By Dr Verda Salman

Optimization- Minimum/Maximum Values

Goal equilibrium quest for the best
Constant function Monotonically increasing/decreasing function Implications of second derivatives Functions with relative maxima and minima

Minimum/Maximum Values- First Derivative Test

The relative maximum: if a derivative f(x) changes its

sign from positive to negative from the immediate left of the point x0 to its immediate right.
A relative Minimum: if a derivative f(x) changes its sign

from negative to positive from the immediate left of the point x0 to its immediate right.
Stationary Points: Points when f(x)=0

Necessary and Sufficient Condition for First Derivative Test of Optimization

Necessary Condition: f(X) = 0 is satisfied Sufficient Condition: Change of derivative sign before

and after extrema.

Relative extrema of a function

Find the relative extrema of the following function

(X>0)

Y = f(x) = x3 -12x2 +36x +8 dy/dx = 3X2 24x + 36 Putting dy/dx = 0 X = 2, 6 F(2) = 40 relative maximum F(6) = 8 relative minimum
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Second Derivative Test

A relative maximum if the second-derivative value at

x0 is f(x0)<0 is f(x0)>0

A relative minimum if the second-derivative value at x0

Necessary and Sufficient Condition for Second Derivative Test of Optimization

Necessary Condition: f(X) = 0 is satisfied Sufficient Condition: Second derivative must have a sign to

confirm concavity or convexity.

Second Derivative Test

Examples: Find stationary values maximum/minimum points with second derivative test Y = 4X2 X Y = X3 3X2 + 2

Constrained Optimization: Lagrange-Multiplier Method (choosing the best solution)

Maximize: U = x1x2 + 2x1

Subject to : 4x1 + 2X2 = 60 Step 1: Write a new function Z Z = x1x2 + 2x1 + (60-4x1 - 2X2 ) Step 2: Derivative of Z w.r.t , x1, x2 Z = Z/ = 60-4x1 - 2X2 Zx1 = Z/X1 = X2 + 2 - 4 ZX2 = Z/X2 = X1 - 2
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