minimum point

At (−1, 12)

= 12(-1) – 6 = -12 – 6 = -18

= - 18 < 0 (negative), (−1, 12) is maximum point

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 Marginal Analysis
One important use of calculus in Business and Economics is in marginal analysis. In Economics
the word “marginal” refers to the rate of change, that is derivative. Thus If C(x) it the total cost
of producing x items, then C’(x) is called the marginal cost and represents the instantaneous rate
of change of total cost with respect to the number of items produced. Similarly, the marginal
revenue R’(x) is the derivative of total revenue function R(x) and marginal profit P’(x) is the
derivative of total profit function P’(x).

Marginal Cost, Revenue and Profit

If x is the number of units of a product produced in some time interval, then

Total cost = C(x)

Marginal cost = C’(x)
Total revenue = R(x)
Marginal revenue = R’(x)
Total profit = P(x) = R(x) - C(x)
Marginal profit = P’(x) = R’(x) – C’(x)
= (marginal revenue) - (marginal cost)
Marginal cost (or revenue or profit) is the instantaneous rate of change of cost (or
revenue or profit) relative to production at a given production level.

Example (5)
A company manufactures fuel tanks for automobiles. The total weekly cost (in dollars) of
producing x tanks is given by
C(x) = 10,000 + 90x - 0.05x2
a) Find the marginal cost function.
b) Find the marginal cost at a production level of 500 tanks per week and interpret the results.
c) Find the exact cost of producing the 501st item.
Solution
(A) C’(x) = 90 – 0.1x

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Example (6)
Out of production, the cost function and revenue function are given:
C (x) = 25 + 0.25x + x2
R (x) = 16 + 25x2
Find
a) Find the profit function.
b) Find the marginal profit function.
c) Find P (20) and P’(20).
Solution
a) P(x) = R(x) – C(x)
= (16 + 25x2) – (25 + 0.25x + x2)
= 16 + 25x2 - 25 - 0.25x - x2
= 24x2 – 0.25x – 9
b) P(x) = 24x2 – 0.25x – 9
P’(x) = 48x – 0.25
c) P(x) = 24x2 – 0.25x – 9
P(20) = 24(20)2 – 0.25(20) – 9
= 9600 – 5 – 9
= 9586

P’(x) = 48x – 0.25

= 48(20) – 0.25
= 960 – 0.25
= 959.75
Note that:
 The price demand function p is the price at which the people buy exactly x units of the
product.
 The total revenue function R(x) is generated by:
R(x) = (quantity sold).(unit price)
R(x) = x (price demand) where x is the quantity sold

Example (3)
The Frezmore company has determined that its cost of producing x refrigerators can be modeled
by: C(x) = 2x2 + 15x + 1500 for 0≤ ≤ 200 where x is the number of refrigerators produced
each week and C(x) represents the weekly cost in dollars. The company also determined that the
price demand function for refrigerators is p = -0.3x + 460.
a) Determine the marginal revenue function.
b) Determine the profit function of producing x refrigerators.
c) Determine the marginal profit function.
d) Compute MP (60).

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Solution
a) R(x) = x(price demand)
= x (-0.3x + 460)
= -0.3x2 + 460x Then
R’(x) = -0.6x + 460
b) P(x) = R(x) – C(x)
= (-0.3x2 + 460x) – (2x2 + 15x + 1500)
= -0.3x2 + 460x - 2x2 - 15x – 1500
= -2.3x2 + 445x - 1500
c) P’(x) = -4.6x + 445
d) MP(60) = P’(60)
= -4.6(60) + 445
= 129

Example (7)
Goljano restaurant determined and modeled the price demand and cost function of producing
Hamburger. C(x) = 1200x + 2800 and price demand p = 3000 – 2x.
Determine the number of Hamburgers produced to achieve the maximum daily profit.
Solution
R(x) = x(price demand)
= x(3000 – 2x)
= 3000x – 2x2
Then
P(x) = R(x) – C(x)
= (3000x – 2x2) – (1200x + 2800)
= 3000x – 2x2 – 1200x – 2800
= 1800x – 2x2 – 2800
To get the maximum, we must take the derivative of the profit function
P’(x) = 1800 – 4x
At maximum or minimum P’(x) = 0
1800 – 4x = 0
1800 = 4x
x = 450
Therefore, to achieve the maximum daily profit, Goljano must produce 450 Hamburgers.

Example (8)
Find the maximum revenue, If p = -6x + 6 is a price demand function. Where x is the number of
items sold.
Solution
R(x) = x(price demand)
= x(-6x + 6)

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 = -6x2 + 6x
To get the maximum revenue take the derivative of the revenue function
R’(x) = -12x + 6
At maximum or minimum R’(x) = 0
-12x + 6 = 0
6 = 12x
x = 0.5
Then substitute x = 0.5 to the revenue function
R(x) = -6x2 + 6x
R(2) = -6(0.5)2 + 6(0.5)
= 1.5

Example (9)
A particle business determined the revenue function and cost function of particular product of its
products.
R(x) = -x2 + 24x
C(x) = 12x + 28
a) Find the value of x that maximizes the profit.
b) Find the maximum profit.
Solution
a) P(x) = R(x) – C(x)
= (-x2 + 24x) – (12x + 28)
= -x2 + 24x – 12x – 28
=-x2 + 12x – 28 Then
P’(x) = -2x + 12
At maximum or minimum P’(x) = 0
-2x + 12 = 0
-2x = -12
x=6
b) P(x) = -x2 + 12x – 28
P (6) = -(6)2 + 12(6) – 28
=8

“Whatever the mind of man can conceive and believe, it can achieve”

The End of the Course

Good luck hope you succeed in life

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