CHAPTER TWO

MATRIX ALGEBRA AND ITS APPLICATIONS.

Objectives
After completing this chapter, you will be able to:
 Define a matrix
 Identify different types of matrices
 Manipulate various matrix operations
 Understand matrix applications in solving linear equations
 Understand the concept of Markov Chain Analysis.
2.1. Matrix Concepts
Matrix is a rectangular array of real numbers arranged in M rows and N columns. or
any rectangular array of numbers surrounded by a pair of brackets is called a matrix (plural
matrices) and the individual numbers constituting the array are called entries or elements.

The matrix A has two rows and three columns and is said to have order 2 × 3. In general, a
matrix of order m × n has m rows and n columns. We denote matrices by capital letters in bold
type (that is, A, B, C, . . . ) and their elements by the corresponding lower-case letter in ordinary
So that aij stands for the element of A which occurs in row i and column j. Referring to the
matrix A above, we see that ype.

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 2.2. Types of Matrices
1. Vector Matrix - is a matrix which consists of either one row or one column.
1.1. Row Vector
E.g. W=
1.2 Column Vector

2. Square Matrix - is a matrix that has the same number of rows and columns.
E.g. 2x2, 3x3,4x4 etc.

3. Null (Zero) Matrix - is a matrix that has zero for every entry. No matter what the dimension
is. It is generally denoted by Omn.

A=¿[0 0 0 0¿][0 0 0 0¿] [0 0 0¿]¿¿

¿
4. Identity (Unit) Matrix - a square matrix in which all of the primary diagonal entries are ones and
all of the off diagonal entries are zeros. Generally it is denoted as I n. Primary diagonal represents:
a11, a22, a33, a44, --- ann entries.

I2 = , I4 =

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5. Scalar Matrix - is a square matrix where elements on the primary diagonal are the same and the
rest zeros. NB: An Identity matrix is a scalar matrix, but a scalar matrix may not be an identity
matrix
6. Diagonal Matrix- a square matrix where elements on the primary diagonal are non zero and
others zeros. For square matrix, the diagonal from the top left to the bottom right corner is called
the principal diagonal or main or primary diagonal.
Example

2 0 0
0 5 0
0 0 1

7. Equal Matrices -Two matrices A & B, are said to be equal only if they are of the same
dimensions and if each element in A is identical to its corresponding element in B; that is, if and
only if aij = bij for every pair of subscripts i and j. If A = B, then B = A; or if A≠B, then B ≠A.

B=¿ [ 1 2 ¿] ¿ ¿¿
is equal to ¿

C=¿ [ 4 2 ¿] ¿ ¿¿
However; is not equal to ¿
2.3. Matrix Operations
2.3.1. Transpose of a Matrix

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2.3.2. Matrix Addition and Subtraction
Two matrices of the same dimensions are said to be conformable for addition. The
addition is performed by adding corresponding elements from the two matrices and
entering the result in the same row-column position of a new matrix [element-wise
addition].
Let us suppose that, for the two-customer three-product example, the matrix

gives the sales for the month of January. Similarly, the monthly sales for February might be
given by

This means, for example, that customer C1 buys 7 items of G1 in January and 6 items of G1 in
February. Customer C1 therefore buys a total of 7 + 6 = 13 items of G1 during the two months. A

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similar process can be applied to the remaining goods and customers, so that the matrix giving
the sales for the two months is

We describe this by saying that C is the sum of the two matrices A and B and we write
C = A + B In general, to add (or subtract) two matrices of the same size, we simply add (or
subtract) their corresponding elements. It is obvious from this definition that, for any two m × n
matrices, A and B, A + B = B + A
For example, it is impossible to add the matrices.

Because D has order 2 × 2 and E has order 3 × 2.

Example
Let

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2.3.3 Matrix Multiplication
A matrix can be multiplied by a constant by multiplying each component in the matrix by a
constant. The result is a new matrix of the same dimensions as the original matrix. We begin by
showing you how to multiply a row vector by a column vector. To illustrate this let us suppose
that goods G1, G2 and G3 sell at $50, $30 and $20, respectively, and let us introduce the row
vector.

If the firm sells a total of 100, 200 and 175 goods of type G1, G2 and G3, respectively, then
we can write this information as the column vector.

The total revenue received from the sale of G1 is found by multiplying the price, $50, by the
quantity, 100, to get $50 × 100 = $5000 Similarly, the revenue from G2 and G3 is $30 × 200 =
$6000 and 20 × 175 = $3500 Respectively. The total revenue of the firm is therefore TR = $5000
+ $6000 + $3500 = $14 500

The value 14, 500 is found by multiplying the corresponding elements of p and q and then
adding together: that is,

Example
If

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Find ab and ac.
Solution
Using the definition of the multiplication of a row vector, by a column vector, we have

It is impossible to multiply a and c because a has four elements and c has only three
elements. You can see the problem if you actually try to perform the calculations, since
there is no entry in c with which to multiply the 4 in a.

The matrix C has order m × n, where m is the number of rows of A and n is the number of
columns of B. Finally, the elements of C are found by multiplying row vectors by column
vectors. To illustrate the technique consider what happens when we find the product of the two
matrices.

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Example 2.

,B AB =

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Answer = -3
2.4. Inverse of a Matrix

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If A is a square matrix of order n, then a square matrix of its inverse (A -1) of the same
order n is said to be the inverse of A, if and only if AA-1 = I = A-1A.
Two square matrices are inverse of each other if their product is the identity matrix: I =

AA-1 = A-1A.

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Not all matrices have an inverse. In order for a matrix to have an inverse, the matrix

must, first of all, be a square matrix. Still not all square matrices have inverse. If a matrix

has an inverse, it is said to be Inevitable or non-singular. A matrix that doesn’t have an

inverse is said to be singular. An inevitable matrix will have only one inverse; that is, if

a matrix does have an inverse , and that inverse is unique.

In short:
 Inverse of a matrix is defined only for square matrices
 If B is an inverse of A, then A is also an inverse of B.
 If matrix A has an inverse, A is said to be inevitable and not all square matrices
are inevitable.

E.g. inverse does not exist for this matrix

Properties of the Inverse
i. The inverse of the inverse is the original matrix, i.e. (A-1)-1=A
ii. The identity matrix is its own inverse, i.e. I-1=I
iii. The inverse of the product of two non-singular matrices is equal to the
product of two inverses in the reverse order, i.e. (AB)-1= B-1.A-1

inverse of A and is analogous to the reciprocal of a number.

The matrix A-1 is said to be the

The formula for A-1 looks rather complicated but the construction of A-1 is in fact very easy.
Starting with some matrix

We first swap the two numbers on the leading diagonal (that is, the elements along the line
joining the top left-hand corner to the bottom right-hand corner of A) to get

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Secondly, we change the sign of the ‘of-diagonal’ elements to get

o get

ad – bc is called the determinant of A and is written as

The number

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1.2. Matrix Applications in Business

Solving Systems of Linear Equations

Systems of linear equations can be solved using different methods. Some are:
 Elimination method for 2 variable problems (equations).

 Matrix method

i. Inverse method

ii. Cramer’s rule – using determinants (independent study)

a. Elimination method

Let X be the longer board feet and Y be shorten board feet then
X +Y = 12
X–Y=2
Then –x –y = -12
x- y= 2 you can get -2y = -10 then y= 5//
x= 2 +y = 2+ 5 = 7//
Therefore the longer board measures 7 feet, while the shorten one is 5 feet
b. Substitution method

Solve the 1st equations for y in terms of x

Y= 12- x substitute in to the 2nd equations

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 x- (12-x) = 2
x- 12 +x = 2
2x-12= 2 X= 7//
Then y= 12 –x
Y= 12-7 = 5//

Inverse method
Example

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Cramer’s rule – using determinants (independent study)

This rule requires finding the quotient of the determinants of matrices associated to the system
and can be used when the determinants of the coefficient matrix is non zero.
It is important note that the rule works only when the number of equations is the same as the
number of variables i.e the matrix associated with the system is a square matrix and the
determinant can be evaluated.

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 To understand this, consider the simple 2 × 2 system

Example; a sales man has the following records of sales during three months for three items A,
B and C which have different rates of commission.

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Months Sales of units Total commission drawn (in
A B C birr)
January 90 100 20 800
February 130 50 40 900
March 60 100 30 850

Find out the rates of commission on the items A, B and C by using cramers rule
Solution
Let X, Y and Z be the rates of commissions in birr per unit for A, B and C items respectively
based on the problems
90x+100y + 20z = 800
130x +50y + 40z = 900
60x +100y + 30z = 850
Divide each of the equation by 10 we obtain
9x =10y + 2z = 80
13x +5y + 4z = 90
6x +10y + 3z = 85
Now:
9 10 2
∆= 13 5 4 = -175 ≠ 0
6 10 3
80 10 2
∆x = 90 5 4 = -350
85 10 3
9 80 2
∆y = 13 90 4 = -700
6 85 3

∆z= 9 10 80
13 5 90 = - 1925
6 10 85

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By cramers rule
X= ∆x/∆ = -350/-175= 2
Y= ∆y/∆ = -700/-175= 4
Z= ∆z/∆= -1925/-175 = 11
Hence the rate of commission for A,B and C are br2, br 4 and br 11 respectively.

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1.6. Markov Chains
Concept, Model and Solutions

A Russian mathematician called Andrew Markov around 1907 developed this model.

Markov chain is a sequence of experiments (trials) or observations such that the

probability for the next states is completely determined by the present state.

Markov chains are models which are useful in studying the evolution of certain system

over repeated trials. These repeated trails are often successive time periods where the

state (outcome, condition) of the system in any particular time period cannot be

determined with certainty. Therefore, a set of transition probabilities is used to describe

the manner in which the system makes transition from one period to the next. Hence,

we can predict the probability of the system being in a particular state at a given time

period.

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 The Markov model is based on two sets of input data
 The set of transition probabilities.
 The existing or initial or current conditions or states.
The Markov process, therefore, describes the movement of a system from a certain state
in the current state/ time period to one of n possible states in the next stage. The system
move in an uncertain environment all that is known is the probability associated with
any possible move or transition. This probability is known as transition probability
symbolized by Pij. It is the likelihood that the system which is currently in state i will
Smoke to state j in the next period.
From these inputs the model makes two predictions usually expressed as vectors:
1. The probabilities of the system being in any state at any given future time period.
2. The long run / equilibrium, steady state probabilities.

Markov chain analysis used among other things in Market share Analysis. The example below
shows this.
1. Currently it is known that 80% of customers shop at store 1 and 20% shop at store 2. In
reviewing a past data suppose we find that out of all customers who shopped at store 1
in a given week 90% remain loyal for the next week (store one again), 10% switch to
store 2. Out of all customers who shopped at store 2, in a given week 80% remain loyal
for the next week (store 2 again), 20% switch to store 1. What will be the proportion of
customers shopping at store 1 and 2
a) in each of the next two weeks?
b) in the long run?
Lets denote Store 1 by 1 and Store 2 by 2.
V12= (.8 .2) - initial state/ current state probability matrix.
To next weekly shopping period
From one week S1 S2

S1 0.9 0.1

S2 0.2 0.8
 The sum of rows in the transition matrices should be one.
 We have to be consistent in writing the elements.
P11, P22, P33, P44 ---------------------Pnn that represent the primary diagonal show loyalty.
Others switching.
V12 (0) = (.8 .2)
V12 (1) = V12 (0) x P
= (.8 .2)
= (.8 x .9) + (.2x.2) (.8x.1) + (.2x.8)
= .72 + .04 .08 +. 16

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 = 0.76 .24

V12(1) = (.76 .24)

(2)
V12 = V12(1) x P
= V12(1) x P
= (.76 .24)
= (.8) .2) =(0.732 .268)
c. In the long run

In short, the switching over the sum of the switching gives us the long run state.
To
S1 S2

From S1 .9 .1
S2 .2 .8

V1=
μ 1 V2 =
μ2
μ3 μ4
= =

(V1 V2) =
μr
In the long run 67 of the customer will shop in store 1 and 33% in store 2.

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