3 Applications of Differentiation

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3.7 Optimization Problems

Copyright © Cengage Learning. All rights reserved.

Optimization Problems (1 of 5)
In solving such practical problems the greatest challenge is often to convert the
word problem into a mathematical optimization problem by setting up the
function that is to be maximized or minimized.

Let’s recall the problem-solving principles.

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Optimization Problems (2 of 5)
Steps In Solving Optimization Problems

1. Understand the Problem The first step is to read the problem carefully until
it is clearly understood. Ask yourself: What is the unknown? What are the
given quantities? What are the given conditions?

2. Draw a Diagram In most problems it is useful to draw a diagram and

identify the given and required quantities on the diagram.

3. Introduce Notation Assign a symbol to the quantity that is to be maximized

or minimized (let’s call it Q for now).

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Optimization Problems (3 of 5)
Also select symbols (a, b, c, . . . , x, y) for other unknown quantities and
label the diagram with these symbols. It may help to use initials as
suggestive symbols—for example, A for area, h for height, t for time.

4. Express Q in terms of some of the other symbols from Step 3.

5. If Q has been expressed as a function of more than one variable in Step 4,

use the given information to find relationships (in the form of equations)
among these variables. Then use these equations to eliminate all but one of
the variables in the expression for Q.

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Optimization Problems (4 of 5)
Thus Q will be expressed as a function of one variable x, say, Q = f (x).
Write the domain of this function in the given context.

6. Use the previous methods to find the absolute maximum or minimum value
of f. In particular, if the domain of f is a closed interval, then the Closed
Interval Method can be used.

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Example 1
A farmer has 2400 ft of fencing and wants to fence off a rectangular field that
borders a straight river. He needs no fence along the river. What are the
dimensions of the field that has the largest area?

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Example 1 – Solution (1 of 5)
In order to get a feeling for what is happening in this problem, let’s experiment
with some special cases. Figure 1 (not to scale) shows three possible ways of
laying out the 2400 ft of fencing.

Figure 1

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Example 1 – Solution (2 of 5)
We see that when we try shallow, wide fields or deep, narrow fields, we get
relatively small areas. It seems plausible that there is some intermediate
configuration that produces the largest area.

Figure 2 illustrates the general case. We wish to maximize the area A of the
rectangle.

Figure 2

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Example 1 – Solution (3 of 5)
Let x and y be the depth and width of the rectangle (in feet). Then we express
A in terms of x and y:
A = xy
We want to express A as a function of just one variable, so we eliminate y by
expressing it in terms of x. To do this we use the given information that the total
length of the fencing is 2400 ft.
Thus
2x + y = 2400

From thi s equation we have y = 2400 − 2x, which gives

A  xy  x 2400  2 x  2400 x  2 x 2

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Example 1 – Solution (4 of 5)
Note that the largest x can be is 1200 (this uses all the fence for the depth and
none for the width) and x can’t be negative, so the function that we wish to
maximize is
A  x  2400 x  2 x 2 0  x 1200

The derivative is A( x ) 2400  4 x, so to find the critical numbers we solve the
equation
2400 − 4x = 0
which gives x = 600.

The maximum value of A must occur either at this critical number or at an

endpoint of the interval.
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Example 1 – Solution (5 of 5)
Since A(0) = 0, A(600) = 720,000, and A(1200) = 0, the Closed Interval Method
gives the maximum value as A(600) = 720,000.

[Alternatively, we could have observed that A( x )  4  0 for all x, so A is

always concave downward and the local maximum at x = 600 must be an
absolute maximum.]

The corresponding y-value is y = 2400 − 2(600) = 1200; so the rectangular field

should be 600 ft deep and 1200 ft wide.

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Optimization Problems (5 of 5)
First Derivative Test for Absolute Extreme Values Suppose that c is a critical
number of a continuous function f defined on an interval.

(a) If f ( x )  0 for all x < c and f ( x )  0 for all x > c, then f(c) is the absolute
maximum value of f.
(b) If f ( x )  0 for all x < c and f ( x )  0 for all x > c, then f(c) is the absolute
minimum value of f.

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Applications to Business and Economics

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Applications to Business and Economics (1 of 3)
We know that if C(x), the cost function, is the cost of producing x units of a
certain product, then the marginal cost is the rate of change of C with respect
to x.

In other words, the marginal cost function is the derivative, C ( x ), of the cost
function.

Now let’s consider marketing. Let p(x) be the price per unit that the company
can charge if it sells x units.

Then p is called the demand function (or price function) and we would
expect it to be a decreasing function of x. (More units sold corresponds to a
lower price.)

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Applications to Business and Economics (2 of 3)
If x units are sold and the price per unit is p(x), then the total revenue is
R(x) = quantity × price = xp(x)
and R is called the revenue function.

The derivative R  of the revenue function is called the marginal revenue

function and it is the rate of change of revenue with respect to the number of
units sold.

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Applications to Business and Economics (3 of 3)
If x units are sold, then the total profit is

P(x) = R(x) − C(x)

and P is called the profit function.

The marginal profit function is P , the derivative of the profit function.

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Example 6
A store has been selling 200 TV monitors a week at $350 each. A market
survey indicates that for each $10 rebate offered to buyers, the number of
monitors sold will increase by 20 a week. Find the demand function and the
revenue function. How large a rebate should the store offer to maximize
revenue?

Solution:
If x is the number of monitors sold per week, then the weekly increase in
sales is x − 200.

For each increase of 20 units sold, the price is decreased by $10.

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 Example 6 – Solution (1 of 2)
So for each additional unit sold, the decrease in price will be 1 10
and the demand function is 20

10 1
p  x  350  x  200  450  x
20 2
The revenue function is
1 2
R  x   xp x  450 x  x
2
Since R ( x )  450  x, we see that R ( x ) 0 when x  450.

This value of x gives an absolute maximum by the First Derivative Test (or
simply by observing that the graph of R is a parabola that opens downward).
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Example 6 – Solution (2 of 2)
The corresponding price is
1
p 450  450  450  225
2

and the rebate is 350 − 225 = 125.

Therefore, to maximize revenue, the store should offer a rebate of $125.

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