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Optimization Techniques and New Management Tools

The document provides information on optimization techniques and new management tools. It includes equations, tables, and graphs showing relationships between variables like quantity (Q), total revenue (TR), total cost (TC), average cost (AC), and marginal cost (MC). It also covers profit maximization calculations and concepts from calculus like derivatives, limits, and using derivatives to find maxima and minima.

Uploaded by

Piyush Kakkar
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© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
43 views14 pages

Optimization Techniques and New Management Tools

The document provides information on optimization techniques and new management tools. It includes equations, tables, and graphs showing relationships between variables like quantity (Q), total revenue (TR), total cost (TC), average cost (AC), and marginal cost (MC). It also covers profit maximization calculations and concepts from calculus like derivatives, limits, and using derivatives to find maxima and minima.

Uploaded by

Piyush Kakkar
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Optimization Techniques

and New Management Tools


Expressing Economic
Relationships

Equations: TR = 100Q - 10Q2

Tables: Q
TR
0
0
1
90
2 3 4 5 6
160 210 240 250 240
TR
300

250

Graphs:
200

150

100

50

0
0 1 2 3 4 5 6 7

Q
Total, Average, and
Marginal Cost
Q TC AC MC
0 20 - -
AC = TC/Q 1 140 140 120
2 160 80 20
MC = TC/Q 3 180 60 20
4 240 60 60
5 480 96 240
Total, Average, and
Marginal Cost
TC ($)
240

180

120

60

0
0 1 2 3 4
Q

AC, MC ($) MC
AC

120

60

0
0 1 2 3 4 Q
Profit Maximization

Q TR TC Profit
0 0 20 -20
1 90 140 -50
2 160 160 0
3 210 180 30
4 240 240 0
5 250 480 -230
Profit Maximization
($) 300
TC

240
TR
180
MC

120

60

MR
0 Q
0 1 2 3 4 5
60
30
0
-30 Profit
-60
Concept of the Derivative

The derivative of Y with respect to X is


equal to the limit of the ratio Y/X as
X approaches zero.

dY Y
 lim
dX X 0 X
Rules of Differentiation
Constant Function Rule: The derivative
of a constant, Y = f(X) = a, is zero for all
values of a (the constant).

Y  f (X )  a

dY
0
dX
Rules of Differentiation
Power Function Rule: The derivative of
a power function, where a and b are
constants, is defined as follows.

Y  f (X )  aX b

dY
 b  a X b 1
dX
Rules of Differentiation
Sum-and-Differences Rule: The derivative
of the sum or difference of two functions
U and V, is defined as follows.
U  g( X ) V  h( X ) Y  U V

dY dU dV
 
dX dX dX
Rules of Differentiation
Product Rule: The derivative of the
product of two functions U and V, is
defined as follows.
U  g( X ) V  h( X ) Y  U V

dY dV dU
U V
dX dX dX
Rules of Differentiation
Quotient Rule: The derivative of the
ratio of two functions U and V, is
defined as follows.
U
U  g( X ) V  h( X ) Y
V

dY


V dU
dX  
 U dV
dX 
2
dX V
Rules of Differentiation
Chain Rule: The derivative of a function
that is a function of X is defined as follows.

Y  f (U ) U  g(X )

dY dY dU
 
dX dU dX
Optimization With Calculus

Find X such that dY/dX = 0


Second derivative rules:
If d2Y/dX2 > 0, then X is a minimum.
If d2Y/dX2 < 0, then X is a maximum.

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