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DIFFERENTIATION

AFTERSCHO☺OL
– DEVELOPING CHANGE MAKERS
CENTRE FOR SOCIAL ENTREPRENEURSHIP
PGPSE PROGRAMME –
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11/28/09 AFTERSCHO☺OL's
AFTERSCHO☺OL's MATERIAL
MATERIAL 1
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DIFFERENTIATION
Dr. T.K. Jain.
AFTERSCHO☺OL
Centre for social entrepreneurship
Bikaner M: 9414430763
tkjainbkn@yahoo.co.in
www.afterschool.tk, www.afterschoool.tk
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11/28/09 AFTERSCHO☺OL's
AFTERSCHO☺OL's MATERIAL
MATERIAL 2
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DERIVATIVE OF X^N
• N * X ^ (N-1)

11/28/09 AFTERSCHO☺OL's MATERIAL 3


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DERIVATIVE OF X^10
• = 10 X ^ 9

11/28/09 AFTERSCHO☺OL's MATERIAL 4


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DERIVATIVE OF
5X^3 – 2X^2 + 10 X -3
• 5*3 X^(3-1) -4X + 10
• =15X^2 – 4X +10

11/28/09 AFTERSCHO☺OL's MATERIAL 5


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DERIVATIVE OF (3X^2 -1)/(X+1)
• [(X+1) * (6X ) - (3X^2 -1) (1) ] / (X+1)^2
• (6x^2 + 6x - 3x^2 + 1) / ( x^2 + 2x + 1)
• =(3x^2 + 6x +1) / (X^2 + 2x +1)
• Answer.

11/28/09 AFTERSCHO☺OL's MATERIAL 6


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Differentiate e^x / x^2
• = [(e^x * 2X) - (X^2 * e^x) ]/ (X^4)
• = (2x e^x - X^2e^x ) / X ^4
• X (2e^x - Xe^x) / X^4
• = (2e^x - Xe^x) / X^3
• =e^x (2 - X) / X ^3 answer.

11/28/09 AFTERSCHO☺OL's MATERIAL 7


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Differentiate 2 ^(X^3 +X^2 +1)
= 2^ (X^3 + X^2 + 1) * log2 * differentiation
of (X^3 + X^2 + 1)
= 2^ ( X ^3 + X ^2 + 1) * log 2 * ( 3x^2 + 2x)
Answer.

11/28/09 AFTERSCHO☺OL's MATERIAL 8


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Differentiate
(2x^3 + x^2 + 1) ^(3/2)
• = 3/2 * ( 2x^3 + X^2 +1)^(1/2) *
differentiation of (2x^3 + X^2 +1)
• =3/2 * ( 2x^3 + X^2 +1)^(1/2) * (6x^2 + 2x)
• Answer.

11/28/09 AFTERSCHO☺OL's MATERIAL 9


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Find differentiation of log (X^2 + 1)
• = 1/ (x^2 + 1) * differentiation of (X^2 +1)
• = 1/ (x^2 + 1) * 2X
• Answer.

11/28/09 AFTERSCHO☺OL's MATERIAL 10


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Differentiate (log x)^2
• = 2 * log X * diffferentiation of log x
• = 2 * log x * 1/x answer

11/28/09 AFTERSCHO☺OL's MATERIAL 11


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Find the total cost when output is
15000, C = (X^2 / 10000) + 500
• X = 15000
• Thus C =[ (15000)^2 / 10000] + 500
• C = 22500 + 500
• Total cost = 23000 answer.

11/28/09 AFTERSCHO☺OL's MATERIAL 12


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Find the marginal cost when output
is 15000, C = (X^2 / 10000) + 500
• Differentiate the function :
• = 2X / 10000

X = 15000
= 30000/ 10000
= Rs. 3 answer.

11/28/09 AFTERSCHO☺OL's MATERIAL 13


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Find the average cost when output
is 15000, C = (X^2 / 10000) + 500
• Average is obtained by dividing the total
cost by the number of units.
• The number of units is denoted by X.
• Thus divide total cost by X
• = [(X^2 / 10000) + 500 ] / x
• =(x/10000) + (500/x)
• = 1.5 + 500/15000
• = 1.53 answer.
11/28/09 AFTERSCHO☺OL's MATERIAL 14
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During a period, a retail shop can
sell X units at price P.
What is the total revenue,
if P = 20 - .03X and X = 50 ?

• Total revenue is total units multiplied by


price.
• = (20 -.03X) X
• =(20 – 1.5) * 50
• = 925 answer.
11/28/09 AFTERSCHO☺OL's MATERIAL 15
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During a period, a retail shop
can sell X units at price P.
What is the marginal revenue, if
P = 20 - .03X and X = 100 ?
• Differentiate total revenue
• Total revenue = P * X= (price * number of units)
• =(20 - .03x) X
• Differentiated = 20 - .06X (put x = 100)
• = 14 Answer

11/28/09 AFTERSCHO☺OL's MATERIAL 16


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During a period, a retail shop
can sell X units at price P.
What is the average revenue, if
P = 20 - .03X and X = 100 ?
• Average revenue = total revenue / no. of units
• =(20X - .03X^2) / X
• = 20 - .03x
• = 20 – 3
• = 17 answer.
11/28/09 AFTERSCHO☺OL's MATERIAL 17
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Find the maximum value of the
function :
f(x) = 2x^3 + 3x^2 -12x +1
• Maximum value is when first order differentiation
is zero & second order differentiation is less than
zero.
• First differentiation :
• 6X^2 + 6x -12 = 0
• X^2 +x – 2 = 0
• X^2 +2x –x -2 =0
• X (X +2) -1(X +2)
•11/28/09
Thus X = 1 or -2.
AFTERSCHO☺OL's MATERIAL 18
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Solution….
• Second differentiation:
• 12X + 6
• Here if we put the value of X = -2, we get
value in negative.
• f(x) = 2x^3 + 3x^2 -12x +1
• = 2 * ( -8) + 3 * 4 +24 +1
• =-16 +12 +24 +1
• =21 answer.

11/28/09 AFTERSCHO☺OL's MATERIAL 19


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Find the minimum value of the
function :
f(x) = 2x^3 + 3x^2 -12x +1

• Minimum value is when first order differentiation is


zero & second order differentiation is less than zero.
• First differentiation :
• 6X^2 + 6x -12 = 0
• X^2 +x – 2 = 0
• X^2 +2x –x -2 =0
• X (X +2) -1(X +2)
• Thus X = 1 or -2.
11/28/09 AFTERSCHO☺OL's MATERIAL 20
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Solution…
• Second differentiation:
• 12X + 6
• Here if we put the value of X = 1, we get
value in positive, so X = 1
• f(x) = 2x^3 + 3x^2 -12x +1
• =-6 answer. ( minimum value).

11/28/09 AFTERSCHO☺OL's MATERIAL 21


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Differentials
• Definition
– (dy/dx = f (x))
– dy = f (x) Δx

• Use:
– Δy ≈ dy

11/28/09 AFTERSCHO☺OL's MATERIAL 22


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Indefinite Integral
• Anti-derivative of f(x) is F(x) such that
– F'(x) = f(x)
– dF(x) = f(x) dx

• Indefinite integral x is the variable on integration


∫f(x) dx = F(x) + C

Integral sign Integrand Constant of integration

Technique 1: Guess the anti-derivative


11/28/09 AFTERSCHO☺OL's MATERIAL 23
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Indefinite Integral
• Basic integration formulas
– Page 625 of text

• Examples from notes

11/28/09 AFTERSCHO☺OL's MATERIAL 24


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Integrations with initial conditions
• y = ∫f(x) dx = F(x) + C

• If I know y(x0) = y0, I can find C


– C = y0 – F(x0)
– Example from notes

11/28/09 AFTERSCHO☺OL's MATERIAL 25


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EVPI
• Expected Value of Perfect Information
• the maximum amount which the decision
maker can spend for obtaining the perfect
information as to which event would occur
is called EVPI.
• EVPI = expected profit with perfect
information - expected monetary value of
optimal act.
11/28/09 AFTERSCHO☺OL's MATERIAL 26
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EXAMPLE…
• A physician purchases a particular medicine on
Monday of each week. The medicine must be
used within the week following, otherwise it
becomes worthless. The medicine costs Rs. 2
per dose and Physician charges Rs. 4 per dose.
The past 50 weeks record of uses are as
foliows
• Dose per week 20 25 40 60
• No. of weeks 5 15 25 5

11/28/09 AFTERSCHO☺OL's MATERIAL 27


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Solution – payoff matrix
Demand Probabilit 20 25 40 60
y

20 5/50 = .1 40 30 0 -40
25 15/50=.3 40 50 20 -20
40 25/50=.5 40 50 80 40
60 5/50=.1 40 50 80 120
EMV 40 48 54 22
Optimal
action Perfect
information
11/28/09 AFTERSCHO☺OL's MATERIAL 28
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SOLUTION….
• EMPI = with perfect information:
• 40*.1 + 50*.3 + 80*.5 + 120*.1 = 71
• EMV = 54
• EVPI = 71 – 54 = 17 answer.

11/28/09 AFTERSCHO☺OL's MATERIAL 29


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MAXIMIN CRITERION
• The decision maker tries to maximise the
minimum gains or he tries to pick the best
of the worst.

11/28/09 AFTERSCHO☺OL's MATERIAL 30


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MINIMAX REGRET CRETERION
• The decision maker selects that act, which
will give the minimum of the maximum
opportunity losses. Hence prepare
opportunity loss table for each option (act).

11/28/09 AFTERSCHO☺OL's MATERIAL 31


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Example = solve it using Maximin
and Minimax criterion
Action A B C D

S1 8 0 10 6

S2 -4 12 18 -2

S3 14 6 9 8

11/28/09 AFTERSCHO☺OL's MATERIAL 32


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MAXIMIN
Action A B C D MIN.

S1 8 0 10 6 0

S2 -4 12 18 -2 -4

S3 14 6 9 8 6

11/28/09 AFTERSCHO☺OL's MATERIAL 33


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SOLUTION
• Maximin is 6, because it is maximum out
of the minimums.

11/28/09 AFTERSCHO☺OL's MATERIAL 34


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MINIMAX OPPORTUNITY LOSS
TABLE
Action A B C D max
regret

S1 6 12 8 2 12

S2 18 0 0 10 18

S3 0 6 9 0 9

11/28/09 AFTERSCHO☺OL's MATERIAL 35


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Solution …
• We will first identify the regrets for each
value, then select maximum regret for
each row and then pick up the minimum
regret out of all the regrets (which are
maximum from their rows). For calculating
regrets, subtract each value from the
maximum value from its column.

11/28/09 AFTERSCHO☺OL's MATERIAL 36


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Decision tree…
• An organisation has two packaging machines old and new. the
new machine is more efficient if the materials are of good quality;
on the other hand the old machine performs better if the materials
are of poor quality. The following information is available
• (i) In the previous batches 80% of the materials have been of good
quality and 20% of poor quality
• (ii) The profit position is as under
• (a) Using old machine
• If the materials are good Profit of Rs. 2,000 If the materials are poor
Profit of Rs. 1,600
• (b) Using new Machine
• If the materials are good Profit of Rs. 2,400
• If the materials are poor Profit of Rs. 800
You have to decide which machine should be used under the
condition that quality of the materials is not known at this stage.

11/28/09 AFTERSCHO☺OL's MATERIAL 37


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Decision tree….
1600
2000
+ 320
Good P = .8
= 1920

old 1600 p =.2


poor

2400 p =.8
Good
NEW
1920+160

Poor =2080
800 P = .2

11/28/09 AFTERSCHO☺OL's MATERIAL 38


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Solution ….
• When we prepare a decision tree, we are
preparing a list of all the options with their
respective payoffs along with their
probabilities. The option, which has the
highest payoff possibilities is selected
based on the computations.

11/28/09 AFTERSCHO☺OL's MATERIAL 39


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• A client asks an estate agent to sell three
properties A, B and C:. The agent has to
sell A first within 60 days. If he is
successful he can either backout or try to
sell B or C. After selling second again
either he can backout or try to sell third. He
receives 5% commission on each sale. The
detail is given in next slide:

11/28/09 AFTERSCHO☺OL's MATERIAL 40


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Continued..
Property Cost Probability Selling price

A 400 .7 12000

B 225 .6 25000

C 450 .5 50000

11/28/09 AFTERSCHO☺OL's MATERIAL 41


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Decision tree ..
800
765
Sold b Sold C
400
884 Sell C .
Sell B
5
200 .6
Sell A
Fail
-225.4 backout
.7 1063
Sell
C Try B Sold b
.5 so
ld 525
.3 1288
Fail -400 c
Backo fail

Final expected value = 764 ut

11/28/09 AFTERSCHO☺OL's MATERIAL 42


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Tabular presentation ….
• We will try for each Sell Suc Fail Sell Fail
option. We will look at B eed C
all the possibilities
and multiply those
with respective
probabilities to find
their expected
payoffs. First option :
sell B :

11/28/09 AFTERSCHO☺OL's MATERIAL 43


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Total cost of a firm is as under:
c = 25 +2x +.01x^2
the firm can sell as much as it
wishes at 30 per unit. How much
should it sell to maximise profits?

• Profit = revenue – cost; revenue = 30x


• =30x – (25 +2x +.01x^2)
• =-.01x^2 +28X -25
• To maximise, first differentiation must be 0 and second
differentiation must be negative.

11/28/09 AFTERSCHO☺OL's MATERIAL 44


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Solution…
• =-.02x+28 = 0
• X = 1400
• Second differentiation :
• -.02 (which is negative), thus profit is
maximum at x = 1400 answer.
• Profit:
• =-.01*1400*1400 +28*1400 -25
• =19575 answer.
11/28/09 AFTERSCHO☺OL's MATERIAL 45
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A manufacturer can sell x items
per week at price (one item)
p=20-.001x and cost is c = 5x
+2000 to produce x items. How
much should it produce to
maximise profits?
• Profit = (20-.001x)x - (5x+2000))
• =20x - .001x^2 – 5x – 2000
• = -.001x^2 +15x -2000
• Differentiate it :

11/28/09 AFTERSCHO☺OL's MATERIAL 46


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Solution…
• -.001x^2 +15x -2000
• Differentiate it :
• -.002x+15 = 0
• X = 7500
• Second differentiation is -.002 (which is
negative).
• The firm should make 7500 items.

11/28/09 AFTERSCHO☺OL's MATERIAL 47


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A company charges Rs. 200 for
each box of tools on orders of 150
or fewer boxes. The cost to the
buyer on every box is reduced by
Re. 1 for each order in excess of
150. For what size order is the
revenue maximum ?
• Price per box = (suppose order size is x)
• =200 – 1(x-150) OR –x + 350
• Total revenue = (-x+ 350)x
11/28/09 AFTERSCHO☺OL's MATERIAL 48
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Solution…
• Total revenue = (-x+ 350)x
• Differentiate it :
• -2x +350 = 0
• X = 175
• Second differentiation:
• -2 (which is negative).
• Thus order size of 175 will maximize the
revenue.
11/28/09 AFTERSCHO☺OL's MATERIAL 49
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Demand function of a firm is
p=700-.3x and cost function (total)
is c=15x+20000, where p is price
per unit and x is number of units
produced. Find the production for
maximum profit?
• Profit = revenue – cost
• Revenue = (700 -.3x) X = 700x -.3x^2
• Cost= c=15x+20000
• Profit = 700x -.3x^2 – (15x+20000)
11/28/09 AFTERSCHO☺OL's MATERIAL 50
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Solution
• Profit = 700x -.3x^2 – (15x+20000)
• =685x - .3x^2 – 20000
• Differentiate it :
• 685 - .6x =0
• X = 1141.67
• Second differentiation :
• = -.6 (this is negative). Thus the
production should be 1142 answer.
11/28/09 AFTERSCHO☺OL's MATERIAL 51
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A manufacturing firm requires 45000
units of a particular item as raw
material. The item is packed in boxes
of 10 items each. The ordering cost is
rupees 45 per order. If the carrying
charges are Rs. 2 per box, how many
boxes should be ordered for minimum
cost ?
• Number of orders = 4500/x
• X = number of boxes per order
• Cost = carrying cost + ordering cost.

11/28/09 AFTERSCHO☺OL's MATERIAL 52


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Solution …
• Cost = carrying cost + ordering cost.
• Carrying cost = 2 * average inventory
• Average inventory = x/2, thus carrying
cost=2x/2
• Ordering cost = 45 * ( 4500/x)
• Total cost = 202500/x + 2x/2

11/28/09 AFTERSCHO☺OL's MATERIAL 53


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Solution…
• First Differentation
• Total cost = 202500/x + 2x/2

• ( x * differentiation of 202500)- (202500*1)/ x^2 + 2/2


• =-202500/x^2 +1 = 0 OR -202500/x^2 = -1
• X^2 = 202500 or X = 450
• Second differentiation :
• (x^2*differentiation of -202500)-(-202500*2x)/x^4
• =405000x / x^4 OR 405000/X^3 (this is positive,
therefore the number of boxes should be 450 per
order). Answer.

11/28/09 AFTERSCHO☺OL's MATERIAL 54


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Remember …
• For maximisation, first differentiation
should be zero and second differentiation
must be negative.
• For minimisation, first differentiation
should be zero and second differentiation
must be positive.

11/28/09 AFTERSCHO☺OL's MATERIAL 55


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About AFTERSCHO☺OL
• PGPSE - World’s most comprehensive
programme on social entrepreneurship –
after class 12th
• Flexible – fast changing to meet the
requirements
• Admission open throughout the year
• Complete support from beginning to the
end – from idea generation to making the
project viable.
11/28/09 AFTERSCHO☺OL's MATERIAL 56
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Branches of AFTERSCHO☺OL
• PGPSE programme is open all over the
world as free online programme.
• Those who complete PSPSE have the
freedom to start branches of
AFTERSCHO☺OL
• A few branches have already started -
one such branch is at KOTA (Rajasthan).

11/28/09 AFTERSCHO☺OL's MATERIAL 57


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Workshop on social
entrepreneurship
• We conduct workshop on social
entrepreneurship – all over India and out
of India also - in school, college, club,
association or any such place - just send
us a call and we will come to conduct the
workshop on social entrepreeurship.
• These workshops are great moments of
learning, sharing, and commitments.

11/28/09 AFTERSCHO☺OL's MATERIAL 58


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FREE ONLINE PROGRAMME
• AFTERSCHO☺OL is absolutely free
programme available online – any person can
join it. The programme has four components :
• 1. case studies – writing and analysing – using
latest tools of management
• 2. articles / reports writing & presentation of
them in conferences / seminars
• 3. Study material / books / ebooks / audio / audio
visual material to support the study
• 4. business plan preparation and presentations
of those plans in conferences / seminars

11/28/09 AFTERSCHO☺OL's MATERIAL 59


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• AFTERSCHO☺OL has the record of
100% placement / entrepreneurship till
date
• Be assured of a bright career – if you join
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11/28/09 AFTERSCHO☺OL's MATERIAL 60


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Pursue professional courses along
with PGPSE
• AFTERSCHO☺OL permits you to pursue
distance education based professional /
vocational courses and gives you support
for that also. Many students are doing
CA / CS/ ICWA / CMA / FRM / CFP / CFA
and other courses along with PGPSE.
• Come and join AFTERSCHO☺OL

11/28/09 AFTERSCHO☺OL's MATERIAL 61


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