Mathematics for Business

1Introduction to Quantitative Analysis

Introduction to Quantitative Analysis
Mathematical Models

• Accurately represent reality.

• Help in formulating the business problem.
• Give insight and information.
• Save time and money in decision making and problem
solving.
• Be the only way to solve some large or complex problems in
time.
• Be used to communicate problems and solution to others.
Mathematical Models

• Implementation of mathematical models depends upon the

decision of the top level officials.
• Improper implementation will lead to many problems. A
certain mathematical model takes into consideration an
element called risk.
• These models are referred to as probabilistic models. The
outcome of these types of models may be very close to the
actuals. Using these models, only conclusions can be drawn.
Mathematics for Business
1Part 1: Algebra
Algebra

• Set Theory
• Number Systems
• Fraction
• Percentage
• Increasing and Decreasing
• Indices
• Equation
• System of Linear Equations
• Matrix
• Input – Output Analysis
Algebra
1
Set Theory
Set Theory
Set Theory
•Commutative
  Law

Associative Law

De Morgan’s Law:
Set Theory
•Distributive
  Law
Set Theory

• Eg. 1. In the survey of 1000 customers, the number of people

who buy various grades of coffee seeds were found to be as
follows: A grade only 180. A grade but not B grade 230. A
grade and C grade 80. A grade 260, C grade 480, C and B
grade 80. None of the three grades 240.
(i) How many buy B grade seeds?
(ii) How many buy C grade, if and only if they do not buy B grade?
(iii) How many buy the C and B grade but not A?
• Eg. 2. A salesman visits 274 housewives in a town to find out
their views about three products, A, B and C. He finds that
157 use A, 98 use only A, 22 use all the three, 14 use A and C
but not B, 39 use B and C, and 48 use only B.
(i) How many use product C only?
(ii) What percentage use at least two products?
Problem Solving
Set Theory

• Eg. 3. In a survey concerning the soft drink habits of

consumers, following data were obtained: 55% drink brand A,
50% drink brand B, 40% drink brand C, 30% drink brand A
and B 20% drink brand A and C, 12% drink brand B and C,
10% drink all brands
(i) What percentage do not drink any soft drink?
(ii) What percentage drink exactly two brands?
• Eg. 4. Out of 30 students in a class, 15 students played
football and 10 students played football but not hockey. Find
the number of students who played hockey and football; and
those who played hockey but not football.
Percents
Set Theory

• Eg. 5. In a survey conducted out of 2000 clerks in an office, it

was found that 48% preferred coffee, 54% liked tea, 64% used
to smoke, 28% used coffee and tea, 32% used tea and smoked,
and 30% preferred coffee and smoked. Only 5% did none of
this. Find
(i) The numbers with all the three habits.
(ii) Tea and smoke but not coffee.
(iii) Only coffee.
Set Theory

• Eg. 6. A company study of the product preferences of 10,000

consumers reported that each of the product A, B and C was
liked by 5015, 3465 and 4827, respectively, and all the
products were liked by 500 people. Products A and B were
liked by 1000, products A and C were liked by 850 and
products B and C were liked by 1420.
(i) Prove that the study results are not correct.
(ii) It was found that an error was made in recording the number of
consumers liking the products A and C. What is the value of this
number?
Algebra
1
Number System
Four different number systems
Number systems
•  Natural numbers: = {1, 2, 3, …}
• Whole numbers: W = {0, 1, 2, 3, …}
• Integers: = { –3, –2, –1, 0, 1, 2, 3, …}
• Fractions: , p: terminator, q: denominator
• Proper fraction: p < q
• Improper fraction: p ≥ q
• Rational numbers:
• Irrational numbers: eg.
Examples

1) Divide $7506 evenly among 18 winners. How much will

each receive?
2) A budget surplus of $13,280 is divided evenly among four
branch libraries. How much did each receive?
3) A homeowner’s association collected $385 from each of 62
homeowners. If the association paid $18,280 in expenses, how
much remained?
4) A college student earns $15.75 per hour. How much is earned
for 26.5 hours of work?
5) A fish wholesaler buys 40 pounds of fresh salmon from
fishermen for $232. Estimate the cost of 300 pounds of salmon.
 CIA

Many experts believe that some

countries already have a water
shortage, while others will be
facing water shortages soon. The
chart below shows an estimate of
freshwater resources per person, by
country.
(a) Find the difference in the water
resources per person between
China and India.
(b) Use division to compare water
per person in the United States to
that in India.
(c) Find the difference in the water
resources per person between
Brazil and Saudi Arabia.
Rounding
Examples

1) Roofing material costs $84.52 per square (10 ft × 10

ft). The roofer charges $55.75 per square for labor, plus
$9.65 per square for supplies. Find the total cost for 26.3
squares of installed roof. Round to the nearest cent.
2) A supermarket sells bananas for $1.74 per kilogram.
Find the price per pound by dividing $1.74 by 2.2
pounds. Round to the nearest cent.
3) A veterinarian decides that a cat with a kidney
infection should get .65 milliliters of antibiotic twice a
day for 7 days. Find the total amount of antibiotic needed
rounded to the nearest milliliter.
 Cost of getting married
Interested in getting married? You might be surprised at the cost. A local
newspaper said that the average costs of a wedding with 200 guests increased from
$24,168 in 2010 to $28,540 in 2017. Reception $10,664

1) Find the combined cost of the reception, Photography/Video $3821

photography, wedding attire, and the ceremony. Wedding Attire $3053
2) Find the difference in the average costs of a Ceremony $2958
wedding in 2010 versus 2017.
Wedding Rings $2864
3) If you budget $7500 for the wedding reception
and the cost per person is $42, find the number of Flowers $1825
guests you can invite and the amount remaining.
Gifts $1080
4) If costs force you to limit the number of guests to
115 and the cost of the reception to $5325, find the Music $946
amount spent per person rounded to the nearest Stationary $871
cent.
Transportation $458
5) A couple plans to spend $22,000 for their
wedding. Their parents have agreed to pay $8000 of
the costs. If the couple has excess income of $650
per month, how many months will it require for
them to pay their share of the costs?
 Subway
With the help of a family friend, seventeen-year-old Fred DeLuca opened the first Subway store in
1965. DeLuca believed in using only the freshest ingredients and drove many miles each week in his
Volkswagen bug to buy fresh produce. Later, management decided to “give back” to the community and
now supports research related to both heart disease and cancer.
Profit margins are surprisingly small in most businesses, so managers must work very hard to control
costs. A primary responsibility of a store manager at Subway is to control costs. Of course, the store
manager is also responsible for many issues related to employees, the quality of food and service, and
also sales.
1) Jessica Fernandez is the manager of a Subway store. Find the total of an invoice with the following costs:
produce, $486.12; meat and cheese, $1236.14; bread dough, $364.76; shipping charges, $103.75.
2) One employee worked the following hours during the week: Thursday, 3.5 hours; Friday, 4.5 hours; Saturday,
6 hours; and Sunday, 5.5 hours. He is paid $8.65 per hour. Find the total number of hours worked and the pay for
the week rounded to the nearest cent.
3) Fernandez notes that meat and cheese costs went up from $1864.92 last week to $2065.48 this week and
attributes it to additional customers. Find the difference between the two. If the average cost of meat and cheese
per sub sandwich is $.94, estimate the number of additional customers this week compared to last week, rounded
to the nearest whole number.
4) This month, Fernandez plans to spend four times as much on advertising as the $168.32 spent last week. Find
the amount spent on advertising. If the increased advertising brings in 1.3 times last week’s revenue of
$10,984.76, estimate the revenue.
Discussion Question: If sales increase by $1500 in a week, do you think profit for the week will also increase by
about $1500? Why or why not?
 Take the Limo Liner
At Graphic Express, Inc., Bob is planning to take three managers to a weekly meeting in New
York. Traveling from Boston to New York for meetings has been part of the normal course of
doing business at Graphics Express for several years, and the travel expenses and wasted time
represent a considerable cost to the company. Normally, Bob’s managers set up travel
arrangements individually and get a reimbursement from the company. Desiring to cut costs
and increase productivity, Bob decides to investigate alternative modes of making this weekly
trip. He discovered that Amtrak Acela Express costs $178 for the round trip from Boston to
New York. A taxi from the train station to the meeting costs about $40. The managers live in
different parts of Boston, so carpooling in one car has not worked well; however, if two of the
managers drive the 440-mile round-trip drive and each takes one of the other managers, the
process might be manageable, and the cost is only the mileage reimbursement of $167 plus
$25 parking for each car. A round trip airline ticket is about $265 if purchased in advance.
Although the flight is only about one hour in duration, the total travel time when flying from
home to the New York office is about the same as when driving—the trip takes between three
and four hours depending on traffic. The taxi from the airport to the meeting costs about $40.
A new service called Limo Liner, a sort of bus with upgrades, advertises that round-trip cost is
about $40 less than an Amtrak ticket, and they offer extra services including a kitchen, TVs,
restrooms, and a conference table that can be reserved. A taxi from the Limo Liner terminal to
the meeting will cost around $20. In the past, most of the managers have flown to the meeting
—citing the ability to work en route as a productivity advantage. The idea of using the Limo
Liner intrigues Bob. He likes the idea that he and his managers could work together while they
travel but wonders if this feature is worth the expense.
 Take the Limo Liner
1) What is the cost of Bob and his three managers traveling by each method: by
Amtrak with two taxi fares in New York, in individual cars including parking,
carpooling in two cars including parking, by airplane with two taxi fares in New
York, and by Limo Liner with two taxi fares in New York?
2) In the past, costs for the trip have totaled around $1,140 per trip for the group of
four people using different methods of traveling to New York. Bob thinks he and his
managers should probably drive in two cars to save the most money, but he is still
intrigued by the possibility of conducting a meeting on the Limo Liner while
traveling to New York. How much will the company save with either of these
options? Which method of travel might yield the most productivity increase?
3) Each year Bob and his managers attend 40 weekly meetings in New York. How
much will the cost savings be in a year over past average cost if the group travels
regularly by Limo Liner?
 Sanderson Roofing

Rick Sanderson owns a residential roofing business near Memphis. Rick has a
small crew of three employees, and he does all of the measuring and calculations
for the roofing jobs his company bids. Rick does all of his materials calculations
based on the number of “squares” in a roof—one of the most commonly used terms
in the roofing industry. One roofing square = 100 square feet. It does not matter
how you arrive at 100 square feet: 10 feet × 10 feet = 100 square feet, or 1 roofing
square, is the same as 5 feet × 20 feet and so on. Although roofs come in many
shapes and sizes, one of the most common is a gable roof. This is a type of roof
containing sloping planes of the same pitch on each side of the ridge or peak, where
the upper portion of the sidewall forms a triangle.
1) Rick just finished measuring a gable roof for a detached garage, and needs help
with his materials calculations. Each of the two sides of the roof measured 45 feet
(ft) * 20 feet (ft). How many square feet (ft2) would this be in total? How many
roofing squares would this equal?
 Sanderson Roofing

2) Rick knows that for each roofing square he needs 4 bundles of 40-year
composition shingles, which he can buy at $14 per bundle. He also uses 15-pound
(lb) roofing felt as a base under the shingles, and each roll costs $9 and covers 3
squares. Given your answers to Exercise 1, how many bundles of shingles will he
need? How many rolls of roofing felt? What are the costs for each?
3) To finish the job, Rick needs roofing nails and drip edge. A four-pound box of
one-inch roofing nails will cover 3 squares, and cost $5. Drip edge comes only in
10-foot lengths, costs $3 per length, and is attached only to the horizontal edges of
the roof. How many pounds of 1-inch roofing nails will the job require, and what is
the cost? How many 10-foot lengths of drip edge will finish the job, and at what
cost? Finally, what is the total materials cost of the entire roofing project?
 The Cost of Giving

United Way is a nonprofit organization working with nearly 1,300 local chapters
that raise resources and mobilize care units for communities in need. According to
their web site, United Way’s annual revenue recently topped $4 billion for the first
time, continuing its status as the nation’s largest charity. A substantial portion of
those funds was raised through annual campaigns and corporate sponsorships.
Alaina has been asked to coordinate her company’s United Way fund drive.
Because she has seen some of the projects United Way has supported in her own
community, Alaina is excited to help her company try to reach its goal of raising
$100,000 this year. Alaina will be distributing pledge cards to each of the
company’s employees to request donations. There are 150 people working on the
first shift, 75 people working on the second shift, and a crew of 25 people working
on the third shift.
1) If each person were to make a one-time donation, how much would each person
need to donate for the company to reach its goal of raising $100,000?
2) Alaina feels that very few people can contribute this amount in one lump sum, so
she is offering to divide this amount over 10 months. If the employees agree to this
arrangement, how much will be deducted from each person’s monthly paycheck?
 The Cost of Giving

3) Two weeks have passed and Alaina has collected the pledge cards from each of
the employees with the following results:
• First Shift: 100 employees agreed to have $40 a month deducted for 10 months; 25
employees agreed to make a one-time contribution of $100; 15 employees agreed to
make a one-time contribution of $50. The remaining employees agreed to have $20
withheld for the next 10 months.
• Second Shift: 25 people agreed to a one-time contribution of $150; 25 people agreed to
have $40 a month deducted for 10 months; and the remaining employees agreed to a
one-time contribution that averaged about $35 each.
• Third Shift: All 25 people agreed to double the $40 contribution and have it deducted
over the next 10 months. How much was pledged or contributed on each shift?
4) Has Alaina met the company’s goal of raising $100,000 for the year? By how
much is she over or short?
5) If Alaina’s company were to match the employee’s contributions with $2 for
every $1 the employees contributed, how much would the company contribute?
What would be the total contribution to the United Way?
Algebra
1
Fractions and Ratio
 JK Manufacturing Demographics
Carl has just started his new job as a human resource management assistant for JK
Manufacturing. His first project is to gather demographic information on the personnel at
their three locations in El Paso, San Diego, and Chicago. Carl studied some of the
demographics collected by the Bureau of Labor Statistics (www.stats.bls.gov) in one of his
human resource classes and decided to collect similar data. Primarily, he wants to know the
gender, level of education, and ethnic/racial backgrounds of JK Manufacturing’s workforce.
He designs a survey using categories he found at the Bureau of Labor Statistics web site.
Employees at each of the locations completed Carl’s survey, and reported the following
information:
El Paso: 140 women, 310 men; 95 had a bachelor’s degree or higher, 124 had some college
or an associate’s degree, 200 were high school graduates, and the rest had less than a high
school diploma; 200 employees were white non-Hispanic, 200 were Hispanic or Latino, 20
were black or African American, 15 were Asian, and the rest were “other.”
San Diego: 525 women, 375 men; 150 had a bachelor’s degree or higher, 95 had some
college or an associate’s degree, 500 were high school graduates, and the rest had less than a
high school diploma; 600 employees were Hispanic or Latino, 200 were black or African
American, 50 were white non-Hispanic, 25 were Asian, and the rest were “other.”
Chicago: 75 women, 100 men; 20 had a bachelor’s degree or higher, 75 had some college or
an associate’s degree, 75 were high school graduates, and the rest had less than a high school
diploma; 100 employees were white non-Hispanic, 50 were black or African American, 25
were Hispanic or Latino, there were no Asians or “other” at the facility.
 JK Manufacturing Demographics
1) Carl’s supervisor asked him to summarize the information and convert the raw data to a
decimal part of the total for each location. Carl designed the following chart to organize the
data. To complete the chart, write a fraction with the number of employees in each category
as the numerator and the total number of employees in each city as the denominator. Then
convert the fraction to a decimal rounded to the nearest hundredth. Enter the decimal in the
chart. To check your calculations, the total of the decimal equivalents for each city should
equal 1 or close to 1 because of rounding discrepancies.
Fractions
 Pastry

It was the grand opening of Elizabeth’s pastry business, and she wanted to make
something extra special. As a tribute to her Grandma Gertrude—who had helped
pay for culinary school (and incidentally nicknamed her Bitsie), she had decided to
make her grandmother’s favorite recipe, apple crisp. Although she thought she
remembered the recipe by heart, she decided she had better write it down just to
make sure.
 Pastry
•Heat
  oven to 375°F. Bake until topping is golden brown and apples are tender, approximately
30 minutes.
1) Elizabeth planned to make 6 pans of apple crisp for the day, using extra tart Granny Smith
apples—just like her grandmother had. But after peeling, coring, and slicing she had a major
problem: she had 10 cups of apple slices. It was getting late and she needed to get some pans
of apple crisp into the oven. She knew that 10 cups of apples was times as much as the 4
cups she needed, so she decided to use multiplication to figure out batches. Based on her
hasty decision, how much of each ingredient will she need?
2) After looking at her math, Elizabeth realized her mistake. She didn’t have a pan that she
could use for half a batch, and her math seemed too complicated anyway. She decided she
would just make a double batch for now, because then she wouldn’t need to multiply. Using
addition, how much of each ingredient would she need for a double batch?
3) The two pans of apple crisp were just starting to brown when Elizabeth returned from the
store with more apples. But instead of tart apples, the store had only honey crisp, a much
sweeter variety. After preparing 14 more cups of apples, she could make 3 batches using the
honeycrisp (12 cups) and the fourth and final batch using both kinds of apples. Her concern,
however, was the sweetness of the apples. For the batches using the honeycrisp only, if the
brown sugar and granulated sugar were reduced by , how much sugar should she use for each
batch? How much for all 3 batches?
Fractions
Examples

•1)  A plumber needs 68 pieces of 1-inch-diameter copper

tubing. If each piece of tubing must be inches long, how
many total inches of tubing are needed?
2) A welder needs angle iron pieces that are inches long.
Find the number of pieces that can be cut from a piece of
angle iron that is 70 inches in length, assuming no waste.
3) Two real estate developers agree to build a project
estimated to cost $17.6 million. They decide to split costs
in a ratio of 7:4. Find the cost to each.
OPERATING EXPENSES AT WOODLINE
MOLDINGS AND TRIM

1) Find the total annual operating expenses for Woodline Moldings and Trim.
2) What fraction should be used to represent each expense item as part of the total
expenses?
OPERATING EXPENSES AT WOODLINE
MOLDINGS AND TRIM

3) Draw a circle (pie) graph using the fractions you found

in part 2) to represent each expense item. Approximate the
fractional part of the circle needed for each expense item.
Label each segment of the circle graph with the fraction
and the expense item.
4) Since there are 360 degrees in a circle, find the number
of degrees that would be used to represent each expense
item in the circle graph.
 Home Depot
•The
  Home Depot is the world’s largest home-improvement retailer, employing more than
300,000 employees called associates. Its goal is to provide a very high level of service,
broad selection of products, and very competitive prices in a one-stop shopping
environment. Management also believes in taking care of its employees by offering many
benefits. It even has a program that matches employee charitable donations. Management
also tries to encourage employees to donate their time to needy organizations.
1. Kara Oaks manages the cabinetry department. She has been asked to take measurements
for a set of custom cabinets made of cherry wood. The side panel is inches tall. If she needs
6 side panels, find the number of inches of cherry wood needed, assuming no waste when
cut.
2. The width of each side panel is inches. Find the area of each panel by multiplying the
height of the panel given in 1. above by the width. The resulting area is in square inches.
3. Find the total area of cherry wood needed for all six side panels in square inches.
4. Ignoring waste, how many side panels can be made if the cabinetmaker has only 2250
square inches of cherry wood panels of the appropriate width?
Discussion Question: Do you think that exact measurements are an important component of
quality from the standpoint of a customer at The Home Depot? What are other important
components of quality?
 Atlantic Candy Company
Tom always loved the salt water taffy his parents bought while on summer
vacations at the beach. His fond memories probably had something to do with his
accepting a job with the Atlantic Candy Company as a marketing manager. Among
other things, his new job involves assessing the mix of flavors in a box of taffy. He
remembers saving the orange and green with red pieces for last because they were
his favorites; however, the company has recent market research showing that his
favorite flavors are not the most popular flavors with most other people. Milk
chocolate, dark chocolate, and chocolate mint are the most popular flavors,
followed by peppermint and licorice. Tom knows that most 1-lb boxes of Atlantic
Candy Company taffy containing 64 pieces include 4 green with red pieces, 3 white
with red peppermint pieces, 3 white with green peppermint pieces, 3 milk chocolate
pieces with white and pink bull’s-eye centers, 2 milk chocolate with green
peppermint pieces, 7 white pieces, 12 dark chocolate pieces, 9 orange pieces, 15
milk chocolate pieces, and 6 licorice pieces.
1) What fraction of the pieces of taffy have chocolate in them? What fraction of the
pieces are Tom’s favorite orange and green with red?
 Atlantic Candy Company
•   Does the Atlantic Candy Company assortment need to be adjusted to match most
2)
people’s taste preference better if the top five choices are considered? What fraction
of the pieces in the Atlantic Candy Company 1-lb box are chocolate, peppermint,
and licorice? Hint: If a piece falls in two categories, count it only once.
3) Based on the market research, Tom thinks it would be profitable to sell an
assortment box that has double-size pieces of taffy in chocolate and peppermint in a
special holiday gift box. If they use a -lb box how many pieces should they
include? (1lb = 64 regular-size pieces)
4) If they produce another -lb box containing an equal number of double-size milk
chocolate taffy, chocolate-mint taffy, and peppermint taffy, how many pieces of
each flavor will there be in this special gift box?
 Green Scape Design
•Travon
  returned from his meeting with the City of Orlando to begin preparing his bid for a
new park project that the city was planning for the upcoming year. As a landscape architect,
it is Travon’s job to make areas such as parks, malls, and golf courses beautiful and useful.
For this project, he would decide where the playground equipment and walkways would go,
and how the flower gardens and trees should be arranged. For now, his most important task
was to estimate costs based on the specifications that he had received from the city, for
which $240,000 had been budgeted.
1) Travon knows from experience that a typical bid for a landscaping job consists of for the
materials, for the labor, and the remainder for the anticipated profit margin. Using the city’s
budgeted figure of $240,000, what dollar amount is expected for materials? For labor? And
finally, what amount is the anticipated profit margin and what fraction of the cost does this
amount represent?
2) The dimensions for the park are 400 × 400 feet square, and the specifications require
40,000 square feet of flower/tree gardens; 5,000 ft2 for a playground equipment area; 10,000
ft2 in walkways; and at least 80,000 ft2 of open green space. On a fractional basis, what
portion of the park will be covered by each of these designated components?
3) Travon hopes to use any additional space for the creation of a water garden. What portion
of the park, if any, remains for the creation of a water garden?
 Operating Expenses

The annual operating expenses for Woodline Moldings and Trim are
shown below.
Expense Item Monthly
1) Find the total annual operating expenses for Amount
Woodline Moldings and Trim. Salaries $10,000
2) What fraction should be used to represent Rent $6,000
each expense item as part of the total expenses?
Utilities $2,000
3) Draw a circle (pie) graph using the fractions
Insurance $1,500
you found in part (b) to represent each expense
item. Approximate the fractional part of the Advertising $1,500
circle needed for each expense item. Label each Miscellaneuous $3000
segment of the circle graph with the fraction
and the expense item.
4) Since there are 360 degrees in a circle, find
the number of degrees that would be used to
represent each expense item in the circle graph.
 Home Repair
Pete and Barbara Johnson buy an old house. They plan to make the
necessary repairs before moving in with their two children, one dog,
and two cats. The Johnsons buy all of the needed supplies at a local
Home Depot store (see www.homedepot.com) and work on the house
during evenings and weekends as they have time and money. Pete
believes it will take about 6 months before they can move into the
house.
(a) A gutter downspout is 10 feet long. If a piece of gutter downspout 8 feet inches
is needed for a job, find the length of the remaining piece. (Hint: 1 foot equals 12
inches.)
(b) Home Depot stock is selling for $25.80 per share. Find the number of shares
that can be purchased for $10,000.
(c) Give three specific situations in which fractions and mixed numbers would be
used in a home-improvement store.
(d) From your own experiences and those of family members and classmates, list
three specific activities where the ability to work with fractions would be needed.
 Pricing Stock Share
Shantell recognized the stationery, and looked forward to another of her Aunt
Mildred’s letters. Inside, though, were a number of documents along with a short
note. The note read: “Shantell, your Uncle William and I are so proud of you. You
are the first female college graduate in our family. Your parents would have been
so proud as well. Please accept these stocks as a gift towards the fulfillment of
starting your new business. Cash them in or keep them for later, it’s up to you!
With love, Aunt Millie.” Shantell didn’t know how to react. Finishing college had
been very difficult for her financially. Having to work two jobs meant little time
for studying, and a nonexistent social life. But this she never expected. With
dreams of opening her own floral shop, any money would be a godsend. She
opened each certificate and found the following information: Alcoa—35 shares at
15 3/8; Coca Cola—150 shares at 24 5/8; IBM—80 shares at 40 11/16; and AT&T
—50 shares at 35 1/8.
1) Shantell knew the certificates were old, because stocks do not trade using
fractions anymore. What would the stock prices be for each company if they were
converted from fractions to decimals?
 Pricing Stock Share
2) Using your answers with decimals from Exercise 1, find the total value of each
company’s stock. What is the total value from all four companies?
3) Shantell couldn’t believe her eyes. The total she came up with was over $9,000!
Suddenly, though, she realized that the amounts she used could not possibly be the
current stock prices. After 30 minutes on-line, she was confident she had the
current prices: Alcoa: 35 shares at $34.19; Coca Cola: 150 shares at $48.05; IBM:
80 shares at $95.03; and AT&T: 50 shares at $38.88. Using the current prices, what
would be the total value of each company’s stock? What would be the total value
for all of the stocks? Given the answer, would you cash the stocks in now or hold
on to them to see if they increased in value?
Algebra
1
Percentage
Percentage
 Smokes
Even though smoking is believed to account for 1 of every 5 deaths
in the United States, 36 million Americans smoke. The bar chart
shows the percent of people in each age group that smoke. Convert
each percent to a fraction and reduce to lowest terms.
Examples

The bar graph shows the unemployment rate by age. Use the data
provided to estimate the number of unemployed teenagers out of a
total of 32,000 working-age teenagers in one city. How many of
the 83,200 men 25 and over would you expect to be unemployed?
Percentage
Percentage
 Examples

1) One day, the Lock Shoppe had sales of $1485 and charged a sales tax of 6%.
Find the sales tax and the total sales including the tax.
2) A video game set is priced at $280 less a 15% discount. First, identify the
whole and rate. Then calculate the part (the discount).
3) The number of people who passed the real estate license exam was 832. If
this was a 65% pass rate, how many took the exam?
4) One quarter, the administrator of a school district’s retirement funds received
$37,500 interest from an investment in bonds that paid 1.5% for the quarter.
Find the amount invested.
5) An investment of $40,500 resulted in a profit of $1012.50. What was the rate
of return?
6) As long as it is maintained, an inexpensive hot-water heater should last 12
years before it needs to be replaced. If a water heater is 10 years old, find the
percent of the water heater’s life that remains, to the nearest percent.
Percentage
Algebra
1Increasing and Decreasing
Increasing and Decreasing
 Examples

1) The total sales at Office Products this year are $713,340,

which is 35% more than last year’s sales. What is the
amount of last year’s sales?
2) Due to a large gift from a donor, Blalock College has
increased the number of scholarships by 10% per year for
each of the past two years. If 1815 scholarships will be
offered this year, find the number offered two years ago.
3) A 65-inch HD LCD television is discounted 25% from
the original price. If the discounted price is $1799.99, what
was the original price of the television?
 Real Estate
Century 21 Real Estate Corporation (www.century21.com) is the world’s largest franchiser
of real estate offices and operates in more than 60 countries. The firm provides
comprehensive training, management, administrative, and market support for more than
6000 independently owned and operated offices. It is considered the number-one consumer
brand in the real estate industry.
Sometimes homeowners complain when they see the 6% sales commission that they must
pay when listing their homes for sale with Century 21. However, realize that the commission
is usually split among the following four parties: listing agent, selling agent, and the two
offices for which each of these real estate agents work.
(a) The value of homes in one area went up by an average of 2.3% in the past year. Estimate the value
today of a home that was valued at $265,000 last year.
(b) This year, the annual sales through one Century 21 office with 12 sales agents were $42 million.
Estimate the revenue for the office if it received an average of 20% of the 6% commission on sales.
(c) From the revenue in part (b) above, the office manager must pay all costs of operating the sales
office, including advertising, utilities, phones, insurance, and salaries for all noncommission employees.
For the current year, these costs amount to $468,000. Find the profit as a percent of total revenue to the
real estate office and round to the nearest tenth of a percent.
(d) Describe at least four examples in which percent is used in the real estate industry.
(e) Visit any local real estate office. Ask the manager and/or agents about advantages and disadvantages
of a career as a real estate agent. Would a career as a real estate agent interest you? Why or why not?
 Century 21
Tom Dugally worked as an agent for Century 21 for several years before he received his
broker’s license. A few years later, he contacted Century 21 and they helped him set up his
own real estate office under a Century 21 franchise. He uses percents on a daily basis to find
real estate commissions, monitor costs, follow interest rates, estimate property taxes, and
keep up with home prices.
1. Dugally owned a small apartment complex that was worth $865,000 last year. He sold it
for $892,680 this year. Find the percent increase in value.
2. Mr. Makin wants Dugally’s agency to sell a similar property. Last year, this property had
a value of $1,145,000. Use the percent increase from the exercise above to estimate the
current value of this property.
3. A homeowner has a home that is currently valued at $435,000. If his home price has
increased by the amount indicated in exercise 1 above, find the amount by which it
increased in value compared to one year ago. Round all dollar values to the nearest dollar.
4. The total real estate commissions paid to Dugally’s real estate agency for the quarter were
$237,075. If 65% of those funds are paid directly to the self-employed real estate agents that
work in the office under Dugally, find the amount the real estate office keeps. He uses these
funds to pay for office, computer, advertising expenses, unilities, etc.
Discussion Question: It is very difficult for a new real estate agent to earn enough to live
on while learning the business. What can Dugally do to train and help a new agent?
Algebra
1
Indices
Time Series

• Values of economic indicators: annual, quarterly, monthly,

weekly, daily, hourly, … basis
• Analyze the rise and the fall

index number = scale factor from the base × 100

• Eg. Calculate the index numbers when Year 2 is taken as the
base year.
Index

• Ex 1. Calculate the index numbers when Year 1 is taken as the

base year.

• Ex 2. Given the index numbers, compute the percentage

change from
• Y2Q1 to Y2Q4
• Y1Q1 to Y2Q4
• Y1Q1 to Y2Q1
Compound Index
••  Compound Index (based on more than one time series):

Ex. Calculate the index numbers when April is taken as the base
month. Calculate the compound index where the weight for
Share A and Share B are 2 and 1 respectively.

66
Algebra
1
Equations
Equations
Problem Solving
Examples
•1)  A professor was taking 28 students to Guadalajara, Mexico, on a
two-week, travel-study program. If there were 14 more women
than men, find the number of men and the number of women.
2) Fearful of bankruptcy, the top manager of a company laid off
enough people so that the workforce was only of the original
workforce. Find the original number of employees if there were 34
employees after the layoff.
3) A mutual fund company has $24 million to invest. They place
part of the funds in the bonds of a utility company and $4 million
more than three times that amount in New York City bonds. Find
the amount placed in utility bonds and the amount in New York
City bonds.
 Breakeven in Retail
• 
Vocabulary:
• Gross revenue: the total of all revenue from all sales.
• Breakeven: the point at which total revenues equals cost of goods sold plus total expenses.
• Profit, or net profit: the amount left over after all expenses have been paid.
Eg 1. The average selling price of a book at Discount Books is $24.80. Typically, just of this amount
goes to pay for the cost of the book, including shipping and handling. Monthly expenses at Discount
Books are:

 (a) Find the total monthly expenses. Salaries with $8500 (includes
(b) If of the revenues is used to pay for books, what fraction of benefits owner’s salary)
the revenue remains? Rent and $2100
(c) Write an equation for monthly net profit. Net profit is gross Utilities
revenue from the sale of books less monthly expenses. Use N for Janitorial $350
the number of books sold in a month.
Other $1620
(d) How many books must the store sell to break even? Round to
the nearest whole number.
(e) What happens if the store does not sell enough books to
break even one month?
(f ) How many books must the store sell to reach a profit of
$6000 over and above all expenses in a month? Round to the
nearest whole number.
 Expanding the number of stores
McDonald’s (see www.mcdonalds.com) is a successful company that has stores
(restaurants) in more than 100 countries. In fact, managers predict that at some
point in the future as much as 80% of company profits will be from countries
other than the United States. In 2010, the chain had about 26,000 stores, and
managers expect total revenue of over $25 billion. Now that is a lot of
hamburgers, or actually veggie burgers in India! Most people in India are
vegetarians, so when McDonald’s goes to India the menus are radically
changed.
(a) Estimate the average sales per store to the nearest dollar.
(b) Use the average sales per store found in part (a) and write an algebraic expression for
total revenue if managers add N stores next year. Assume that average sales for all of the
stores remain the same and that none of the stores are closed.
(c) Estimate revenue for McDonald’s if the revenue is increased by in 2 years.
(d) List the pros and cons of working at a fast-food restaurant such as McDonald’s. Why
might upper management not want to hire someone to manage a store unless he or she has
worked in one?
 Forecasting Sales
Jane Alcorn had sold items on eBay for several years but felt it was time to open
a retail store. After thinking about the options and competition, she decided to
open a shop specializing in women’s clothing. Sales were slow for her first few
months and she began to wonder how much she should be spending on
advertising. So, she decided to keep track of the monthly amount spent on
advertising and the monthly sales as shown.
Jane’s son Benton used statistics to help
find the equation that was a best fit for the
data. The equation is shown as the straight
line in the graph. He told his mother it
might not help much since it did not take
into account factors such as seasonality or
competition. And of course, Alcorn still had
to decide where to advertise and exactly
what the advertisements should look like.
But she thought the equation might give her
some idea of how much she should spend
on advertising each month.
Forecasting Sales

1) Estimate sales for advertising of $800 and $2000 if Sales =

$6500 + $4.95 # Advertising.
2) Ah, Alcorn thought, this is easy. If you increase advertising from
$800 up to $2000, then sales go up from $10,500 to $16,500. So an
increase in advertising expenses of $1200 results in an increase in
sales of $6000, at least during the first months her business was
open. Her gross profit margin on the fashion goods she carried in
her tiny boutique was 50%. Find the increased gross profit by
multiplying the 50% by the increase in sales.
3) Therefore, an increase in advertising of $1200 results in $3000
more gross profit. Given this information, Alcorn’s first thought
was to borrow $5000 from a bank and advertise a lot. Then she
began to wonder. What suggestions do you have for her? Should
she borrow $5000 and advertise? Why or why not (based on your
intuition)?
General Motors

In some respects, General Motors (GM) is the story of

globalization. It was one of the most successful companies in the
world in the 1960s under the gifted manager Alfred Sloan. As it
expanded globally, some of the jobs that had gone to Americans
were moved overseas, partly to be closer to where vehicles were
sold but also to cut costs.
Gasoline prices increased sharply during the 1970s and many
Americans turned away from GM products and bought cars from
Toyota, Honda, or Nissan. Americans were interested in the
smaller, high-quality cars built by the Japanese. The weakened
state of GM and the financial crisis of 2008–2010 forced the
company to file for bankruptcy in 2009, when the U.S. government
stepped in to help. But the company has since recovered.
 General Motors
Ben James received a bachelor’s degree in statistics and a master’s degree in business
administration. He has worked at GM for several years. Among other things, he studies
data such as that shown in the following two figures and develops equations to forecast
demand.

1) What can you learn from the two figures?

2) Many factors are involved in making a forecast. To illustrate, use the following
equation to make a monthly forecast of car sales (in thousands) in one area given
Advertising = $6.2 (millions), Economic Growth = 2.8% 1.0282, and Level of
Competition = .6.
Sales = 34.8 + 5.3 # Advertising + 485 # Economic Growth - 34.2 # Level of Competition
 General Motors
3) GM has responded to increasing competition, and rapid economic growth in
China by building and selling cars in China. The strategy has worked for GM,
since China is now its largest market. Forecast monthly GM sales in one region
of China using the following equation (in thousands) when Advertising = $5.3
(millions), Economic Growth = 6.5%, and Level of Competition = .7.
Sales = 50.9 + 9.6 # Advertising + 720 # Economic Growth - 28.7 # Level of
Competition
4) In one European country, the sales of GM products increased from 23,850 to
36,400 in the third year that GM was in that market. Use a proportion to estimate
the number of sales in the third year in a neighboring country with a very similar
economy, if year two sales were 14,910.
Discussion Question: Many factors other than those listed here affect sales of
new automobiles. Think about your own family or a family you know and list
things that influence the purchase of an automobile, new or used.
Algebra
1System of Linear Equations
System of Linear Equations
Row Echelon form
Row Echelon form
 Steam Plant

A steam plant burns two types of coal: anthracite (A) and bituminous (B). For
each ton of A burned, the plant produces 27.6 million Btu of heat, 3100 grams
(g) of sulfur dioxide, and 250 g of particulate matter (solid-particle pollutants).
For each ton of B burned, the plant produces 30.2 million Btu, 6400 g of sulfur
dioxide, and 360 g of particulate matter.
a. How much heat does the steam plant produce when it burns x1 tons of A and
x2 tons of B?
b. Suppose the output of the steam plant is described by a vector that lists the
amounts of heat, sulfur dioxide, and particulate matter. Express this output as a
linear combination of two vectors, assuming that the plant burns x1 tons of A and
x2 tons of B.
c. Over a certain time period, the steam plant produced 162 million Btu of heat,
23,610 g of sulfur dioxide, and 1623 g of particulate matter. Determine how
many tons of each type of coal the steam plant must have burned. Include a
vector equation as part of your solution.
Matrix form
 Nutrition Information

The container of a breakfast cereal usually lists the number of calories and the
amounts of protein, carbohydrate, and fat contained in one serving of the cereal.
The amounts for two common cereals are given below. Suppose a mixture of
these two cereals is to be prepared that contains exactly 295 calories, 9 g of
protein, 48 g of carbohydrate, and 8 g of fat.
a. Set up a vector equation for this problem. Include a statement of what the
variables in your equation represent.
b. Write an equivalent matrix equation, and then determine if the desired mixture
of the two cereals can be prepared.
 Examples

One serving of Post Shredded Wheat® supplies 160 calories, 5 g of

protein, 6 g of fiber, and 1 g of fat. One serving of Crispix®
supplies 110 calories, 2 g of protein, .1 g of fiber, and .4 g of fat.
a. Set up a matrix B and a vector u such that Bu gives the amounts
of calories, protein, fiber, and fat contained in a mixture of three
servings of Shredded Wheat and two servings of Crispix.
b. Suppose that you want a cereal with more fiber than Crispix but
fewer calories than Shredded Wheat. Is it possible for a mixture of
the two cereals to supply 130 calories, 3.20 g of protein, 2.46 g of
fiber, and .64 g of fat? If so, what is the mixture?
 Annie’s® Mac and Cheese

After taking a nutrition class, a big Annie’s® Mac and Cheese fan decides to
improve the levels of protein and fiber in her favorite lunch by adding broccoli
and canned chicken. The nutritional information for the foods referred to in this
are given in the table.
a. If she wants to limit her lunch to 400 calories but get 30 g of protein and 10 g
of fiber, what proportions of servings of Mac and Cheese, broccoli, and chicken
should she use?
b. She found that there was too much broccoli in the proportions from part (a),
so she decided to switch from classical Mac and Cheese to Annie’s® Whole
Wheat Shells and White Cheddar. What proportions of servings of each food
should she use to meet the same goals as in part (a)?
 Equilibrium Prices
Suppose a nation’s economy is divided into many sectors, such as various manufacturing,
communication, entertainment, and service industries. Suppose that for each sector we
know its total output for one year and we know exactly how this output is divided or
“exchanged” among the other sectors of the economy. Let the total dollar value of a
sector’s output be called the price of that output.
Leontief proved the following result.
There exist equilibrium prices that can be assigned to the total outputs of the various
sectors in such a way that the income of each sector exactly balances its expenses.
Suppose an economy consists of the Coal,
Electric (power), and Steel sectors, and the output
of each sector is distributed among the various
sectors as shown, where the entries in a column
represent the fractional parts of a sector’s total
output.
Denote the prices (in dollar values) of the total
annual outputs of the Coal, Electric, and Steel
sectors by pC, pE, and pS, respectively. If possible,
find equilibrium prices that make each sector’s
income match its expenditures.
 Examples

Suppose an economy has only two sectors, Goods and Services.

Each year, Goods sells 80% of its output to Services and keeps the
rest, while Services sells 70% of its output to Goods and retains the
rest. Find equilibrium prices for the annual outputs of the Goods
and Services sectors that make each sector’s income match its
expenditures.
 Examples
Suppose an economy has three sectors: Agriculture, Mining, and
Manufacturing. Agriculture sells 5% of its output to Mining and
30% to Manufacturing, and retains the rest. Mining sells 20% of its
output to Agriculture and 70% to Manufacturing, and retains the
rest. Manufacturing sells 20% of its output to Agriculture and 30%
to Mining, and retains the rest. Determine the exchange table for
this economy, where the columns describe how the output of each
sector is exchanged among the three sectors.
 Examples
Consider an economy with three sectors, Chemicals & Metals,
Fuels & Power, and Machinery. Chemicals sells 30% of its output
to Fuels and 50% to Machinery and retains the rest. Fuels sells
80% of its output to Chemicals and 10% to Machinery and retains
the rest. Machinery sells 40% to Chemicals and 40% to Fuels and
retains the rest.
a. Construct the exchange table for this economy.
b. Develop a system of equations that leads to prices at which each
sector’s income matches its expenses. Then write the augmented
matrix that can be row reduced to find these prices.
c. Find a set of equilibrium prices when the price for the Machinery
output is 100 units.
 Examples
Suppose an economy has four sectors, Agriculture (A), Energy (E),
Manufacturing (M), and Transportation (T). Sector A sells 10% of
its output to E and 25% to M and retains the rest. Sector E sells
30% of its output to A, 35% to M, and 25% to T and retains the
rest. Sector M sells 30% of its output to A, 15% to E, and 40% to T
and retains the rest. Sector T sells 20% of its output to A, 10% to E,
and 30% to M and retainsthe rest.
a. Construct the exchange table for this economy.
b. Find a set of equilibrium prices for the economy.
Linear Transformation
 Cambridge Diet

1) If possible, find some combination of nonfat milk, soy flour, and whey to provide the
exact amounts of protein, carbohydrate, and fat supplied by the diet in one day.
2) The Cambridge Diet supplies .8 g of calcium per day, in addition to the nutrients listed in
the Table. The amounts of calcium per unit (100 g) supplied by the three ingredients in the
Cambridge Diet are as follows: 1.26 g from nonfat milk, .19 g from soy flour, and .8 g from
whey. Another ingredient in the diet mixture is isolated soy protein, which provides the
following nutrients in each unit: 80 g of protein, 0 g of carbohydrate, 3.4 g of fat, and .18 g
of calcium.
a. Set up a matrix equation whose solution determines the amounts of nonfat milk, soy flour,
whey, and isolated soy protein necessary to supply the precise amounts of protein,
carbohydrate, fat, and calcium in the Cambridge Diet. State what the variables in the
equation represent.
b. Solve the equation in (a) and discuss your answer.
Algebra
1
Input – Output Model
Input – Output Model
•Suppose
  a nation’s economy is divided into n sectors that produce goods or services,
and let x be a production vector in that lists the output of each sector for one year.
Also, suppose another part of the economy (called the open sector) does not produce
goods or services but only consumes them, and let d be a final demand vector (or
bill of final demands) that lists the values of the goods and services demanded from
the various sectors by the nonproductive part of the economy. The vector d can
represent consumer demand, government consumption, surplus production, exports,
or other external demands.
As the various sectors produce goods to meet consumer demand, the producers
themselves create additional intermediate demand for goods they need as inputs for
their own production. The interrelations between the sectors are very complex, and
the connection between the final demand and the production is unclear. Leontief
asked if there is a production level x such that the amounts produced (or “supplied”)
will exactly balance the total demand for that production, so that
Example

What amounts will be consumed by the manufacturing sector if it decides to produce

100 units?
Leontief Model

C: Consumption Matrix

Consider the economy whose consumption matrix is given above. Suppose the final
demand is 50 units for manufacturing, 30 units for agriculture, and 20 units for
services. Find the production level x that will satisfy this demand.

(I – C)x = d
Theorem
 US Economy
The consumption matrix C below is based on input–output data for the U.S.
economy in 1958, with data for 81 sectors grouped into 7 larger sectors: (1)
nonmetal household and personal products, (2) final metal products (such as
motor vehicles), (3) basic metal products and mining, (4) basic nonmetal
products and agriculture, (5) energy, (6) services, and (7) entertainment and
miscellaneous products.
1) Find the production levels needed to satisfy the final demand d. (Units are
in millions of dollars.)

2) The demand vector in Exercise 13 is reasonable for 1958 data, but

Leontief’s discussion of the economy in the reference cited there used a
demand vector closer to 1964 data: d = (99640; 75548; 14444; 33501; 23527;
263985; 6526). Find the production levels needed to satisfy this demand.