COURSE CODE: CIX1004

COURSE NAME: QUANTITATIVE ANALYSIS FOR

BUSINESS
SESSION 2019/2020
SEMESTER 1
TUTORIAL SLOT: FRIDAY 10:00-11:00am

NAME MATRIC NUMBER

GAN CHIN WEE CIB190023
HWANG YU YONG CIB190031
KATHERINE TAN JIA CHYET CIB190037
LEN ROU YIN CIB190043
SITI NURBALQISH BINTI NOOR CIB190098
HISHAM

LECTURER’ NAME: DR. AZMIN AZLIZA BINTI AZIZ

 Table of Content

1. MATRIX ALGEBRA .................................................................. 2

2. DIFFERENTIATION AND ADDITIONAL

DIFFERENTIATION ....................................................................... 8

3. MULTIVARIABLE CALCULUS ............................................ 12

4. INTEGRATION AND METHODS AND APPLICATIONS

OF INTEGRATION ....................................................................... 20

5. LINEAR PROGRAMMING .................................................... 24

REFERENCES ............................................................................... 34

1
1. Matrix Algebra
Matrices are a useful way to represent, manipulate and study linear maps between finite
dimensional vector spaces (if you have chosen basis). Matrices can also represent quadratic
forms (it's useful, for example, in analysis to study hessian matrices, which help us to study the
behavior of critical points)

a) Gauss-Jordan Method
The process that we use to solve a system of equations with matrices is called the
Gauss-Jordan elimination method. It is a systematic procedure that uses row
operations to attempt to reduce the coefficient matrix to an Identify matrix.

EXAMPLE 1
A furniture factory produces three types of sofas A, B and C. Three machines I, II and III are
used to produce the sofas. The table shows the time required by each machine to produce each
type of sofa and the total time allocated for each machine.

Sofa Total time

allocated for
each machine
Machine A B C (hours)
(hours) (hours) (hours)

I 15 20 18 180
II 17 21 19 192
III 20 18 16 174

Write down the system of linear equations based on the table. Hence, using Gauss-Jordan
Method, find the number of sofas A, B and C produced.

Solving:
Let x be the number of sofas A produced.
Let y be the number of sofas B produced.
Let z be the number of sofas C produced.

15x + 20y + 18z = 180

17x + 21y + 19z = 192
20x + 18y + 16z = 174

2
 15 20 18 𝑥 180
[17 21 19 ] [𝑦 ] = [ 192]
20 18 16 𝑧 174

15 20 18 180
[17 21 19 |192]
20 18 16 174

*R1 = 1/15R1
*R2= -17/20 R3 + R2

1 4/3 6/5 12
[0 57/10 27/5 |441/10]
20 18 16 174

*R1 = -40/171 R2 + R1
*R3 = -20R1 + R3
1 0 −6/95 32/19
[ 0 57/10 27/5 |441/10]
0 −26/3 −8 −66

*R2 = 10/57 R2
*R3 = R3 + 260/171 R2
1 0 −6/95 32/19
[0 1 18/19 |147/19]
0 0 4/19 20/19

*R1 = R1 + 3/10 R3
*R2 = -9/2R3 + R2
*R3 = 19/4 R3
1 0 0 2
[0 1 0 |3]
0 0 1 5
x = 2, y = 3 and z = 5

Therefore, there 2 units of sofa A, 3 units of sofa B and 5 units of sofa are produced.

3
 b) Inverse Method
If the product of A and B us the identity matrix, I, we say that B is the inverse of A (and
A is the inverse of B). The matrix B is called the inverse matrix of A,denoted 𝐴−1 .
Two sqaure matrices, A and B, are called inverses of each other if
AB = I and BA = I
In this case, B = 𝐴−1 and A = 𝐵 −1

EXAMPLE 2
YG Ent has plan to deliver two types out of three types of products, B, W and I. Product B has
a height of 1m, a weight of 1kg and is insured for RM1. Product W has a height of 3m, a weight
4kg and is insured for RM3. Product I has a height of 3m, the weight is 3kg and is insured for
RM4. The company’s truck can carry products with height of 50m, weight of 50kg and insured
for RM60. Set up the system of equation and determine which two products should be carried
in order to maximise the use of the truck and how many units of each product should be carried
using inverse matrices.

Solution:
Let x be the number of Product B.
Let y be the number of Product W.
Let z be the number of Product I.

x + 3y + 3z = 50
x + 4y + 3z = 50
x + 3y + 4z = 60

1 3 3 𝑥 50
[1 4 𝑦
3] [ ] = [50]
1 3 4 𝑧 60

4
 1 3 3 1 0 0
[1 4 3 |0 1 0]
1 3 4 0 0 1
R2* = - R1 + R2
R3*= - R1 + R3
1 3 3 1 0 0
[0 1 0 |−1 1 0]
0 0 1 −1 0 1
*R1 = - 3R2 + R1

1 0 3 4 −3 0
[0 1 0 |−1 0 0]
0 0 1 −1 1 1
*R1 = - 3R3 + R1

1 0 0 7 −3 −3
[0 1 0 |−1 1 0]
0 0 1 −1 0 1

𝑥 7 −3 −3 50
[𝑦] = [−1 1 0 ] [50]
𝑧 −1 0 1 60
20
=[0]
10
x = 20, y = 0 and z = 10.
Therefore, Product B and I Product I should be carried by the company’s truck.

20 units of Product B and 10 units of Product I should be carried by the company’s truck
in order to maximise the use of the truck.

5
EXAMPLE 3
A clothing factory uses three types of cloth C1, C2 and C3 to produce three types of clothes
which are skirts, t-shirts and pants. The table below shows the amount of cloth required (in
inch) for each clothes:
Cloth Skirts T-shirts Pants
C1 20 30 40
C2 10 10 20
C3 30 20 10

Determine the number of each type of clothes which can be produced using 290 inches of C1,
130 inches of C2 and 160 inches of C3.

Let x = Number of skirts which can be produced

y = Number of T-shirts which can be produced
z = Number of pants which can be produced

20𝑥 + 30𝑦 + 40𝑧 = 290

10𝑥 + 10𝑦 + 20𝑧 = 130

30𝑥 + 20𝑦 + 10𝑧 = 160

20 30 40 𝑥 290
[10 10 20 ] [𝑦 ] = [ 130]
30 20 10 𝑧 160

3 1
20 30 40 1 0 0 𝑅1∗=𝑅1 ( 1 ) 1 2 20 0 0 𝑅2∗=𝑅2+(−10𝑅1)
20 2
[𝐴|𝐼] = [10 10 20 | 0 1 0 ] → [10 10 20 | 0 1 0] →
30 20 10 0 0 1 30 20 10 0 0 1

1 1
3 0 0 3 0 0
1 2 20 1 2 20
2 1 𝑅3 ∗=𝑅3 +(−30𝑅1) 2 1 𝑅3 ∗=𝑅3 +(−5𝑅2)
| |
0 −5 0 |− 2 1 0 → 0 −5 0 |− 2 1 0 →
0 −25 −50 − 3 0 1] 0 −25 −50 − 3 0 1]
[ 2 [ 2

6
 3 1 1
3
1
2
2 20
00
𝑅2 ∗=𝑅2 (− ) 1
1 2 20 0 0 𝑅1∗=𝑅1+(−3𝑅2)
5 2 2
[0 −5 15 |− 2
1
1 0] → [0 1 0 |10 − 5 0] →
1 1

0 0 −50 1 −5 1 0 0 −50 1 −5 1

1 3
− 10
1 3
0 − 10 0
1 0 2 1 1 0 2 10
10 𝑅3 ∗=𝑅3 (− ) 𝑅1 ∗=𝑅1 +(−2𝑅3)
1 1
1 0 || 10 − 5
50
[0 1 0 | 1
−5
1
0 →
] 0 0 →
0 0 −50 10 0 0 1 1 1 1
1 −5 1 [ − 50 10 − 50]

3 1 1
−
1 0 0| 50 10 25
1 1
0 1 0 − 0
| 10 5
0 0 1 1 1 1
[ − − ]
50 10 50

3 1 1
−
50 10 25
1 1
𝐴−1 = − 0
10 5
1 1 1
[− 50 10 − 50]

𝑥=A-1B

3 1 1
− 50 10 25 290 2
1 1
−5 0 [130] = [3]
10
1 1 1 160 4
[− 50 10
− 50]

𝑥=2

𝑦=3

𝑧=4

Hence, 2 skirts, 3 T-shirts and 4 pants can be produced.

7
2. Differentiation and Additional Differentiation
Differentiation can help us solve many types of real-world problems. We use the derivative to
determine the maximum and minimum values of particular functions (e.g. cost, strength,
amount of material used in a building, profit, loss, etc.).

a) Marginal Revenue Product

Marginal revenue product (MRP), also known as the marginal value product, is the
market value of one additional unit of output. The marginal revenue product is
calculated by multiplying the marginal physical product (MPP) by the marginal
revenue (MR). The MRP assumes that the expenditures on other factors remain
unchanged.

𝒅𝒓
𝑴𝒂𝒓𝒈𝒊𝒏𝒂𝒍 𝒓𝒆𝒗𝒆𝒏𝒖𝒆 𝒑𝒓𝒐𝒅𝒖𝒄𝒕 =
𝒅𝒎

EXAMPLE 1
Carly owns a small factory that sells cosmetics, given the demand function for their products
is p = 100 + q where q is the quantity produced. Carly has m number of workers, they can
produce q = 8m units per day. By determining the revenue function and marginal revenue
function, find the marginal revenue product when Carly hires 5 workers. Intepret your answer.

Revenue function

𝑟 =𝑝𝑥𝑞
𝑟 = (100 + 𝑞)𝑞
𝑟 = 100𝑞 + 𝑞 2

Marginal revenue function

𝑑𝑟 𝑑
= (100𝑞 + 𝑞 2 )
𝑑𝑞 𝑑𝑞

𝑑𝑟
= 100 + 2𝑞
𝑑𝑞

8
 The marginal revenue product when m = 5

𝑑𝑟
𝑀𝑎𝑟𝑔𝑖𝑛𝑎𝑙 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝑝𝑟𝑜𝑑𝑢𝑐𝑡 =
𝑑𝑚
𝑑𝑟 𝑑𝑟 𝑑𝑞
= ×
𝑑𝑚 𝑑𝑞 𝑑𝑚
𝑑𝑟
= (100 + 2𝑞)(8)
𝑑𝑚
𝑑𝑟
= 800 + 16𝑞
𝑑𝑚

𝑊ℎ𝑒𝑛 𝑚 = 5, 𝑞 = 8(5) = 40,

𝑑𝑟
= 800 + 16(40) = 1440
𝑑𝑚

An increase of a worker from 5 to 6 corresponds to an increase of approximately

RM1440 in revenue.

b) Consumption Function

The consumption function, or Keynesian consumption function, is an economic formula

that represents the functional relationship between total consumption and gross national
income. It was introduced by British economist John Maynard Keynes, who argued the
function could be used to track and predict total aggregate consumption expenditures.

𝑪𝒐𝒏𝒔𝒖𝒎𝒑𝒕𝒊𝒐𝒏 𝑭𝒖𝒏𝒄𝒕𝒊𝒐𝒏, 𝑪 = 𝒇(𝑰)

𝑺=𝑰−𝑪

𝒅𝑺 𝒅𝑪
=𝟏−
𝒅𝑰 𝒅𝑰

𝑴𝒂𝒓𝒈𝒊𝒏𝒂𝒍 𝒑𝒓𝒐𝒑𝒆𝒏𝒔𝒊𝒕𝒚 𝒕𝒐 𝒔𝒂𝒗𝒆 = 𝟏 − 𝒎𝒂𝒓𝒈𝒊𝒏𝒂𝒍 𝒑𝒓𝒐𝒑𝒆𝒏𝒔𝒊𝒕𝒚 𝒕𝒐 𝒄𝒐𝒏𝒔𝒖𝒎𝒆

EXAMPLE 2

Suppose that a country’s consumption function is estimated by C = 0.01I2 + 0.2I + 50, where
C and I are expressed in billions of RM. Calculate the marginal propensity to consume and
marginal propensity to save when income is RM30 billion.

9
 𝑑𝐶 𝑑
= (0.01𝐼 2 + 0.2𝐼 + 50)
𝑑𝐼 𝑑𝐼
𝑑𝐶
= 0.02𝐼 + 0.2
𝑑𝐼

𝑑𝐶
𝑊ℎ𝑒𝑛 𝐼 = 30, = 0.02(30) + 0.2 = 0.8
𝑑𝐼

𝑑𝑆 𝑑𝐶
=1−
𝑑𝐼 𝑑𝐼

𝑑𝑆
= 1 − 0.8 = 0.2
𝑑𝐼

⸫So, the marginal propensity to consume is 0.8 where as marginal propensity to save is 0.2.

c) Elasticity of Demand
Elasticity of demand measures how reposnsive demand is to changes in price.
Point elasticity of demand, 𝜂 𝑖𝑠
𝑝
𝑞 𝑝 𝑑𝑞
𝜂 = 𝑛(𝑞) = = 𝑥
𝑑𝑝 𝑞 𝑑𝑝
𝑑𝑞

where p is price and q is quantity

Three categories of elasticity:

(i) │𝜂│ > 1. Demand is elastic. When the response to price changes is considerable.

(ii) │𝜂│ = 1. Demand is unitary elastic / has unit elasticity. The percentage of decrease in
demand is approximately equal to the corresponding percentage increase in price.

(iii)│𝜂│ < 1. Demand is inelastic. When price changes cause relatively small changes in

demand for a product.

10
EXAMPLE 3

Delyn company sells several types of perfumes in the market. Delyn company wants to
determine the elasticity of one of the types of perfumes. The demand function for that type of
500−5𝑞
perfume is given by 𝑝 = , where p is the price per unit (in RM) when q is the demanded
2

quantity. Determine the elasticity of the demand and the approximate percentage change in the
price if the demand increases by 2% and the price per unit is RM50?

Point of elasticity of demand when p = 50

500 − 5𝑞
𝑝=
2

500 − 2𝑝
𝑞=
5

500 − 2(50)
𝑤ℎ𝑒𝑛 𝑝 = 50, 𝑞 = = 80 𝑢𝑛𝑖𝑡𝑠
5

𝑑𝑞 𝑑 500 − 2𝑝
= ( )
𝑑𝑝 𝑑𝑝 5

𝑑𝑞 2
=−
𝑑𝑝 5

𝑝 𝑑𝑞
𝜂= 𝑥
𝑞 𝑑𝑝

50 2
𝜂= 𝑥−
80 5

𝜂 = −0.25

│𝜂│ = │ − 0.25│

│𝜂│ = 0.25

⸫𝑺𝒊𝒏𝒄𝒆 𝟎. 𝟐𝟓 < 𝟏, 𝒅𝒆𝒎𝒂𝒏𝒅 𝒊𝒔 𝒊𝒏𝒆𝒍𝒂𝒔𝒕𝒊𝒄

% ∆ 𝑖𝑛 𝑑𝑒𝑚𝑎𝑛𝑑
𝜂=
% ∆ 𝑖𝑛 𝑝𝑟𝑖𝑐𝑒

2%
% ∆ 𝑖𝑛 𝑝𝑟𝑖𝑐𝑒 = = 1.28%
1.5625

⸫ 𝑺𝒐, 𝒕𝒉𝒆 𝒑𝒓𝒊𝒄𝒆 𝒘𝒊𝒍𝒍 𝒊𝒏𝒄𝒓𝒆𝒂𝒔𝒆 𝒃𝒚 𝟏. 𝟐𝟖% 𝐢𝐟 𝐭𝐡𝐞 𝐝𝐞𝐦𝐚𝐧𝐝 𝐢𝐧𝐜𝐫𝐞𝐚𝐬𝐞𝐬 𝐛𝐲 𝟐%.

11
3. Multivariable Calculus
Multivariable calculus is the study of calculus with more than one variable. It is known that
differentiation and integration of two or more variables by partial derivative by using the first
order of test in finding the critical point. Then, apply the second order of test to find maxima,
minima and saddle point. Besides, first and second order helps to solve optimization problems.
The method of Lagrange multipliers is a technique in mathematics to find the local maxima
or minima of a function 𝑓(𝑥1, 𝑥2 ,⋯, 𝑥𝑛 )subject to constraints 𝑔𝑖 (𝑥1, 𝑥2 ,⋯, 𝑥𝑛 ) = 0. Lagrange
multipliers are also used very often in economics to help determine the equilibrium point of a
system because they can be interested in maximizing/minimizing a certain outcome.

a) Maxima and Minima for Functions of Two Variables

EXAMPLE 1
A firm is allowed to charge different prices for its domestic and industrial customers. If 𝑃1
and 𝑄1 denote the price and demand for the domestic market then the demand equation is
𝑃1 + 𝑄1 = 500
If 𝑃2 and 𝑄2 denote the price and demand for the industrial market then the demand equation
is
2𝑃2 + 3𝑄2 = 720
The total cost function is
𝑇𝐶 = 50 000 + 20𝑄
Where 𝑄 = 𝑄1 + 𝑄2 . Determine the firm’s pricing policy that maximises profit with price
discrimination and calculate the value of the maximum profit, in RM.

Solution:
For the domestic market the demand equation is
𝑃1 + 𝑄1 = 500
Which rearranges as
𝑃1 = 500 − 𝑄1
The total revenue function for this market is then
𝑇𝑅1 = 𝑃1 𝑄1 = (500 − 𝑄1 )𝑄1 = 500𝑄1 − 𝑄12
For the industrial market the demand equation is

2𝑃2 + 3𝑄2 = 720

12
Which rearranges as
3
𝑃2 = 360 − 𝑄2
2

The total revenue function for this market is then

𝑇𝑅2 = 𝑃2 𝑄2
3
= (360 − 𝑄2 ) 𝑄2
2
3
= 360𝑄2 − 𝑄22
2

The total revenue received from sales in both markets is

𝑇𝑅 = 𝑇𝑅1 + 𝑇𝑅2
3
= 500𝑄1 − 𝑄12 + 360𝑄2 − 𝑄22
2

The total cost of producing these good is given by

𝑇𝐶 = 50 000 + 20𝑄
since 𝑄 = 𝑄1 + 𝑄2,
𝑇𝐶 = 50 000 + 20(𝑄1 + 𝑄2 )
= 50 000 + 20𝑄1 + 20𝑄2

The firm’s profit function is therefore

𝑃𝑟𝑜𝑓𝑖𝑡 = 𝑇𝑅 − 𝑇𝐶
3
= (500𝑄1 − 𝑄12 + 360𝑄2 − 𝑄22 ) − (50 000 + 20𝑄1 + 20𝑄2 )
2
3
= 480𝑄1 − 𝑄12 + 340𝑄2 − 𝑄22 − 50 000
2

This is a function of the two variables, 𝑄1 and 𝑄2 . The first and second order partial
derivatives are

13
 𝜕𝜋
= 480 − 2𝑄1
𝜕𝑄1
𝜕𝜋
= 340 − 3𝑄2
𝜕𝑄2
𝜕 2𝜋
= −2
𝜕𝑄12
𝜕 2𝜋
= 0
𝜕𝑄1 𝜕𝑄2
𝜕 2𝜋
= −3
𝜕𝑄22
STEP 1
At stationary point
𝜕𝜋
=0
𝜕𝑄1
𝜕𝜋
=0
𝜕𝑄2
Solving the simultaneous equations
480 − 2𝑄1 = 𝑂
340 − 3𝑄2 = 𝑂
The first equation immediately gives
480
𝑄1 = = 240
2
While the second gives
340
𝑄2 =
3
STEP 2
To check that the conditions for a maximum are satisfied:
𝜕 2𝜋
= −2 < 0
𝜕𝑄12
𝜕 2𝜋
= −3 < 0
𝜕𝑄22
𝜕 2𝜋 𝜕 2𝜋 𝜕 2𝜋 2
( ) ( ) − ( ) = (−2)(−3) − 02
𝜕𝑄12 𝜕𝑄22 𝜕𝑄1 𝜕𝑄2

=6>0

14
To get the optimum prices, substitute
340
𝑄1 = 240 and 𝑄2 = 3

Into the corresponding demand equations.

For the domestic market
𝑃1 = 500 − 𝑄1
= 500 − 240
= 𝑹𝑴𝟐𝟔𝟎
For the industrial market
3
𝑃2 = 360 − 𝑄1
2
3 340
= 360 − ( )
2 3
= 𝑹𝑴𝟏𝟗𝟎
Substitute the values of 𝑄1 and 𝑄2 into the profit function
3 2
𝑃𝑟𝑜𝑓𝑖𝑡 = 480𝑄1 − 𝑄12 + 340𝑄2 − 𝑄 − 50 000
2 2
340 3 340 2
= 480(240) − (240)2 + 340 ( )− ( ) − 50 000
3 2 3
= 𝟐𝟔𝟖𝟔𝟔. 𝟔𝟕
The maximum profit is RM26866.67 when 𝑷𝟏 is RM260 and 𝑷𝟐 is Rm190.

EXAMPLE 2

A company producing box container wants to produce a container with an open top to have 10
𝑚3 capacity and be made of thin sheet metal. Calculate the dimensions of the box if it is to use
the minimum possible amount of metal.
Solution: Let A be the total area of metal used to make the box and let 𝓍 and 𝓎 be the length
and width and 𝓏 the height. Then

A = 2𝔵𝓏 + 2𝓎𝓏 + 𝓍𝓎

Also

𝓍𝓎𝓏 = 10

15
 10
Because the volume is 10 𝑚3 . This implies that 𝓏 = 𝓍𝓎. Putting this into the formula for A

gives A as a function of 𝓍 and 𝓎 only:

10 10
A = 2𝔵 (𝓍𝑦) + 2𝓎 (𝓍𝑦) + 𝓍𝑦

20 20
= + + 𝓍𝑦
𝑦 𝓍

We shall apply our techniques to this function. Now

𝜕𝐴 20 𝜕𝐴 20
= 𝑦− , =𝑥−
𝜕𝑥 𝑥2 𝜕𝑦 𝑦2

And for a stationary point we need 𝜕𝐴/𝜕𝑥 =𝜕𝐴 = 0. This gives

20 20
𝑦= and 𝑥 =
𝑥2 𝑦2

Therefore

20 𝑦4
𝑦= (20/𝑦 2 )2
= 20

𝑦 3 = 20

Since the zero root 𝑦 = 0 is obviously not consistent with having a volume of 10 𝑚3 we
reject 𝑦 = 0 and conclude that 𝑦 3 = 20 so that 𝒚 = 𝟐𝟎𝟏/𝟑 = 2.714 meters. From 𝑥 = 20/𝑦 2
10
we conclude 𝒙 = 2.714 meters also. To find 𝓏 =𝓍𝑦 so that 𝔃 = 𝟏. 𝟑𝟓𝟕𝐦𝐞𝐭𝐞𝐫𝐬.

We have to show that these values indeed give a minimum value. Now

𝜕2𝐴 𝜕2 𝐴 40 𝜕2 𝐴 40
= 1, = 𝑥3, = 𝑥3
𝜕𝑥𝜕𝑦 𝜕𝑥 2 𝜕𝑦 2

So, when (𝑥,y) = (2.714,2.714),

𝐴𝑋𝑋 𝐴𝑌𝑌 − 𝐴2𝑥𝑦 = (2)(2) − 12 = 3 > 0

16
So, it is either a max or min. But 𝐴𝑋𝑋 > 0 and 𝐴𝑌𝑌 > 0 so it is a minimum. Our conclusion
is that the box should have length of 2.714 m, width of 2.714m and height of 1.357m.
The actual area of metal used will then (from formula for 𝑨) be 22.1 𝒎𝟐 .

20 20
A= + + 𝓍𝑦
𝑦 𝓍

20 20
= 2.714 + 2.714 + 2.714(2.714)

= 22.1 𝑚2

b) Lagrange Multipliers

EXAMPLE 3

The golf ball manufacturer, Titan, has developed a profit model that depends on the
number 𝑥 of golf balls sold per month (measured in thousands), and the number of hours per
month of advertising y, according to the function

𝑧=𝑓(𝑥,𝑦)=48𝑥+96𝑦−𝑥2−2𝑥𝑦−9𝑦2,

where 𝑧 is measured in thousands of dollars. The budgetary constraint function relating the cost
of the production of thousands golf balls and advertising units is given by 20𝑥+4𝑦=216. Find
the values of 𝑥 and 𝑦 that maximize profit, and find the maximum profit.

Solution:

The objective function is 𝑓(𝑥,𝑦)=48𝑥+96𝑦−𝑥2−2𝑥𝑦−9𝑦2. To determine the constraint function,

we first subtract 216 from both sides of the constraint, then divide both sides by 4, which
gives 5𝑥+𝑦−54=0.The constraint function is equal to the left-hand side, so 𝑔(𝑥,𝑦)=5𝑥+𝑦−54.
The problem asks us to solve for the maximum value of 𝑓, subject to this constraint.

So, we calculate the gradients of both 𝑓f and 𝑔g:

𝑓(𝑥,𝑦)=( 48−2x−2y)i^+(96−2x−18y)j^

g(x, y)=5i^+j^.

17
The equation 𝑓(𝑥0 , 𝑦0 )=λ , 𝑔(𝑥0 , 𝑦0 ) becomes

(48−2𝑥0 −2𝑦0 )𝑖̂+(96−2𝑥0 −18𝑦0 ) j^=λ(5i^+j^),

which can be rewritten as

(48−2𝑥0 −2𝑦0𝑦0 ) i^+(96−2𝑥0 −18𝑦0 )j^=λ5i^+λj^.

We then set the coefficients of i^ and j^ equal to each other:

48−2𝑥0 −2𝑦0 =5λ

96−2𝑥0 −18𝑦0 =λ.

The equation 𝑔(𝑥0,𝑦0)=0 becomes 5𝑥0+𝑦0−54=0. Therefore, the system of equations that
needs to be solved is

48−2𝑥0 −2𝑦0 =5λ

96−2𝑥0 −18𝑦0 =λ

5𝑥0 +𝑦0 −54=0.

We use the left-hand side of the second equation to replace λ in the first equation:

48−2𝑥0 −2𝑦0 =5(96−2𝑥0 −18𝑦0 )

48−2𝑥0 −2𝑦0 =480−10𝑥0 −90𝑦0

8𝑥0 =432−88𝑦0

𝑥0 =54−11𝑦0 .

Then we substitute this into the third equation:

5(54−11𝑦0 )+ 𝑦0 −54=0

270−55𝑦0 +𝑦0 -54=0

216−54𝑦0 =0

𝑦0 =4.

Since 𝑥0 =54−11𝑦0 , this gives 𝑥0 =10.

We then substitute (10,4) into 𝑓(𝑥,𝑦)=48𝑥+96𝑦−𝑥 2 −2𝑥𝑦−9𝑦 2 , which gives

18
𝑓(10,4)=48(10)+96(4)−(10)2−2(10)(4)−9(4)2

=480+384−100−80−144

=540.

Therefore the maximum profit that can be attained, subject to budgetary constraints,
is $540,000 with a production level of 10,000 golf balls and 4 hours of advertising bought per
month. Let’s check to make sure this truly is a maximum. The endpoints of the line that defines
the constraint are (10.8,0) and (0,54) Let’s evaluate 𝑓 at both of these points:

𝑓(10.8,0)=48(10.8)+96(0)−10.82 −2(10.8)(0)−9(02 )=401.76

𝑓(0,54)=48(0)+96(54)−02 −2(0)(54)−9(542 )=−21,060.

The second value represents a loss, since no golf balls are produced. Neither of these values
exceed 540, so it seems that our extremum is a maximum value of 𝑓, subject to the given
constraint.

19
4. Integration and Methods and Applications of Integration

a) Logistic Function
𝑴
𝑵=
𝟏 + 𝒃𝒆−𝒄𝒕
where
N = Number of population
M = Maximum number of population
c = Parameter that affects the rate of exponential growth
t = Time period
Also called the Verhulst-Pearl logistic function.
Alternative Form of Logistic Function:
𝑴
𝑵=
𝟏 + 𝒃𝑪𝒕

EXAMPLE 1
In a chicken breeding business, suppose that the maximum number of chickens to be in the
farm is 500 chickens due to the limitation of space. Initially, the amount of chickens in the farm
were 20. After a year, the number of chickens increased to 100. Taylor, the owner of the
business hopes that there will be 400 chickens or more after 3 years. Provided that enrolment
follows a logistic function, how many chickens will be in the farm after 3 years? Can Taylor’s
hope be achieved after 3 years?
Logistic function Alternative Form of logistic function
𝑴 𝑴
𝑵 = 𝟏+𝒃𝒆−𝒄𝒕 𝑵 = 𝟏+𝒃𝑪𝒕

M = 500
When t = 0, N = 20
𝑀 500
𝑁 = 1+𝑏𝐶 𝑡 ➔ 20 = 1+𝑏(1)

500
1+𝑏 = 20

𝑏 = 24
When t = 1, and N =100,
500 500
100 = 1+24𝐶 ➔ 1 + 24𝐶 = 100

1 + 24𝐶 = 5
1
𝐶= 6

20
Thus, when t = 3, N = ?
500
𝑁= 1 3
1+24( )
6

= 450 chickens
Taylor’s hope can be achieved as there will be 450 chickens in the farm after 3 years,
more than what he expected (400chickens).

b) Newton’s Law of Cooling

The temperature of the cooling body changes at a rate proportional to the difference
between the temperature of the body and the surrounding temperature.
Newton’s Law of Cooling is applied to determine the time at which a homicide was
committed.
𝒅𝑻
= 𝒌(𝑻 − 𝒂)
𝒅𝒕
where
T(t) = Temperature of body at time t
a = Surrounding temperature
k = Constant of proportionality

EXAMPLE 2
A famous celebrity was found suicided in the hotel. Police arrived on the scene at 10.00p.m.
The temperature of the body at that time was 30 °C, and one hour later it was 28 °C. The
temperature of the room in which the body was found was 20 °C. Estimate the time at which
the suicide occurred.
Newton’s Law of Cooling
𝒅𝑻
= 𝒌(𝑻 − 𝒂)
𝒅𝒕
Let t = Number of hours after the body was discovered
T(t) = Temperaute of the body at time t
t = 0, T = 30 °C 𝑑𝑇
= 𝑘(𝑇 − 𝑎)
𝑑𝑡
t = 1, T = 28 °C 𝑑𝑇
= 𝑘(𝑇 − 20)
𝑑𝑡
a = 20 °C
𝑑𝑇
when T = 37 °C, t = ? ∫ = ∫ 𝑘 𝑑𝑡
𝑇 − 20
ln(𝑇 − 20) = 𝑘𝑡 + 𝐶

21
 When t = 0, T = 30 °C When t = 1, T = 28 °C
ln(30 − 20) = 𝑘(0) + 𝐶 ln(28 − 20)
= 𝑘(1)
10
𝐶 = ln 10
8
Hence, ln(𝑇 − 20) = 𝑘𝑡 + ln 10 𝑘 = 𝑙𝑛
10
ln(𝑇−20) ln(𝑇 − 20) 8
= 𝑘𝑡 = 𝑡 𝑙𝑛
10
10 10

When T = 37 °C (normal body temperature), t = ?

ln(37 − 20) 8
= 𝑡 𝑙𝑛
10 10
17
𝑙𝑛 10
𝑡=
8
𝑙𝑛 10

𝑡 = −2.38
Accordingly, the suicide occured around 2.38 hours before the time of discovery of the
body (10.00pm). The celebrity suicided at about 7.37pm.

c) Consumer’s Surplus & Producer’s Surplus

Consumer surplus is derived whenever the price a consumer actually pays is less than
they are prepared to pay.
𝒒
Consumer surplus, CS, is defined as 𝑪𝑺 = ∫𝟎 𝟎[𝒇(𝒒) − 𝒑𝟎 ]𝒅𝒒

Producer surplus is the additional private benefit to producers, in terms of profit and
gain when the price they receive in the market is more than the minimum price prepared
to supply for.
𝒒
Producer surplus, PS, is defined as 𝑷𝑺 = ∫𝟎 𝟎[𝒑𝟎 − 𝒈(𝒒)]𝒅𝒒

(𝒒𝟎 ; 𝒑𝟎 ): Point of equilibrium → when two curves intersect

Companies use consumer and producer surplus to price their items to create the greatest
amount of producer surplus. This is how companies expand their profit margin on each
item, so that they can generate greater net revenues for the entire company.

22
EXAMPLE 3
The demand function for Coffea Coffee is 𝑝 = 𝑓(𝑞) = 200 − 0.1𝑞 where p is the price per
unit (in RM) for q units. The supply function is 𝑝 = 𝑔(𝑞) = 20 + 0.2𝑞. Determine consumers’
surplus and producer’s surplus of the company under market equilibrium.

Equilibrium point:
𝑓(𝑞) = 𝑔(𝑞)
200 − 0.1𝑞 = 20 + 0.2𝑞
180 = 0.3𝑞
𝑞 = 𝑞0 = 600
Thus, 𝑝0 = 200 − 0.1(600) = 140
Consumer Surplus,
𝑞0
𝐶𝑆 = ∫ [𝑓(𝑞) − 𝑝0 ]𝑑𝑞
0
600 600
=∫ (200 − 0.1𝑞 − 140)𝑑𝑞 = ∫ ( 60 − 0.1𝑞) 𝑑𝑞
0 0

0.1𝑞 2 600
= [60𝑞 − ]
2 0
= 𝑹𝑴𝟏𝟖, 𝟎𝟎𝟎
Producer Surplus,
𝑞0
𝑃𝑆 = ∫ [𝑝0 − 𝑔(𝑞)]𝑑𝑞
0
600 600
=∫ [140 − (20 + 0.2𝑞)]𝑑𝑞 = ∫ (120 − 0.2𝑞) 𝑑𝑞
0 0

0.2𝑞 2 600
= [120𝑞 − ]
2 0
= 𝑹𝑴𝟑𝟔, 𝟎𝟎𝟎

23
5. Linear Programming

Question 1

J&E boutique uses two machines, A and B in their daily production. Each unit of blouse that
is produced requires 6 minutes processing on machine A and 30 minutes processing on
machine B. Each unit of skirt that is produced requires 9 minutes processing on machine A
and 32 minutes processing on machine B. The available time on machine A in March is
forecast to be 30 hours and on machine B in March is forecast to be 120 hours. Each unit of
blouse sold in March gives a contribution to profit of RM12 and each unit of skirt sold in
March gives a contribution to profit of RM5.

a) Formulate the problem of deciding how much of each product to make in March as a linear
program.
b) Solve this linear program graphically.
c) If machine A has extra 140 minutes available, using sensitivity analysis, what is your
comment?
d) If J&E boutique is now able to produce one extra unit of blouse in March, what is your
comment?
e) If the company is now able to produce one extra unit of skirt in March, what is your
comment?

a) Let x = number of blouse produced in March

y = number of skirt produced in March

Number of blouse Number of skirt Total

produced in March, x produced in March, y
Time of processing on 6 9 1800
machine A (minute)
Time of processing on 30 32 7200
machine B (minute)

24
30 hours x 60 minutes = 1800 minutes

120 hours x 60 minutes = 7200 minutes

The constraints are:

6x + 9y ≤ 1800

30x + 32y ≤ 7200

x≤0

y≤0

The objective is to maximise profit = 12x + 5y

a) 6x + 9y = 1800 30x + 32y = 7200

x y x y

0 200 0 225

300 0 240 0

‫؞‬The maximum revenue is

RM 1680 and is reached
when 225 units of blouse are
produced in March.

25
b) We need to find the new optimal point when the duration for usage of machine A
increased 140 minutes,
6x + 9y = 1800
When x=225, 6(225) + 9y = 1800
y=50
‫؞‬new optimal point is (140,50)
New optimal profit = 12(140) + 5 (50)
=RM1930
Shadow price = RM2880- RM1930
= RM950
‫ ؞‬J&E boutique should increase the duration of usage of machine A if it costs less than
RM250.

d) 30x + 32y = 7200

when x= 226,
30(226)+32y=7200
Y=13.13
New optimal point= (141,13.13)
New optimal profit= 12(141)+5(13.13)
=RM 1757.65

‫ ؞‬J&E boutique should increase the number of blouse produced in March if it cost less
than RM1757.65per unit.

e) 30x+32y=7200

When y = 1,

30x + 32(1) =7200

x = 238.93

New optimum point = (238.93,1)

New optimal profit =12(238.93)+5(1)

=RM2872.16

26
Shadow price = RM2872.16– RM2880

= RM7.84

‫ ؞‬J&E boutique should increase the number of blouse produced in March if it cost less
than RM7.84per unit.

27
Question 2

A baker bakes cookies and biscuits for sell. Each packs of cookies can be sold for a profit of
RM18 and each packs of biscuits for a profit of RM12. The baker can afford to spend up to
10 hours per month working for baking the cookies and takes 25 hours to make the biscuits.
The baker uses 12 kilograms of flours to make the cookies while 10 kilograms of flours for
the biscuits. The maximum monthly working time of the baker is 500 hours. Maximum 300
kilograms of flour will be provided every month.

a) Formulate this problem as a linear programming problem.

b) Solve it graphically.

c) If the weight of flour used has extra 40 kilograms available, using sensitivity analysis,
what is your comment?

d) If the carpenter is now able to produce one extra unit of cookies made per month, what
is your comment?

a) Let x = number of cookies made per day

y = number of biscuits made per day

Number of cookies made Number of biscuits made Total

per month, x per month, y
Working hour per month 10 25 500
(hour)
Weight of flours used 12 10 300
(kilograms)
The constraints are:

10x + 25y ≤ 500

12x + 10y ≤ 300

x≥0

28
y≥0

The objective is to maximise profit = 18x + 12y

b) 10x +25y = 500 15x + 10y = 300

x y x y
0 20 0 30
50 0 25 0

Vertex Objective Function = 18x + 12y

A (0,0) 18 (0) + 12 (0) = 0
B (0,20) 18 (0) + 12 (20) = 240
C (16,16) 18 (16) + 12 (16) = 480
D (25,0) 18 (25) + 12 (0) = 450

29
 ‫؞‬The maximum profit is RM 240 and is reached when 16 units of cookies and 16
units of biscuit are made monthly.

c) We need to find the new optimal point when the weight of flour used has 10kg extra
kilograms available,

15x+30y=300

When x=16

15(16) + 10y = 300

y=6

New optimal point is (16,6)

New optimal profit=18(16)+12(6)

=RM360

Shadow price= RM240-RM360

=RM120

‫؞‬The baker should increase the weight of flour by 10 kg kilograms if it costs less than
RM120.

c) 15x+10y=300

When x=17,

15(17)+30y =300

y=1.5

New optimal point= (17,1.5)

New optimal profit=18(17)+12(1.5)

=324

Shadow price= RM240-RM324

=RM84

30
 ‫؞‬The baker should increase the weight of flour by 10 kg kilograms if it gains extra
than RM84.

Question 3

In a company, there are two main products which is (A and B) and the profit per unit sold is
RM 5 and RM 2 respectively. Each product has to be gathered together on a particular
machine, each unit of product A taking 3 hours of gather time and each unit of product B 2
hour of gather time. Due to maintenance, the company estimates that the machine used for
gathering has an effective working week of only 160 hours. Each product has to be packaged
and checked before sell. Each unit of product A take 1 hour to packaged and checked while
each product B require 30 minutes to packaged and checked. The maximum working hour for
workers is 90 hours.

a) Formulate the problem of how much of each product to produce as a linear program.

b) Solve this linear program graphically.

c) If the time of gather has an extra hour available, using sensitivity analysis, what is your
comment?

d) If the time of packaging and checking has extra 2 hours available, what is your comment?

a) Let x = number of product A

y = number of product B

Number of Number of product B, y Total

product A, x
Time of gathering (hour) 3 2 200
Time of packaging and 1 0.5 70
checking (hour)

31
The constraints are:

3x + 2y ≤ 200

x + 0.5y ≤ 70

x≥0

y≥0

The objective is to maximise profit = 5x + 2y

b) x + 2y = 150 x + y = 90
x y x y
0 75 0 90
150 0 90 0

32
c) x+2y=151

when x=90

90+2y=151

y=30.5

New optimal point is (90,30.5)

New optimal profit=5(90)+2(30.5)

=RM511

Shadow price= RM450-RM511

=RM61

‫؞‬The company should increase the time of packaging and checking if it gains extra
RM61.

d) x+y=90

When y=0,

x+0=90

x=90

New optimal point= (90,0)

New optimal profit=5(90)+2(0)

=450

Shadow price= RM450-RM450

=RM0

‫؞‬The company should not increase/decrease the time of packaging and checking since
there is no increase in profit.

33
REFERENCES
Acca. (n.d.). Linear programming. Retrieved November 29, from
https://www.accaglobal.com/my/en/student/exam-support-resources/fundamentals-
exams-study-resources/f5/technical-articles/linear-programming.html.

Azmin, A. A. & Phoong, S. W. (2019). Quantitative Analysis for Business.

Chapter 12 Linear Programming - National Council of ... (n.d.). Retrieved Novembe

29, 2019, from http://www.ncert.nic.in/NCERTS/l/lemh206.pdf.

Haslida, T. (2017). Mathematics Student Notes, Malaysia: Unit Matemetik, Kolej

Matrikulasi Johor, Kementerian Pendidikan Malaysia.

Tai, P. H. (2017). Pre-U Text STPM Mathematics (T) First Term, Malaysia:
Sasbadi Sdn. Bhd.

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