6.

OPTIMIZATION
 AREA AND PERIMETER
 MAXIMIZING REVENUE AND PROFIT
 INVENTORY CONTROL
• Area and perimeter
the techniques used to solve optimization problems are best illustrated through
examples.

• Example 1 maximizing area

a homeowner has $320 to spend on building a fence around a rectangular garden.
Three sides of the fence will be constructed with wire fencing at a cost of $2 per
linear foot. The fourth side is to be constructed with wood fencing at a cost of $6
per linear foot. Find the dimensions and the area of the largest garden that can be
enclosed with $320 worth of fencing.
• SOLUTION
To begin, we draw a figure (Fig. 1), introduce variables, and look for relationships among
the variables.
Since we don't know the dimensions of the garden, the lengths of fencing are represented
by the variables x and y. The costs of the fencing materials are fixed and are thus
represented by constants.
Now we look for relationships among the variables. The area of the garden is
A = xy

while the cost of the fencing is

C = 2y + 2x + 2y + 6x = 8x + 4y
• The problem states that the homeowner has $320 to spend on fencing. We make
the assumption that enclosing the largest area will use all of the money available
for fencing. The problem has now been reduced to
Maximize A = xy subject to 8x + 4y = 320
• Before we can use calculus techniques to find the maximum area A, we must
express A as a function of a single variable. We use the cost equation to eliminate
one of the variables in the expression for the area (we choose to eliminatey-either
will work).
8x + 4y = 320
4y = 320 -8x
y = 80-2x
A = xy = x(80 -2x) = 80x -2x2
• Now we consider the permissible values of x. Because x is one of the dimensions
of a rectangle, x must satisfy
x ≥ 0 Length is always nonnegative
• And because y = 80 -2x is also a dimension of a rectangle, y must satisfy
y= 80-2x ≥ 0 Width is always nonnegative.
80 ≥ 2x
40 ≥ x or x ≤ 40
• We summarize the preceding discussion by stating the following model for this
optimization problem:
Maximize A(x) = 80x -2x2 for 0 ≤ x ≤ 40
• Next, we find any critical values of A:
A’(x) = 80 – 4x = 0
80 = 4x
80
x= = 20 Critical Value
4
X A(x)
0 0
20 800
40 0

• Since A (x) is continuous on (a, 40], the absolute maximum value of A, if it exists, must occur at a
critical value or an endpoint. Evaluating A at these values (Table 1), we see that the maximum area
is 800 when
x = 20 and y = 80 -2 (20) = 40
• Finally, we must answer the questions posed in the problem. The dimensions of the garden with the
maximum area of 800 square feet are 20 feet by 40 feet, with one 20-foot side with wood fencing.
MATCHED PROBLEM 1

• Repeat Example 1 if the wood fencing costs $8 per linear foot and all other
information remains the same.
• We summarize the steps we followed in the solution to Example 1 in the
following box:
PROCEDURE :
Strategy for solving optimization problem
1. Introduce variable, look for relationships among the variables, and construct
a mathematical model of the form
Maximize (or minimize) f(x) on the interval I

2. Find the critical values of f(x)

3. Use the procedures developed in section 5 to find the absolute maximum (or
minimum) value of f(x) on the interval I and the value(s) of x where this
occurs.
4. Use the solution to the mathematical model to answer all the questions asked
in the problem.
EXAMPLE 2 – MINIMIZING PERIMETER

• Refer to example 1. The homeowner judges that an area of 800 square feet
for the garden is too small and decides to increase the area to 1,250 square
feet. What is the minimum cost of building a fence that will enclose a garden
with area 1,250 square feet? What are the dimensions of this garden?
Assume that the cost of fencing remains unchanged.
SOLUTION
• Refer to Figure 1in the solution for Example 1. This time we want to minimize
the cost of the fencing that will enclose 1,250 square feet. The problem can
be expressed as
• Minimize C = 8x + 4y subject to xy = 1,250
• Since x and y represent distances, we know that x ≥ 0 and y ≥ 0. But neither
variable can equal 0, because their product must be 1,250.
Xy = 1250 Solve the area equation for y
Y = 1250
𝑥
C(x) = 8x + 4 1250 Substitute for y in the cost equation
𝑥
= 8x + 5000 x>0
𝑥
SOLUTION

• We use the second derivative to determine the behavior at x = 25.

SOLUTION

• The second-derivative test shows that C(x) has a local minimum at x == 25,
and since x == 25 is the only critical value of x > 0, C(25) must be the
absolute minimum value of C(x) for x > O. When x = 25, the cost is

• and

• The minimal cost for enclosing a 1,250-square-foot garden is $400, and the
dimensions are 25 feel by 50 feet, with one 25-foot side with wood fencing.
 MATCHED PROBLEM 2
• INSIGHT
• The restrictions on the variables in the solution of examples 1 and 2 are typical of problems involving
areas or perimeters (or the cost of the perimeter)
8x+4y = 320 cost of fencing (example 1)
Xy = 1250 area of garden (example 2)
• The equation in example 1 restricts the values of x to
0≤x≤40 or [0,40]
• The endpoints are included in the interva for our convenience ( a-closed interval is easier to work with
than an open one). The area function is defined at each endpoint, so it does no harm to include them
• The equation in example 2 restricts the values of x to
X>0 or (0,∞)
• Neither endpoint can be included in this interval. We cannot include 0 because the area is not defined when x = 0, and
we can never include ∞ as an endpoint. Remember, ∞ is not a number, but a symbol which denotes that the interval is
unbounded.
 MAXIMIZING REVENUE AND PROFIT
EXAMPLE 3 -MAXIMIZING REVENUE
An office supply company sells x mechanical pencils per year at $p per pencil.
The price--demand equation for these pencils is p = 10 -0.001x. What price
should the company charge for the pencils to maximize revenue? What is the
maximum revenue?
SOLUTION
Revenue = Price x Demand
R(x) = (10 – 0,001x)x
= 10x – 0,001x2

Both price and demand must be non negative, so

X ≥ 0 and P = 10 – 0,001x ≥ 0
10 ≥ 0,001x
10000 ≥ x
• The mathematical model for this problem is
Maximize R(x) = 10x – 0,001x2 0 ≤ x ≤ 10000
R(x) = 10 – 0,002x
10 – 0,002x = 0
10 = 0,002x
X = 10 critical value
0,002
= 5000

• Use the second-derivative test for absolute extrema:

R”(x) = - 0,002 < 0 For all x

Max R(x) = R(5000) = $25000

• When the demand is x = 5,000, the price is

10 – 0,001 (5000) = $5 P = 10 – 0,001x

• The company will realize a maximum revenue of $25,000 when

the price of a pencil is $5
MATCHED PROBLEM 3

• An office supply company sells x heavy-duty paper shredders per year at $p

per shredder. The price-demand equation for these shredders is

• What price should the company charge for the shredders to maximize
revenue? What is the maximum revenue?
EXAMPLE 4 – MAXIMIZING PROFIT
• The total annual cost of manufacturing x mechanical pencils for
the office supply company in Example 3 is
C(x) = 5,000 + 2x

• What is the company's maximum profit? What should the

company charge for each pencil, and how many pencils should be
produced?
SOLUTION
Using the revenue model in example 2, we have
• Profit = Revenue - Cost
• P(x) = R(x) -C(x)
= l0x - 0.001x2 -5,000 -2x
= 8x - 0.00lx2 -5,000
SOLUTION
• The mathematical model for profit is
Maximize P(x) = 8x – 0,001x2 – 5000 0 ≤ x ≤ 10000
(the restriction on x come from the revenue model in example 2)
P’(x) = 8 – 0,002x = 0
8 = 0,002x
8
= = 4000 critical value
0,002

P’(x) = -0,002 < 0 for all x

SOLUTION
• Since x = 4000 is the only critical value and P”(x) < 0
MAX P(x) = P(4000) = $110000
Using the price-demand equation from example 2 with x = 4000,
p = 10 – 0,001(4000) = $6 p = 10 – 0,001x
Thus, a maximum profit of $11000 is realized when 4000 pencils are
manufactured annually and sold for $6 each

The resule in example 2 and 3 are illustrated in figure 2.

INSIGHT
• In figure 2, notice that the maximum revenue and the maximum profir occur
at different production levels. The profit is maximum when
P’(x) = R’(x) – C”(x) = 0
That is, when the marginal revenue is equal to the marginal cost. Notice that
the slopes of the revenue function and the cost function are the same at this
production level.
MATCHED PROBLED 4
• The annual cost of manufacturing x paper shredders for the office supply
company in Matched Problem 3 is C(x) = 90,000 + 30x. What is the
company's maximum profit? What should it charge for each shredder, and
how many shredders should it produce?
EXAMPLE 5 MAXIMIZING PROFIT
• The government decides to tax the company in Example 4 $2 for each pencil
produced. Taking into account this additional cost, how many pencils should the
company manufacture each week to maximize its weekly profit? What is the
maximum weekly profit? How much should the company-charge for the pencils
to realize the maximum weekly profit?
SOLUTION
• The tax of $2 per unit changes the company's cost equation:

• The new profit function is

 SOLUTION
• Thus, we must solve the following equation:

Using the price-demand equation (Example 3) with x = 3,000, we find that

p = 10 - 0.001(3,000) = $7 p = 10 - 0.001x

Thus, the company's maximum profit is $4,000 when 3,000 pencils are produced and sold weekly at a price of $7.

Even though the tax caused the company's cost to increase by $2 per pencil, the price that the company should charge to
maximize its profit increases by only $1. The company must absorb the other $1, with a resulting decrease of $7,000 in
maximum profit.
MATCHED PROBLEM 5
• The government decides to tax the office supply company in Matched
Problem 4 $20 for each shredder produced. Taking into account this
additional cost, how many shredders should the company manufacture each
week to maximize its weekly profit? What is the maximum weekly profit? How
much should the-company charge for the shredders-to realize the maximum
weekly profit?
EXAMPLE 6 – MAXIMIZING REVENUE
• When a management training company prices its seminar on management
techniques at $400 per person, 1,000 people will attend the seminar. The
company estimates that for each $5 reduction in the price an additional 20
people will attend the seminar. How much should the company charge for the
seminar in order to maximize its revenue? What is the maximum revenue?
SOLUTION
• Let x represent the number of $5 price reductions. Then
400 - 5x = price per customer
1,000 + l0x = number of customers
Revenue = (price per customer)(number of customers)
R(x) = (400 -5x) x (1,000 + 20x)
• Since price cannot be negative, we have
400 - 5x ≥ 0
400 ≥ 5x
80 ≥ x or 𝑥 ≤ 80
SOLUTION
• A negative value of x would result in a price increase. Since the problem is
stated in terms of price reductions, we must restrict x so that x ≥ O. Putting all
this together, we have the following model:

• Since R(x) is continuous on the interval [0, 80], we can determine the behavior
of the graph by constructing a table. Table 2 shows that R(15) = $422,500 is
the absolute maximum revenue. The price of attending the seminar at x = 15
is 400 -5(15) = $325. The company should charge $325 for the seminar in
order to receive a maximum revenue of $422,500.
SOLUTION
X R(X)

0 400.000

15 422.500

80 0
MATCHED PROBLEM 6

• A walnut grower estimates from past records that if 20 trees are planted per
acre, each tree will average 60 pounds of nuts per year. If,for each
additional tree planted per acre, the average yield per tree drops 2 pounds,
how many trees should be planted to maximize the yield per acre? What is
the maximum yield?
EXPLORE & DISCUSS 1
• In Example 6, letting x be the number of $5 price reductions produced a
simple and direct solution to the problem. However, this is not the most obvious
choice for a variable. Suppose that we proceed as follows:
• Let x be the new price and let y be the attendance at that price level. Then
the total revenue is given by xy.
• (A) Find y when x = 400 and when x = 395. Find the equation of the line
through these two points.
• (B) Use the equation from part (A) to express the revenue in terms of either
x or y, and use the expression you came up with to solve Example 6.
• (C) Compare this method of solution to the one used in Example 6 with
respect to ease of comprehension and ease of computation.
EXAMPLE 7 – MAXIMIZING REVENUE
• After additional analysis, the management training company in Example 6
decides that its estimate of attendance was too high. Its new estimate is that
only 10 additional people will attend the seminar for each $5 decrease in
price. All other information remains the same. How much should the company
charge for the seminar now in order to maximize revenue? What is the new
maximum revenue?
SOLUTION
• Under the new assumption, the model becomes

• Note that x = -10 is not in the interval (0, 80]. Since R(x) is continuous on [0,
80], we can use a table to find the absolute maximum revenue. Table 3 shows
that the maximum revenue is R(O) = $400,000. The company should leave the
price at $400. Any $5 decreases in price will lower the revenue.
MATCHED PROBLEM 7

• After further analysis, the walnut grower in Matched Problem 6 determines

that each additional tree planted will reduce the average yield by 4 pounds.
All-other information remains the same. How many additional trees per acre
should the grower plant now in order to maximize the yield? What is the new
maximum yield?
INSIGHT

• The solution in example 7 is calld an endpoint solution, because the optimal

value occurs at the endpoint of an interval rather than at a critical value in the
interior of the interval. It is always important to verify that the optimal value
has been found.
 INVENTORY CONTROL

• EXAMPLE 8 – INVENTORY CONROL

A recording company anticipates that there will be a demand for 20,000copies of
a certain compact disk (CD) during the next year. It costs the company $0.50 to
store a CD for one year. Each time it must make additional CDs, it costs $200 to
set up the equipment. How many CDs should the company make during each
production run to minimize its total storage and setup costs?
•SOLUTION
This type of problem is called an inventory control problem. One of the basic assumptions
made in such problems is that the demand is uniform. For example, if there are 250
working days in a year, the daily demand would be 20,000 -7 250 = 80 CDs. The
company could decide to produce all 20,000 CDs at the beginning of the year. This would
certainly minimize the setup costs, but would result in very large storage costs. At the
other extreme, the company could produce 80 CDs each day. This would minimize the
storage costs, but would result in very large setup costs. Somewhere between these two
extremes is the optimal solution that will minimize the total storage and setup costs. Let

x = number of CDs manufactured during each production run

y = number of production runs
It is easy to see that the total
setup cost for the year is 200y,
but what is the total storage
cost? If the demand is uniform,
the number of CDs in storage
between production runs will
decrease from x to 0, and the
average number in storage
each day is x/2. This result is
illustrated in Figure 3.
• Since it costs $0.50 to store a CD for one year, the total storage cost is 0.5(x/2) =
0.25x and the total cost is
Total Cost = Setup Cost + Storage Cost
C = 200y + 0.25x

• Inorder to write the total cost C as a function of one variable, we must find a
relationship between x and y. If the company produces x CDs in each of y
production runs, the total number of CDs produced is xy. Thus,
xy = 20000
y = 20000
x

• Certainly, x must be at least 1 and. cannot exceed 20,000. Therefore, we must

solve the following equation:
 Minimize C(x) = 200(20000) + 0,25x 1 ≤ x ≤ 20000
x
C(x) = (4000000) + 0,25x
x
C’(x) = - 4000000
2 + 0,25
𝑥
4000000 = 0
- + 0,25
𝑥2

𝑥2 = 4000000
0,25
-4000 is not a critical value,
𝑥2 = 16000000
since
x = 4000 1 ≤ x ≤ 20000
C”(x) = 8000000 For x ∈ (1, 20000)
𝑥3

Thus
Min C(x) = C(4000) = 2000

y = 20000 = 5
4000

The company will minimize its total cost by making 4,000 CDs five times during the year
EXAMPLE 8 - PROBLEM

• Repeat example 4 if it cost $250 to set up a production run and $0,40

to store a CD for one year
ANSWER

• The dimensions of the garden with the maximum area of 640 square feet are 16
feet by 40 feet, with one 16-foor side with wood fencing.
• The minimal cost for enclosing a 1800 square foot garden is $480, and the
dimensions are 30 feet by 60 feet, with one 30-foot side with wood fencing.
• The company will realize a maximum revenue of $675000 when the price of a
shredder is $150
• A maximum profit is $456750 is realized when 40500 shredders are manufactured
annually and sold for $165 each
ANSWER

• A maximum profit of $378750 is realized whe 3075 shredders are

manufactured annually and sold for $175 each
• The maximum yield is at 1250 pounds per acre when 5 additional trees are
planted on each acre.
• The maximum yield is 1200 pounds when no additional trees are planted
• The company should produce 5000 CDs four times a year