BUSINESs MATHEMATICS

1.48
4. You are given the following 3 x 3 matrix A:
24 1 UNIT I:
A =3 8 3
lo 5 4 MATRICES AND DETERMINANTS
Find its inverse and verify that the product of matrix A and its inverse results
in an identity matrix.
5. Solve the following system of linear equations using Matrix Inversion Method,
Determinants Method and Gaussian Elimination Method:
a)
(6)
2x
x +

3
5y -

+ 4z
3z =

=
11;
19; x +
2x - 3y
3y -
+

22
42

=
=

4;
6;
5x -y-2 =3
7x y + 32 =
29 Chapter 2
(c) 3x + 4y + 52 37; 6x - 4y + 22
=18; 22x + 3y 2 =F8
Application of Matrices to
=
32 10; 4x 2y + 22 10; 3x + 6z =
10
(d) 6x - 2y = =
y -
-
Business and EconomicsS
ANSWERRS)
-532 242 46 2.1. INTRODUCTIOON
OPERATIONS
1. (a) 1ABI = 42 (6) (AB)= 259-116 -25 2.2. APPLICATIONS BASED ON SIMPLE MATRIX
4256 22 8 2.3. APPLICATIONS BASED ON SYSTEM OF SIMULTANEOUS EQUATIONS
2.3.1 Investment and Return
81 129 93 2 1 2 [ 17 -11 4| 2.3.2 Inter-company Holding and Profit Sharing
2. 75 126 84 3 4 1 4. A =|-12 8 2.3.3 Determination of Sales and Profit
111 183 108 4 1 2 15 -10 2.3.4 Cost Determination and Allocation
2.3.5 Production Capacity
5. (a) x = 3, y = 5, z = 7;
(6)x =4, y =
2, 2 =
1; 2.3.6 Selling Prices and Commission
2. 2.3.7 Product Requirement and Usage
()x = 3, y = 2, z = 4;
(d)r = 5, y =
7, z =
2.3.8 Transportation Capacity and Ratess
2.3.9 Determination of Equilibrium Prices
2.4. MISCELLANEOUS PROBLEMS
EXERCISES
ANSWERS
2.1 INTRODUCTION
Matrices as a mathematical tool play important role in managernal decisions and
an
facilitate the application of modern techniques of quantitative analysis in business on
real time basis. Matrices provide a compact way of representing business data and
their interrelationship. Besides, the matrices are also used to represent
of
a system of
relationship between
a definite
equations in which each equation 1s an expression
various business attributes. The matrix operations such as addition, subtraction,
multiplication and scalar multiplication find direct and indirect applications in problem-
solving. Pew business-related areas where matrices have wide applications are:
 2.2
BUSINESS MATHEMATICS APPLICATION OFMATRICES TO BUsINESS AND ECONOMICS 2.3
.Investment and returns 2.0-1.8 2.5-1.8 2.3-1.8
Inter-company holdings and profit sharing = [1000 1500 2000 3.0-2.5+ [2000 2800 3000|2.8-2.5| +[3000 3500 4000|3.1-2.5
Determination of sales and profit 4.0-3.4 3.7-3.4 4.2-3.4
Estimation of costs
Overheads allocation 0.2 0.7 o.5
Determination of production capacity =
[1000 1500 2000 0.5+ [2000 2800 3000 0.3+ [3000 3500
4000]|0.6
Determining selling prices 0.6 l0.3 0.8
Product requirement and usage = [1000 x 0.2 1500 x 0.5 + 2000 x 0.6] + [2000 x 0.7 + 2800 x 0.3 + 3000 x 0.3]
Transportation capacity and rates +[3000 x 0.5 + 3500x 0.6 + 4000 x 0.8]
Determining equilibrium prices = [200 +750 + 1200] +[1400 + 840 + 900] [1500 2100 + 3200]
Besides, matrices are a powerful tool used in electronics, genetics and other frontier = [2150]+ [3140] + [6800] = [12,090]
sciences. The use of mathematical tool of matrices in some of the areas of business
and economics applications is explained in the following paragraphs. Thus, the total profit of all the markets taken together is T12,090.
2.2 APPLICATIONS BASED ON SIMPLE MATRIX OPERATIONSs Example 2.2. A finance company has offces located in every division, every district
and every taluka in a certain state. Assume that there are 5 divisions, 20 districts
Matrix notations can be used to represent complex data of business and economic
and 100 talukas in the state. Each office has one head clerk, one cashier, one clerk
problems in a simple manner. The data so represented can be subjected to matrix
and one peon. A divisional office has, in addition, one office superintendent, 2 clerks,
algebra of addition, subtraction and multiplication to derive inferences for managerial one typist and one peon. A district office has, in addition, one clerk and one peon.
decisions. The following examples can be studied to examine such applications.
The basic weekly salaries are.as follows:
Eample 2.1. A manufacturer produces three products X, Y and Z, which sells
he
in three different markets I, II and III. Monthly sales and sale prices are given as Office Superintendent 8,000 Head Clérk R5,000
follows:
Items Sold Sale Price (in )
Cashier 3.500 Clerk 3,000
Typist 3,000 Peon T2,000
Markets X
Using matrix notation, find:
I 1000 1500 2000 2.00 3.00 4.00
(i) The number of posts of each type in all the offices taken together.
II 2000 2800 3000 2.50 2.80 3.70
4.20 (i) The total basic weekly salary of each type of office.
III 3000 3500 4000 2.30 3.10 (ii) The total basic weekly salary bill of all the offices taken together.
If the cost per item for three products X, Y and Z is 1.80, 72.50 and 3.40 respectively, (Delhi Univ., B.Com. Hons., 2016)
find by matrix algebra his total profit. (Delhi Univ., B,Com. Hons., 2006, 201)
Solution:
Solution: Matrix A represents the number of divisions, districts and talukas:
Total profit may be computed by multiplying the items sold in different markets by the
cost of item per unit.
Div Dist Tal
profit margin, which is the difference between sale price and the
Accordingly, A [5 20 100)1x3
Total Profit = Matrix B represents the number of various posts:
Sales Profit (Market I) Såles Profit (Market ID
x + x + Sales x Profit (Market II) OS HC Cashier Clerk Typist Peon
2.0 18 Div 1 1 3 1 2
'= [1000 1500 2000||3.0- 2.5||+[2000 2800 3000}2 B Dist| 0 0 2
4.0 3.4 Tal 0
12.3 1.8)
+[3000 3500 4000]|3.1-2.5|
 BUSINESS MATHEMATICS APPLICATION OF MATRICES TOBUSINESS AND ECONOMICS 2.5
2.4
Matrix C represents the basic weekly salaries: Solution:
(i) According to the sum of the year's digit method, the annual depreciation for each
OS 800o 54 3
year for the first five years would be in the ratio 5 : 4 : 3 : 2 : l or 5 15 15
HC 6000o
Cashier 3500 2
and respectively.
C Clerk 3000 15 15
Typist 300o M, 4,50,000
Let matrix C represent the cost of the machines M, and M: C= M,|3,00,000
Peon 2000
for the five years:
A B and matrix R represents the rate of depreciation to be charged
() The number of posts of each type in all the offices taken together = x
1 2 3 4 5
1 1 1 3 1 2
=
[5 20 100]|0 1 1 2 0 2
0 1 1 1 0
of each machine for each year =C x R
=
[5 125 125 155 5 150] The annual depreciation
Thus, there are 5, 125, 125, 155, 5 and 150 posts of office superintendent, head 1 23 4 5
clerk, cashier, clerk, typist and peon respectively in all the offices taken together.
M,[4,50,000
M.8.0.00016 16 15 15 15
(ii) The total basic weekly salary of each type of office =
BxC
8000 2 3 4
5000
1 1 1 3 1 2| M, 1,50,000 120,000 90,000 60,000 30,000
3500
I1 2 M,1,00,000 80,000 60,000 40,000 20,000
o111 0 3000
(ii) Accordingto the straight line method, the amount of depreciation is equal for
3000 each year. Thus, the annual rate of depreciation for each year would be constant,
2000 i.e., 1/5. Let matrix S represent the required rates of depreciation when M, is
depreciated by sum of the year's digit method and M, is depreciated by straight
L(8000)+1(5000) +1(3500) +3(3000)+1(3000) +2(2000)32500 line method:
0+1(5000) +1(3500) +2(3000) +0 +22000) 18500 1 2 3 4 5
0+1(5000) +1(3500) +1(3000) +0 +1(2000) 3500 5/15 4/15 3/15 2/15 1/15
Thus the total basic weekly salaries of divisional, district and taluka offices are
732,500, 18,500 and {13,500 respectively.
1/5 1/5 1/5 1/5 1/5 Jas
(in) The total basic weekly salary bill of all the ofices taken together =A x (BC) To ensure that the cost of machine M, is multiplied by the rates for sum of year's
digit method and that of machine M,, is multiplied by the rates for the straight
32500 ine method, the cost of the two machines may now be represented by matrix D as:
=
[5 20 100]|18500 [5(32500) + 20(18500) +
100(13500) M M, Beware!
13500 D M,450.000 0 Cx S andSxC
=
[162500 + 370000 + 1350000] =
[1882500} M,0 3,00,000J2 will not be defined.)
Thus, the total basic weekly salary bill of all the offices taken together is R18,82,500. Therefore, the annual depreciation for each machine = D x S
Example 2.3. A firm has two machines costing 4,50,000 and R3,00,000. Each 450,000 0 15/15 4/15 3/15 2/15 1/15|
machine has 5 years' life with scrap value nil. Find the depreciation of each machine DxS= 3,00,000| 1/5 1/5 1/5 1/5 1/5]
for each year using matrix notations if
1 2 3 5
) both are depreciated by sum of year's digit method;
M, 1,50,000 1,20,000 90,000 60,000 30,000
(i) first is depreciated by sum of the year's digit method and second by straight line
method. (Delhi Uniu., B.Com. Hons., 2011, 2015) M, 60,000 60,000 60,000 60,000 60,000
 BUSINESs MATHEMATICS
APPLICATION OF MATRICES TO BUSINESS AND ECONOMICS 2.7
Example 2.4. There are two families A and B. There are
4 men, 6 women and
Solution:
2recommended
children in daily
Family A and 2 men, 2 and 4 children in Family B. The
women
requirement for calories is Man: 2400, Woman: 1900, Child: 1800 Let matrices S, P and C represent the sales of these products, selling price per unit
and for proteins is Man: 55 grams, Woman: 45 grams, Child: 33 grams. Represent and cost per unit respectively.
the above information by matrices. P R
Using matrix multiplication, calculate the total requirements of calories and proteins Mkt. I 12000 5000 10000 P[45 P[36
for each of the two families. (Delhi Univ., B.Com. Hons., 2014) S Mkt. I1 8000 17000 6000. P=Q25 and C= Q19
Solution: Mkt. II 5000 22000 9000 R35 Rl27
Let matrices A and B represent the members of the family and the daily requirements. () The total revenue from each market is given by:
Man Women Child
12000 5000 10000|45
Family A 4 6 2
A SxP | 8000 17000 6000|25
Family B 2 2 4 J2s
5000 22000 9000 35
Calories Proteins
Man 2400 55 12000x 45+ 5000x25+10000x35] 1015000|
C = Woman| 1900 45 8000x45+17000x25+6000x35 =|995000
Child 1800 33
J3x2
5000x 45+22000x25+9000x35| |1090000
Thus, the sales revenue from the markets X, Y and Z is 10,15,000, 9,95,000
The total requirements of calories and proteins for each of the two families:
and 10,90,000 respectively.
22400 55]
(ii) The gross profit from each market is given by:
AxC 2 462 21900 45
4 6
12000 5000 100001(45] [36|) [12000 5000 10000|9
41800 33 S(P - C)= | 8000 17000 6000 |||25 = 8000 17000 6000
4(2400)+ 6(1900)+2(1800) 4(55) + 6(45) +2(33) 5000 22000 9000 35 27|) 5000 22000 9000 8
2(2400)+21900) + 4(1800) 265)+2(45) +4(33)
12000x9+5000x6+10000 x8 218000
24600 556 =
8000x9+17000x6+6000 x8=222000
15800 332 5000x 9 +22000x6 +9000x8 249000
Thus, the total requirement of calories is 24,600 and 15,800 and that of proteins is Thus, the gross profit from the markets X, Y and Z is T2.18,000, T2,22,000 and
366 grams and 332 grams for Family A and Family B respectively. A2,49,000respectively.
VExample 2.5. A manufacturer is engaged in the production of three products P, Q Ekample 2.6. A manufacturer produces three products X, Y and Z in three different
and R, which are sold in three different markets X, Y and Z. The annual sales of factories: I, II and II. Monthly sales and costs are given as follows:
in these markets are tabulated below:
these products
Products actory
Items Sold Cost per Unit (in 3
Markets Z
1000 1500 2.00 3.00 4.00
12000 5000 10000
17000 6000 2000 2800 3000 2.50 2.80 3.70
8000
I 3000 3500
4000 2.30 3.10 4.20
5000 22000 9000
If the selling price per item för the three products X, Y and Z is 72.80, 73.50 and
You are required to find out: 4.40 respectively. find his total profits by matrix algebra.
() The total revenue from each market, if these products are sold at 45, R25 and
35 respectively.
Solution:
(ii) The gross profit from each market, if the cost of producing these products is R36, The total profit may be. computed by multiplying the items produced in different
factories by the profit margin, which is the difference between sale price and the
T19 and T27 respectively.
cost of item per unit.
 2.8 BUSINESS MATHEMATICS APPLICATION OF MATRICES TOBUSINESS AND ECONOMICS 2.9
The requirement of each constituent = B x C
Total Profits = Sales x Profit (Factory 1) + S x Profit (Pactory 11)
+Sales x Profit (Factory II1) 0.5 0 0.5 01
= [200 300 5001 0.2 0.3 0 0.5
2.8-2.0 2.8-2.51
(2000 2800 3000] 3.5-2.8 0.2. 0.2 0.1 0.5
=
[1000 1500 2000]|3.5-3.0
4.4-4.0 4.4-3.7 =
[260 190 150 400
Thus, 260 kg, 190 kg, 150 kg and 400 kg of constituents A, B, C and D respectively
[2.8-2.3 are used.
+[3000 3500 4000]3.5-3.1|
column matrix D represent cost of each constituent:
4.4 4.2 (ii) Let
= [1000 * 0.8 1500 x 0.5 + 2000 x 0.4) + [2000 x 0.3 + 2800 x 0.7 A[5,0
+3000 x 0.7] [3000 x 0.5 + 3500 x 0.44000x 0.2] B 6.0
D =
C 7.5
=
[800 + 750 + 800] + [600 + 1960 + 2100] + [1500 + 1400 +
800 D10,0
= [2350] + [4660] [3700] = [10,710]
Accordingly, the cost per kg of each fertilizer is expressed as:
Thus, the total profit of the manufacturer is 10,710.
0
2.7. The following matrix gives the proportionate mix of constituents used 0.5 0 0.5 0 1 0.5x5+0.5x7.5 .25
Example CD = 0.2 0.3 0 0.5
6.0
0.2x5+0.3x6+0.5x10 7.8
for the three fertilizers:
0.2 0.2 0.1 0.5 0.2x5+0.2x6+0.1x7.5+0.5x107.95
Constituents y10.0
Fertilizers is F6.25, F7.8 and 7.95 respectively.
Thus, cost of fertilizers I, II and III per kg
0.5 0.5 cost per week constituents used x corresponding cost of constituents
ci) Total =
0.2 0.3 0 0.5 [5.0
0.2 0.2 0.1 0.5 6.0
=
[260 190 150 400
(i) If sales are 1,000 tins (of one kilogram) per week, 20% being fertilizer I, 30%
and 50% being fertilizer II, how much of each constituent is
being fertilizer II,
used?
10.0
(i) If the cost of each constituent is ?5, 76, 77.5 and R10 per kg respectively, how 260 x 5 + 190 x 6 + 150 x 7.5 + 400 x 10
=77565
much does a one-kilogram tin of each fertilizer cost? Alternatively, total cost per week =
quantity of fertilizers x cost of fertilizers
(ii) What is the total cost per week? [ 6.51
Express calculations and answers in matrix form. [200 300 500] 7.8 200 x 6.25+ 300 x 7.8 + 500 x 7.95 = R 7565
(Delhi Univ., B.Com. Hons., 2006, 2008, 2009, 2018)
7.95
Solution:
week, then Example 2.8. A baker makes bread, sweet patties and biscuits. He requires flour,
() Let matrix A represent percentage sales of fertilizers per basic items
eggs, sugar, milk and yeast for his preparations. The requirement of these
III III for making bread, sweet patties and biscuits is as follows:
A [20% 30% 50%].
Sweet Patties Biscuits
The sales of fertilizers in tins can be represented by matrix B as: Bread
B 1000 [20% 30% 50%] = [200 300 500 (By scalar multiplication) Flour 250g 50 g 8 g
0.5 0.25
Let matrix C represent the proportionate mix of the
constituents:
Ege
100 8 25 g
A BC DD Sugar 125
0.02 litre 0.01 litre
I 0.5 0 0.5 0 Milk 0.05 litre
C II 0.2 0.3 0 0.5 Yeast 0.25 cake 0.125 cake 0
III 0.2 0.2 0.1 0.5] t
 AND ECONOMICSs 2.11
2.10 BUSINESS MATHEMATICS APPLICATION
APPL OF MATRICES TO BUSINESS
The baker buys the flour for 72.20 per kg and sugar for 72.40 per kg at controlled matrix operations, compute:
Through
prices. An egg costs him R0.25, a litre of milk 71.80 and a cake of yeast 0.80. What a) the total
demand for each type of car;
is the total cost of making a bread, sweet patties and biscuits? Use matrix system. demand for each repair part needed for the fleet, and
(Delhi Univ., B.Com. Hons., 2001, 2014) (6) total
combined cost for all repair parts. (Delhi Univ., B.Com. Hons., 2000)
(c) total
Solution:
Solution:
Let matrix A represent the requirement of basic items for making bread, sweet patties
car: It can be obtained by multiplying the matrix
and biscuits; and matrix B represent their respective costs (in ). (a) Total demand for each type of
N by a (with all elements equal to unity) as shown below:
column vector
Flour Egg Sugar Milk Yeast Flour 2.20 II III V
Bread [0.25 0.125 0.05 0.251 Egs 0.25 [160 150 100
120
A Sweet Patty 0.05 0.5 0.1 0.02 0.125: B= Sugar|2.40| Total demand for each type of car =400 300 100 400 II
Biscuits 0.008 0.25 0.025 0.01 o Milk 1.80
Yeast 0.80
500 200 150
00 TV
160+150 +100 +120] 530
The cost of making a bread, sweet patties and biscuits is obtained as follovws:
400+300+100 +400 = |1200
|2.20 500+200+ 150 +300 1150
0.25 0.125 0.05 0.25||0.25 Therefore, required number of large, medium and small cars is 530, 1200 and
A xB 0.05 0.5 0.1 0.02 0.125|2.40o 1150 for all the regions taken together.
0.008 0.25 0.025 0.01 o 1.80
(6) Totaldemand for each repair part needed for the fleet: This can be obtained as a
0.80 product of average parts needed per car and the number of cars. Accordingly,
0.55+0+0.3+0.09+0.2 1.14 Fan Belts [1.7 1.6 1.5
530
0.11+0.125+0.24 +0.036+0.1=|0.611 Total demand for each repair part=
Spark Plugs| 12.0 8.0 5.0 x 1200
0.0176+0.0625+0.06+0.018 +0 0.1581 Batteries 0.9 0.75 0.5
Thus, the cost of making a bread, sweet patty and biscuit is 1.14, 0.611 and Tyres 4.0 6.5 6.0 1150
0.1581 respectively. [ 1.7x530+1.6x1200 +1.5x1150 | 4546
is planning its maintenance
Example 2.9. The manager of a car rental company 12x530+8.0x1200 +5.0x1150 |21710
wants to determine the needs of certain repair parts
programme for the next year and 0.9x530+0.75x1200 + 0.5x1150| 1952
medium
and the expected costs. The company rents out three types of cars-large,
and small. The matrix N gives the number of each size of cars
available for renting 4.0x530+6.5x1200+6.0x1150 16820
in the four regions: (c) Total combined cost for all repair parts: This is obtained as a product of the cost
I I II IV of each part and number of parts required. Accordingly,
160 150 100 120 Large 4546
400 Medium
350]|21710
N=400 300 100
Total combined cost =
[125 80 300
500 200 150 300 Small 1952
on four
Because of cost and frequency of replacement, the manager is concentrating 16820
On the basis
repair parts in particular: fan belts, spark plugs, batteries and tyres.
of past records, the average number of repair parts needed per car during
a year
=
[125 x 4546 + 80 x 21710 + 300 x 1952 +350 x 16820
in matrix R. Further the matrix C gives the cost per unit for the four parts. [568250+ 1736800 +585600 + 5887000] [87,77,650}
= =
given
1.5 Fan Belts Thus, the total combined cost for all repair parts is 87,77,650.
1.7 1.6
12.0 8.0 5.0 Spark Plugs Example 2.10. A firm produces chairs, tables and cupboards, each requiring three types
R= C [125 80 300 350 of raw materials-timber, nails and varnish. You are given, in the following table, the
0.9 0.75 5.0 Batteries
units of different raw materials required for producing one unit of each product.
4.0 6.5 6.0 Types
 APPLICATION OF MATRICES TO BUSINESS
AND ECONOMICS 2.13
Z.112 BUSINESS MATHEMATICS
A BC
Product Timber (c.ft) Nails (dozens) Varnish (litres) Mterial 1 3 5 A 300
air 0.7 R Machine 2 4 3 and P B|250|
Table Labour |4 5
2 c200
Cupboard for various inputs = R x P
Total requirements
If the firm produces 300 units of each product, find the quantity of each raw material
required, using matrix algebra. (Delhi Univ., B.Com. Hons., 2002, 2008)
3 5|300 1x300+3x 250+ 5x 200 2050
3 250= 2x300+ 4 250+ 3x200x
2200 =
Solution:
Let a 3 x 3 matrix R represent the requirement of Timber, Nails and Varnish per
5 2 200 4x 300+5x 250+2x 200 2850
2050 kg material, 2200 machine hours and 2850 labour hours.
unit of chair, table and cupboard, and column vector P represent the required number Thus, the requirement is
of units: market to purchase 3 kg of sugar, 10 kg of wheat and
Example 2.12. Mr. A went to a
Chair Table Cupboard these commodities are priced at R20, 10
kg of salt. In a shop near Mr. A's residence, commodities are priced at R15, 8 and
Timber 0.7 3.2 Chair 300 and8 per kg whereas in the local market these
to local market is 25, find the net savings
R Nails 2 and P = Table 300 T6 per kg respectively. If cost of travelling
method. (Delhi Univ., B.Com. Hons., 2011)
Varnish 1 of Mr. A using matrix multiplication
1.5 2 Jax3 Cupboard [300
Solution:
Let row matrix A represent the requirement of sugar, wheat and salt
in kg and matrix B
Total requirements for various inputs = R xP
represents the prices in nearby shop and local market:
0.7 1 3.2 300 A 3 10 )
RxP 2 4 6300 P20 15
1 1.5 2 300
B 10 8
0.7x300+1x300 +3.2x300 1470 8 6J3x2
2x300+4x 300+6x300 = 3600
1x300+1.5x300 +2x300 1350 20 15
Total cost = A x B = [3 10 1]|10
8= [3(20)+ 10(10) + 1(8) 3(15) + 10(8) + 16)]
ft. timber, 3600 dozen nails 1350 litres of varnish is required for
Thus, 1470 cu.
8
production.
Example 2.11. A firm produces three items A, B and C, each requiring three types 168 131
below the Cost of buying from nearby shop = 7168
ofinputs-raw materials, machine hours and labour hours. You are given
units of different inputs required for producing one unit of each product. cost of 131 25 R156
Cost of buying from local market 131 = + travelling = + =
Therefore, the net savings upon buying from local market is =
T168 -
F156 = F12.
Product Raw Material (kg) Machine Hours Labour Hours
2.3 APPLICATIONS BASED ON SYSTEM OF SIMULTANEOUS
LINEAR EQUATIONS
Besides using matrix notation to perform algebraic operations, the data can also be
C represented in the form of system of simultaneous linear equations. The unknown
If the firm produces 300, 250 and 200 units of product A, B and C respectively, variables can be computed using various methods, viz..
determine the total input requirement of each product in terms
of raw material, matrix inversion, Cramer's
machine hours and labour hours using matrix algebra.
rule and Gauss elimination. Such applications focus on certain important
in
business
and economic situations such as investments
and
returns, profit sharing theinter
company holdings, determination of production capacity, selling prices, commission,
Solution:
product usage and requirement, sales and profit, allocation of cost to production
machine hours and
Let 3 x 3 matrix R represent the requirement of raw material, departments, transportation capacity, etc.
P represents
labour hours to produce a unit of product A, B and C, and column vector
the required number of units.
 2.14 BUSINESS MATHEMATICS APPLICATION OF MATRICES TO 8USINESS AND ECONOMICS 2.15
2.3.1 Investment and Return 1680
0.14 12000
D,
Application of matrices and determinants in the area of investment and portfolio
Therefore, 2 D 1200
management includes determination of proportion of funds to be invested in various 1 35000
plans with different risk and return structure, estimating return from various investment D, =
.06 07 660 =1(210 0) 1(180 + 660) + 35000(0+ 07)
plans, revising the investment structure, etc. Let us understand the dynamics of
inyestment and returns on the basis of examples that follow. -1 3000
= 210 - 840 + 2450 = 1820
Example 2.13. Mr. X has invested 35000, that he had divided into three investments.
Part of the money is invested in a savings account with an annual return of 6%, 1820
= 13000
partly in 7% annual yield bonds and the remainder in business. In 2015, when he Therefore, = 0.14
lost 6% of the money that he invested in the bu_iness, his net income from all the
invested in 6% savings account, 7% bonds
three investments is K660. If he invested R 3000 more in the business than in the Thus, 710,00, 712,000 and 713,000 were
savings account, how much was invested in each. Use matrix algebra. and business respectively.
(Delhi Univ, B.Com. Hons., 2017) xample 2.14. Sahil invested 80,000 in three bonds on January 1 last year. The
Solution:
bonds are 7% Bond A; 8% Bond B and 10% Bond C. The interest on the bonds is
Let Tz, Tz, and Rz, be the amounts invested in 6% savings account, 7% bonds and payable yearly. At the end of the year Sahil received an income of R6,800 on these.
business respectively. Further, it was found that the income from Bond C was 800 short of the combined
Xtt2 + x = 35000 income from the bonds A and B. You are required to determine the amount invested
(Total amount invested) by him in each type of bond, using matrix algebra. (Delhi Univ., B.Com. Hons., 2016)
0.06x, + 0.07x, 0.06x = 660 (Net income from investments in 2015)
Solution:
3000 (Relationship between investments)
Let x , x, and Rx, be the amounts invested in 7% Bond A, 8% Bond B and
In matrix form, the above equations appear as under: 10% Bond C respectively.
35001 t + 3 = 80000 (Total amount invested)
0.07x, +0.08x, + 0.10x, 6800 (Total income from investments)
.06 07
06| 660 =
-1 0 13 3000 0.07x, +0.08x 800 = 0.10x, (Relationship between returns from investments)
A X B 0.07 +0.08x, -0.10x, =
800
In matrix form, the above equations appear as under:
Using the Cramer's Rule, the values of x, x, and x, can be computed as follows.
1
80000
AI = D
1.06 1 1
07 - 0 6 1(07 + 0) 1(06 06) +1(0 + .07)
.07 .08 10 6800
07 08 1 0 800
-1 0 A X B
= .07 +.07 0.14
Using the Cramer's Rule, the values of 1, zz andx, can be computed as follows.
35000 1
1 1 1
D, =660 .07 -06 =
35000(.07 +0) -660(1 -0) +
3000(-06-07) AI =
D =
.07 .08 .10= 1(-008 008) 1(-007 007) 1(.0056 .0056)
3000 0 1
.07 .08-10
= 2450 660 390 = 1400
0 1 6 + 014 +0 = -0.002
Therefore, D 1400 - 10000 80000 1 1
0.14
D 6800 .08 .10 80000(-008-008) -6800(-10- 08) +800(.1008)
1 35000 1 800 08-10
D, = 06 660 -.06= 1(660+ 180) - 35000(.06 .06)+ 1(180+ 660)
-1280 + 1224 16 = -40
-1 3000 1
= 840 + 0 + 840 = 1680
Therefore 4020000
-.002
2.16 BUSINESS MATHEMATICS APPLICATION OF MATRICES TO BUSINESS AND ECONOMICS 2.17
1 80000 1 D -1.6 1000
Therefore, D -0.0016
D, 07 6800 .10
11-680 80) .07(-8000 800) +07(8000 6800)
-
.07 800 -.10 1 5000 1
- 7 6 0 + 616 84 = -60 D, = 06 358 08=1-28.64-5,6)-5000-0048-0.0048)+1(4.2-21.48)
-60 30000 .06 70-.08
Therefore, , D -0.002 = -34.24 + 48.00 17.28 =-3.52
|1 1 80000 -3.52
D, = |.07 .08 6800= 1(64 - 544) - 07(800 6400)+ .07(6800- 6400) Therefore, , = -0.0016
2200
.07 .08 800
1 1 5000
-480+ 392 + 28 =-60 D =
06 .07 358 1(4.9 - 25.06) 1(4.2 21.48) + 5000(.0042 0042)
06 .07 70
Therefore, 09-30000
=-20.16+ 17.28 +0.0 =-2.88
Thus, 20,000, R30,000 and T30,000 were invested in 7% Bond A, 8% Bond B and
10% Bond C respectively. Therefore, -2.88 =1800
-0.0016
Example 2.15. An amount of F5,000 is put into three investments at the rates Thus, Investment I =
F1,000; Investment II =
{2,200 and Investment IlI =
71,800.
interest of 6%, 7% and 8% p.a. respectively. The total annual income is 358. If the
combined income from the first two investments is F70 more than the income from Example 2.16. An investor invested T240,000 that he divided into three investments,
third. Find the amount of each investment by using matrix algebra. fixed deposit account at 9% p.a.; 11% bonds at par and the remainder in a joint
(Delhi Univ, B.Com. Hons., 1989)
venture. After a year of investment, the investor earned 17,800 in all from all
investments after suffering a loss of 8% on joint venture. If the Investment in bonds
Solution: was three times that of fixed deposit, find out the amounts invested in each of these
Let x , x , and {x, be the investments in Investment I, Investment II and Investment III
investments.
respectively, then the following relationships exist:
5000 (Total amount invested) Solution:
a t t
r
=
(Total income from investments) Let x , Rx and Tz be the amount invested in fixed deposit, bonds and joint venture
0.06x,+0.07x +0.08x, =
358
respectively, then the following relationships exist:
(0.06x, +0.07x) 0.08x, =
70 (Relationship between income from investments)
Xt+x =
240000 (Total amount invested)
In matrix form, the above equations appear as under:
[1 1
0.09x +0.11x, 0.08x,- =
17800 (Total earnings from investments)
5000 x = 3x a 3x - xz = 0 (Relationship between fixed deposit and bonds)
06 .07 08 358 In matrix form, the above equations appear as under:
06 07 -08 70
1 1 240000
A X B
09 .11 17800
Using the Cramer's Rule, the values of x, x2 and xz are computed as follows. -08
3 -1
A
|1 1 1
= D = |.06 .07 .08= 1(-0056- .0056) - 1-0048 0048) + 1(0042 - 0042)
A X = B
Using the Cramer's Rule, the values of z, Xz and x, are computed as follows.
.06.07-08 1 1 1
= -0.0112 + 0.0096 = -0.0016
A = D = 09 .11 08 = 1(0 - 0.08) 1(0 + 0.24) + 1(-0.09 0.33)
5000 11| 3 -1 0
D, = |358 .07 .08 = 5000(-0056-0.0056) -1-28.64 5.6) + 1(25.06-4.9) = -0.08- 0.24 0.42 -0.74
70 .07 -08
- 5 6 + 34.24 20.16 = -1.6
 2.119
APPLICATION OF MATRICES
TO BUSINESS AND ECONOMICS
BUSINESs MATHEMATICS
2.18 Cramer's Rule, the values of x, x, and x,
are computed as follows.
Using the
240000 1
11 1
D, =
17800 0.11
-0.08 =
240000(0 -
0.08) 1(0 0) 1-17800
+ 0)
IAI D = |0.1 0.12 0.15| 1-0.018-0.018) - 1-0.015-0.015)
=
+ 1(0.012-0.012)
-1
0.1 0.12 -0.15
-37000 = -0.036 + 0.030 = -0.006
Therefore, 37000=
-0.74
50000 10000 1
D, =1310 0.12 0.15
1 240000 -190 0.12 -0.15
D, =
0.09 17800-0.08 1(0 0) -240000(0 +0.24 +
1(0 - 53400) 1-196.5 + 28.5)+ 1(157.2 + 22.8)
3 0 0
=
10000(-0.018 0.018)
168 180 = -12
= -111000
= -360 +
-12
Therefore, -111000 =150000 Therefore, x, -0.006 = 2000
-0.74
1 10000 1
|1 1 240000| +
28.5) - 10000(-015-0.015) + 1(-19 - 131)
D =
0.1 1310 0.15 = 1-196.5
D, =
0.09 0.11 17800= 1(0+ 17800) - 1(0-53400) +240000(-0.09-0.33) 0.1 -190 -0.15
3 -1 0
= -168 + 300 150 = -18
= -29600
Therefore, *2 -18 =3000
Therefore, z,
D
-29600
-0.74
40000 -0.006
bonds and joint venture are 50,000; F 1,50,000 1 1 10000
Thus, the investments in fixed deposit,
and 40,000 respectively. Da 0.1 0.12 1310|= 1(-22.8 157.2) 1-19 131) +
10000(.012 -012)
three investments at the rate of 0.1 0.12 -190
Example 2.17. An amount of R10,000 is put into
from the investments is1,310
interest of 10%, 12% and 15% p.a. The total income = -180 + 1500 = -30
investment is 190 short of income
and the combined income of the first and second
from the third. Find investment in each using
determinant method.
Therefore, D -30
-0.006 5000
(Delhi Uniu, B.Com. Hons., 1984)
Thus, Investment I = 72,000; Investment II = R3,000 and Investment III = z 5,000.
Solution:
in Investment I, Investment II and
Let Rx, 7x2 and x, be the amount invested at the rate
Investment III respectively, then the following relationships
exist: Example 2.18. An amount of 65,000 is invested in three investments
of interest of 6%, 8% and 9% p.a. respectively. The total annual income is 4,800.
10000 (Total amount invested) the second
2 + The income from the third investment is R 600 more than the income from
=
*
1310 (Total income from investments) investment. Find the investment in each, using matrix algebra
0.1x, +0.12x, + 0.15x,
=
(Delhi Univ., B.Com. Hons, 1995)
between incomes from investments)
(0.1x, +0.12x) + 190 =
0.15x, (Relationship
Solution:
-190 be the amounts of investment in Investment I, Investment II
0.1x, +0.12x, 0.15x, =
Leta Rxz and x
In matrix form, the above equations appear as under: and Investment I l respectively, then the following relationships exist:
65000 (Total amount invested)
1 1
10000 + X =
0.1 0.12 = 1310 4800 (Annual income from investments)
0.15| 0.6x, + 0.8x, + 0.09x
0.1 0.12 -0.15| -190 0.9 600 0.008r, (Relationship between incomes from investments)
A X =
B .09x, =
600
08, t
 2.20 BUSINESS MATHEMATICS APPLICATION OF MATRICES TOBUSINESS AND ECONOMICS 2.21
In matrix form, the above system of equations appears as under: Solution:
Let x, and 7x, be the initial amounts of investment in Bond A and Bond B respectively,
1 1 65000 then the exist:
following relationships
0.06 0.08 0.09 4800 0.10x, +0.15x, =
4000 (Interest income during first year)
0 -0.08 0.09| 600
600 = 4500
0.10x,(1 + 0.2) +0.15x,(1 + 0.1) = 4000 +
A X B (Interest income during second year)
0.12x, +
0.165x, =
4500
Using the matrix inversion method, the values of x, *2 and x are computed as follows.
In matrix form, above system of equations appear as under:
AI 1(.08 x.09 + .08 x .09) 1(06 x 09 0 x 09) + 1-08 x .06 0 x 08)
=
(.0072 + .0072) (.0054 + 0) +-0.0048 0) =
0.0144 0.0054 0.0048 0.1 0.15 4000
= 0.0042 0.12 0.165| 4500
A X B
Since lA|# 0, A- exists and the solution is given by X = A-'B.
0.1(0.165) 0.15(0.12) =
0.0165 0.018 =
-0.0015 # 0; therefore A-l exists.
AI
-
=
0.0144 -0.0054 -0.0048
Cofactor of A =|-0.17 0.09 0.08
AATadA
0.01 -0.03 0.02
[ 0.0144 -0.17 0.01
-1 0.165 -0.15
0.0015-0.12 0.1
adj A = -0.0054 0.09 -0.03
X = A-1B
-0.0048 0.08 0.02
1 0.165 -0.15 1[ 4000
1
A ATadj A 0.0015-0.12 0.1 450o
0.0144 -0.17 0.01 -1 0.165x 4000 -0.15x 4500
-0.0054 0.09 -0.03| 0.0015-0.12x4000+0.1x4500
.0042
-0.0048 0.08 0.02
-1660-675 10000
X = A-B
0.0015-480 +450 20000
0.014. -0.17 0.01 65000
1 0.09 -0.03| 4800 Hence, initial investments in Bond A and Bond B are 10,000 and 20,000 respectively
-0.0054
.0042 and the new investment in Bond A is 712,000 (i.e., T10,000 + 20% x 10000) and in
-0.0048 0.08 0.02 600 Bond B is 722,000 (i.e., 7 20,000 + 10% x 20000).
65000x0.0144 -0.17x4800 +0.01x600 2.3.2 Inter-Company Holding and Profit Sharing
65000x0.0054
0042|
+ 4800x 0.09-600x0.03
A holding company (parent company) is a company that acquires of
majority shares
-65000x0.0048+ 4800x0.08+600x0.02 of other companies called its subsidiaries to exercise a controlling over
interest their
936-816+6 [30000 managerial affairs. Besides, even the subsidiary companies may acquire certain
1 percentage of shares in each other as well as the holding company. In the case of such
-351+ 432-18 = |15000|
0042
inter-company holdings, a recurrent problem is to allocate profits amongst the various
*"|-312+384 +12 20000 stakeholders, viz., holding company, subsidiaries and the outside shareholders. For the
shareholders
Hence, InvestmentI=730,000; Investment II =R15,000 and Investment III =
F20,000. holding company, the stakeholders are its subsidiaries and
whereas for the subsidiary companies, stakeholders include the holding company,
the outside
Example 2.19. Mr. X invested a part of his investment in 10% bond A and a part other subsidiaries and the outside shareholders.
in 15% bond B. His interest income during the first year is R4000. If he invests 20% any company is the sum of the
Due to the intercompany holdings, the total profit of
more in 10% bond A and 10% more in 15% bond B, his income during the second and share of earned from ownership of shares in
individually earned profit profits
by 500. Find out his initial investment and the new investments in
year increases the other companies.
bond A and bond B using matrix method. (Delhi Univ., B.Com. Hons., 1999)
 APPLICATION OF MATRICES TO BUSINESS
AND ECONOMICs 2.23
2.22 BUSINESS MATHEMATICS
0.06) + 32000(0.08+ 0.6)
Total Proft = Separately earned profit + Share in the profit of other companies
=
42000(1 -0.01) 52600(-0.8
-
= 41580 + 45236 21760 108576
After determining the total profts as above, the outside shareholders are allocated
their share in the total proft and the sum of the profits allocated to the outside
Therefore, D
10857612120000
shareholders equals the sum of the separately earned profts of all the
companies. The mathematical tool of matrices is used to resolve this interloclking
stakeholder 0.9048
42000 -0.6
situation to determine the allocation of profits amongst various stakeholder companies
D = -0.02 52600 -0.1
as explained through following solved examples.
the
-0.10 32000
xample 2.20. A holding company H has two subsidiaries S, and S, The subsidiaries
own portion of the share capital of H. The percentage ownership of the group + 31560)
also a =
1(52600 3200) +0.02(42000+ 19200) 0.1(-4200
is given below: 2736 54288
= 55800 +
1224
Percentage of Share Capital Held in Company 54288 60000
Owner ofShares Therefore, D 0.9048
60 -0.8 42000
1 52600
D, -0.02
S -0.10 -0.10 32000
Outside Shareholders + 4200) 0.10(-42080 42000)
=
1(32000 + 5260) + 0.02(-25600 -
Total 100 100 100
45240
If the separately earned profits of H, S, and S, are T42,000, 752,600
and 732000 37260 - 428 8408
respectively, find the total net profit of each company, (separately earned proit plusthat Therefore,
DD5 45240 50000
share in the profits of other companies) by using matrix algebra Also, verify 0.9048
the sum of the
the sum of the profits allocated to the outside shâreholders equals Thus, total profit of H, S, and S, is 7120000, 7 60000 and F50000 respectively.
(Delhi Univ., B.Com. Hons., 20155
separately earned profits of all the companies. 120000
Solution: the outside shareholders =
[0.88 0.1 0.3]| 60000
Sum of profits allocated to
The equations
Let the total net profit of H, S, and S, be x, x, and Rr, respectively. 50000
+ share in profit of other) for H,
representing the total profit (separately earned profit = [0.88 x 120000 + 0.1 x 60000 0.3 x 50000]
S, and S, be obtained as:
can
x 42000 +0.8x, + .6x x 0.8x, 0.6x, 42000
-

-
= -
[105600 + 6000+ 15000] =
7126600
52600 + 0.02x, +0.10x, -0.02x, +x, -0.10x, 52600
=
The sum of the separately earned profits of all the companies is
=
0.10x,
+ -0.10x 0.10x, t =
32000 32,000 71,26,600
42,000 + 52,600+
32000 +0.10x,
-
x
matrix form as:
Hence, it is verified that of the profits allocated to the outside shareholders
The above system can be expressed in the sum
1 -0.8 -0.6 42000 equals the sum of the separately earned profts of all the companies.
The subsidiaries
-0.02 1 0.10 52600 Example 2.21. A holding company H has two subsidiaries A and B. of the
6wn a small portion of the share capital of H. The proportionate ownership
-0.10 -0.10 1 32000 8Toup 1s given below:
A X B
Proporlion of Share Capital Held in Company
D 1(1 0.01) + 0.02(-0.8 0.06) 0.10(0.08+ 0.6)
AI = = -
Owner of Shares A
0.99 0.0172 0.068 0.9048 =
0.55/ 0.75
Cramer's
Since Al # 0, A" exists. The values of x, t, and x are computed using the
0.15
Rule as follows: O.04
B 0.06 0.15
42000 -0.8 0.6
0.10
D, =52600 1 -0.1 Outside Shareholders 0.90 0.30
32000 -0.1 1
 BUSINESS MATHEMATICS
2.24 APPLICATION OF MATRICES TOBUSINESS AND ECONOMICS 2.25
If the separately earned profits of H, A and B are T3,00,000, 71,50,000 and 71,00,000 (100000+ 22500) +.04(-55000 + 45000) 06(-82500 300000)
respectively, find the total profits (i.e., separately earned profit plus share in the 122500 - 400 + 22950 145050
profits of other companies) of each company by using matrix algebra. Also verify that
the sum of profits allocated to outside shareholders equals the sum of the separately
Therefore, x ,1450bU
0.90105 =160979
earned profits of all the companies. (Delhi Univ., B.Com. Hons., 2013)
Alternatively, the Gaussian Method (with forward substitution) can be used to solve
Solution: the system of linear equations using the following steps:
Let the total profts of H, A and B be Tx,, Rz and Tx, respectively. Accordingly,
1. Augmented matrix is constructed as follows.
x = 300000 + 0.55x, + 0.75x, * -0.55x - 0.75x, = 300000
z = 150000 +0.04x, + 0.15x, -0.04x, + x, - 0.15x, = 150000 1 -0.55 -0.75 300000
x = 100000 + 0.06x, +0.15x, = 0.06x, - 0.15x, + z F 100000
-0.04 1-0.15|150000
-0.06 0.15 1 100000
In matrix form, the above system of hnear equations is written as:
-0.55 0.75| 2. Apply the operation: R, » R, + 0.75R
1 300000
-0.04 1 -0.15| 150000 0.9550.6625 o 375000
-0.06 -0.15 100000 0.04 1 -0.15 150000
A X B -0.06 -0.15 1 100000
Using the Cramer's Rule, the values of x, z2 and x are computed as follows. 3. Apply the operation: R, > R + 0.15R,
1-0.55 -0.75 0.955 -0.6625 0|375000
A D = |-0.04 1 -0.15 -0.049 0.9775 0 165000
-0.06 -0.15 1
-0.06 -0.15 1 100000
= 1(1 - 0.0225) + 0.55 (-0.04 0.009) 0.75(0.006 + 0.06)
= 0.9775 - 0.02695 - 0.0495 = 0.90105 4. Apply the operation: R2 9775
300000 0.55 -0.75 0.955 -0.6625 o375000
D, = 150000 1 -0.15 0.05013 1 o168798
100000 -0.15 -0.06 -0.15 1 100000
= 300000(1 - .0225) - 150000(-55 - .1125) + 100000(0825+ 0.75)
5. Apply the operation: R, > R, + 0.6625 x R,
= 293250 + 99375 + 83250 = 475875
0.92179 0 0 486828.6
475875 528134 o 168798
Therefore, * D .90105
-0.05013 1
-0.06 -0.15 1 100000
1 300000-0.75
150000 -0.15 The matrix A stands transformed into lower triangular matrix.
D =-0.04
-0.06 100000 1 Using forward substitution, we get
= 1(15000 + 150000) 300000(-0.04 - .009) 75(-4000 + 9000)
0.93179x = 486828.6 ..(1)
= 165000+ 14700 3750 = 175950 486828.6
0.92179
- 528134
Therefore. 175950 195272
0.90105 -0.05013r, + x 168798
=
(2)
-0.06x 0.15x,x, = 100000
+ ..(3)
-0.55 300000
|1 Substituting x, = 528134 in Eqn. (2) above we get,
D -0.04 1 150000
, = 168798+ 26475 195273
-0.060.15 100000
-0.05013(528134) +r, = 168798
 BUSINESS MATHEMATICS APPLICATION OF MATRICES TO BUSINESS AND EcONOMICS 2.27
2.26
195273 in Eqn. (3) above, we get 0.99 0.68 0.86 30000| 45900 50000
Substituting x, =
528134 and x, =
-0.06 x 528134 0.15 x 195273 +x, = 100000 ad) A
AAI
=
0.036 0.952 0.124||17500= 0.918 18360= 20000
r 100000 31688 29291 160979 A 0.918 0.063 0.136 0.982| 5000 9180 10000
the total profits of the companies H, A and B are 5,28,134; 71,95,273 and Thus, total profits ofH =R50,000; S, =
R20,000; and S, =710,000.
Thus, 50000
71,60,979 respectively.
The sum of the profits allocated to outside shareholders is The sum of the profits allocated to outside shareholders
=
[0.91 0.3 0.1]|20000
528134 10000
= [0.9 0.3 0.1]| 195273 [0.91 x
50000 + 0.3 x 20000 0.1 x 10000]
45,500 + 6,000+ 1,000 ={52,500
160979
= 0.9 x 528134 +0.3 x 195273 + 0.1 x 160979 T5,50,000 The sum of the separately earned profits of all the companies is
30,000 + 17,500 +5,000 T52,500.
This is clearly same as the sum of separately earned profits of all companies.
Hence, it is verified that sum
of the profits allocated to the outside shareholders
and S,. The subsidiaries
Example 2.22. A holding company H has two subsidiaries S, ownership of the group eqyals the sum of the separately earned profits of all
the companies.
also own a portion of the share capital of H. The percentage
are holding shares in each other. A is holding
is as below: Example 2.23. Two companies A and B
20% shares of B and B is holding
10% shares of A. If the separately earned profits of
find out the total profits of
Owner of Shares
Percentage o Share Capital Held in Company the two companies are 98,000 and 49,000 respectively,
total of profits allocated to outside
each company using matrices. Also show that the
shareholders is equal to the total of separately earned profits.
(Delhi. Univ., B.Com. Hons., 2004 (External), 2009)
Solution:
be the total profits of A and Fy be the total profits of B, then:
Let x
30 x = 0.2y + 98000 x -0.2y 98000
OutsideShareholders 91
Total 100 100 100 y
= 0.1r +49000 -0.1x + y =49000
7 17,500 and 75,000 In matrix form, it is written as follows:
If the separately earned profits of H, S, and S, are 730,000,
earned profit plus
respectively, find the total net profit of each company (separately 98000
that s u m
share in the profits of other companies) by using matrix algebra. Also, verity
of the profits allocated to the outside shareholders equals the sum
of the separately -0.1 1 49000
(Delhi Uniu., B.Com. Hons., 1990) A X B
earned profits of all the companies.
AI =
1(1) -
(-0.2)(-0.1) =
1 -0.02 =
0.98 # 0, therefore A- exists.
Solution:
x, respectively. From the given 1 0.21
A =Ad j A=10.98
Fx, and
Let total net profits of H, S, and S, be Tx, 0.1 1
data, we obtain the following equations:
30000
a = 30000 0.6x, +0.8x
-0.6r, - 0.8r, =
X = A-B
17500 +0.03x,+0.1x -0.03x, + -0.1x, = 17500 110.2]98000] 1 1x98000+0.2x49000
-0.06x,- 0.1x, + = 5000
g5000 +0.06x, +0.1x,
The above system can be expressed in the matrix form as:
*
0.98 0.11 490000.98 0.1x98000+1x49000
1 98000+9800110000
-0.6-0.8 30000 0.98 9800+4900060000
-0.03 1 -0.1|T=|17500 Hence, total profits of company A =
R110,000 and that of company B
=
R60,000.
-0.06 -0.1 5000 The total profits allocated to outside shareholders
A X B
0.918
110000] [0.9 x 110000 + 0.8 x 60000] = 71,47,000
A =
1(1 -
0.01) + 0.6(-0.03 -
0.006) -
0.8(0.003 +0. 6) =
=
[0.9 0.8| 60000
Since 1AI #0, A- exists and the solution is given by X = A"B.
This is clearly the same as the sum of separately earned profits of all companies.
2.28 BUSINESS MATHEMATICS APPLICATION OF MATRICES TO BUSINESS AND ECONOMICS 2.29
A is
Example 2.24. Three companies A, B and C are holding shares in each other.
= 1(60000 + 12000) - 70000(-0.3 0.08) 0.2(-9000 + 12000)
holding 30% shares of B and 20% that of C; B is holding 30% shares of A and
40% = 72000 + 26600 600 = 98000
that of C; and C is holding 20% shares of Aand 10% of B. If the separately earned D98000
profits of the three companies are 70,000; 60,000 and 30,000 respectively, find out Therefore, , D5 0.8
= 122500
the total profits of each company using matrices. Also show that of
the total profits
allocated to outside shareholders is equal to the total of separately earned profits. -0.3 70000|
Solution: D, =-0.3 1 60000
The given data can be presented in tabular form as below: -0.2 -0.1 30000
Proportion of Share Capital Held in Company = 1(30000 + 6000) + 0.3(-9000+ 12000) + 70000(0.03 0.2)
Owner of Shares = 36000 + 900 16100 53000
30% 20% Therefore, x, = 53000 66250
30% 40% 0.8
20% Shares of outside shareholders in company:
A = 100% - (30% held by B) - (20% held by C) = 50%
OutsiderS 50% 60% 40%
B 100% - (30% held by A) - (10% held by C) = 60%
Total 100% 100% 100%
C 100% - (20% held by A) - (40% held by B) = 40%
If x , Rz2 and Rx, be the total profits of A, B and C respectively, then
70000 Accordingly, profts allocated to outside shareholders of companies are
x
=
0.3x, +0.2x, + 70000 - 0.3x, - 0.2x, =
60000 A 50% of 120,000 = 0.5 x120,000 =760,000
= 0.3x, +0.4x, + 60000
-0.3x +
- 0.4r, =
+ 30000 0.2x, 0.1x, + = 30000 B 60% of 122,500 = 0.6 x 122,500 773,500
0.2x, +0.1x, x
-
In matrix form, it is written as follows: C 40% of 66,250 = 0.4 x 66,250 = T26500
1-0.3
-0.3
-0.2
1 0 . 4 | =60000
70000 Total profits allocated to outside shareholders = 60,000+ 73,500+ 26,500 = R1,60,000
Separately earned profits of the companies = 70000 + 60000+ 30000 = R1,60,000
-0.2 0.1 30000 Thus, the total profits allocated to outside shareholders are equal to the total of
A B separately earned profits by the three eompanies taken together
Rule, the values of x, follows.
Using the Cramer's and x are
computed as Example 2.25. Mr. X invested in the shares of H, A and B equal to 10%, 20% and
-0.3-0.2 10% of their respective paid up capitals. Company H holds 20% shares of A and 30%
0.04) + 0.3(-0.3-0.08) 0.2(0.03+ 0.2) shares of B; and company A holds 20% shares of H and 10% shares of B. Individually
A =D =|-0.3 1 -0.41(1 -
company H earned a profit of R66,800 and company A earned a proft of F24,000. As
-0.2 -0.1 1
a result, Mr. X received a total dividend of T18,000 from his investment in shares of
= 0.96 - 0.114 0.046 = 0.8
these companies. Find out the total profits (i.e., separately earned profit plus share
-0.3 -0.2 in the profits of other companies) of each by applying matrix algebra.
70000 company
D, = 60000 1 -0.4 Solution:
30000 -0.1 1 Let the total profit of H, A and B be Rx, Tz, and Ra, respectively. Accordingly,
= 70000(1 - 0.04) + 0.3(60000 +12000) 0.2(-6000 - 30000) 0.2x +0.3x, + 66800 (Total profts of Company H)
= 67200 + 21600 7200 96000
-0.2x -0.3x =
66800
Therefore, D 96000 120000 x0.2x, +0.1x 24000 (Total profits of Company A)
0.8
70000 -0.2 -0.2x +x2 - 0.1x, =
24000
0.1x, + 0.2x, + 0.1x, = 18000 (Total dividend received by Mr. X)
D, =-0.3 60000 -0.4
-0.2 30000
2.30 BUSINESS MATHEMATICS APPLICATION OF MATRICES TO BUSINESS AND ECONOMICS 2.31
In matrix form, the above system of linear equations is written as: 2. Apply the operation: R, > R, + R
1 -0.2-0.3 66800 1-0.2 -0.3 66800
-0.2 1 24000 -0.1 1.2 0 24000
|0.1 0.2 0.1 18000 0.1 0.2 0.1 18000
A X B
3. Apply the operation: R, > R, + R,
Using the Cramer's Rule, the values of x, a2 and x, are computed as follows.
1 -2 1.1 0 -0.2 84800
-0.1 1.2 0 42000
A =D =-2 1 -1 1(0.1 +0.02) +0.2(-0.02 +0.01) -0.3(-0.04 0.1)
0.1 0.2 0.1 18000
2 1
0.12 0.002 + 0.042 0.16 4. Apply the operation: R, 6R, -R
66800 -2
1.1 0 -0.2 84800
D, = 24000 -.1 -0.1 1.2 0 42000
18000 2 0.7 0 0.6 66000
=
66800(0.1 + 0.02) - 24000(-0.02 +0.06) + 18000(0.02 + 0.3) 5. Apply the operation: R, > 3R, + R,
= 8016 960+ 5760 12816
4 0 320400
Therefore, z = =* 80100 -0.1 1.2 o 42000
0.16
0.7 0 0.6 66000
1 668003
D, =|-2 24000 -1| The matrix A stands transformed into lower triangular matrix and using forward
substitution, we get
18000 .1
4x, 320400 ..(1)
= 1(2400 + 1800) +0.2(6680 + 5400) + 0.1(-6680 + 7200)
= 4200+2416 +52 = 6668 -0.1x, +1.2x, = 42000 .(2)
0.7x, +0.6x, =66000 (3)
6668
Therefore, = 0.16
41675 320400
80100 [From Eqn. (1)]
4
-2 66800 Substituting « = 80100 in Eqn. 2) we get,
24000
D,-2 18000
-0.1(80100) +1.2x, = 42000
1.2x = 50010
=1(18000 4800) +0.2(-3600 13360) +0.1(-4800 66800)
50010
= 13200 3392 7160 2648 2 1.2 = 41675
Therefore, = 2648 16550 Substituting x, = 80100 in Eqn. (3) above, we get
0.16
0.7 x 80100 + 0.6x, = 66000
Alternatively, the Gaussian Method (with forward substitution) can be used to solve
the system of linear equations using the following steps: 0.6x 66000 56070 9930
9930
1. Augmented matrix is constructed as:
x 0.6 16550
1 -0.2 -0.3 66800 Thus, the total profits of the companies H, A and B are T80,100; 41,675 and 716,550
-0.2 1 -0.1 24000 respectively.
0.1 0.2 0.1 18000
 2.32
BUSINESS MATHEMATICS APPLICATION OF MATRICES TO BUSINESS AND ECONOMICS 2.3
2.3.3 Sales and Profit
8(12)+9(13)-14(15) 96+117-210|
Matrix operations can be applied for sales estimation
sales mix to
and profit projection under -12+0+(15) -12+015
various conditions. The applications could involve determining the achieve -12-3(13)+4(15) -12-39 +60
a target profit, the price
of
each product in produet revenues and the mix, the profits Therefore, S = 1 + X+ 3Y.
earned from different and the contribution margin for the given cost
markets and
revenue structure. The details of such matrix operations in the business situations next month with 4 units of X and s units of Y is 1 +4 + 3(5) =
20 units.
Salpsfor
stated above are explained through the following solved examples.
Example 2.27. A firm produces and sells three products X,, X, and X, The total
xample 2.26. The total sales (S) in thousands of rupees of a firm selling two products from selling theseThe profits from selling each unit of
products are
868.
profits
X and Y is given by the relationship, $=a+ bX + cY. Data for the first three months these producis are 8, 76 and 77 respectively. Product X, complements product X, 80
from
1s given as under: that for sale of every 1 unit of X, 8 unit of Xa are sold. The combined profits
the sale of X, and X, exceed that of X, by 7252. You are required to find out the
Month Totals Sales number of units sold in respect of each of these products.
Solution:
Let x, X2 and r, be the number of units sold in respect of products X. X, and X,
respectively, then
Using determinant method, determine the sales in the next month when it sells 4 868- (Total profits from selling the three products)
units of X and 5 units of Y. (Delhi Uni., B.Com. Hons., 2014)
8x, + 6x2 +
Tx =
(Relationship between sales of product X, and X
Solution: + 252 (Relationship between profts of x, x, and x)
8x, +6x,= 7x
The monthly data for the three months can be expressed as system of linear equations
based on the relationship S =a + bX + cY:
The above system of linear equations can be expressed as:
a+ 2b + 3e = 12 8x, +6x t+ 7x =
868
a+6b + 2c 13 8x X2 +Oxg
=
0
a +5b + 3c =
15 8x +6x - 7x, = 252
In the matrix form, these equations can be written as: In the matrix form, these equations can be written as:
12 8 6 868
6 8 -1
8 6 252
A X = B A X B
Al =
1(18 -
10) 1(6 -
15) +
1(4 - 18) =
8 + 9 14 = 3 A = 8(7 - 0) 6(-56 0) + 7(48+ 8) = 56 + 336 + 392 = 784
Since Al # 0, A-1 exists. Since 1A| #0, Al exists and is computed as
below
,18-10 (6-15) 4-18
2-3) A Gdj A
Aad A8
5-6
3-3
(5-2) 6-2
A
9 -14
7 84
56 -112 56
784
-3
56 0-56
X = A-'BB
X = AB
7 84 7 868
9 -14 12 56| 0
X1845656 56 -112
-3 0-56|252
 OF MATRICES TO BUSINESS AND
ECONOMICS 2.35
BUSINESS MATHEMATICS APPLICATION
2.34
80 12200 50
7x868+84x(0)+7x252 D, =|1.25 0= 0 - 1.25 (-12200) + 0 15250
5 6 x 8 6 8 +0x(-112) +56x252|
2
56x868+ 0x0-56x252
D, 15250
50
6076+1764 10 Therefore, D 305
7R4 48608+14112|=80
80 150 12200
48608-1411244 + 2(12200) =9150
44 respectively. D, =
1.25 -1 0 =0 1.25(12200)
Thergfore, number of units sold in respect of X, X, and X, are 10, 80 and 2 -1 0
150 and 50 units respectively of three
Bample 2.28. A firm produces and sells 80, and selling these products is ? 30,
9150
30
products P, Q and R. The per unit cost of producing Therefore, D 305
of 72800, what should be
40 and T20 respectively. In order to get an overall profit forward substitution) can be used to solve
the price of each of these products so that the price of Q is 25% higher
than that of Alternatively, the Gaussian Method (with
the following steps:
P and price of P is half of the combined price of Q and
R. the system of linear equations using
constructed as:
1. Augmented matrix is
Solution:
R. Accordingly, 80 150 5012200
Let Tx, x, and Tx^ be the prices of product P, Q and
1.25 -1 0 0
30) + 150(2 40) + 50(x, 20) 2800 (Target profit)
- =
0(
-
-
1.25)x = *2 (Relationship between prices of products P and Q)
2 -1-10
2. Apply the operation: R, > R, + 50R,
(Relationship between prices of products P, Q and R)
2
180 100 0 12200
The above system of linear equations may be expressed
as:
1.25-1 0 0
12200
P+ -1 -1 0
80x, +
l50x, +
50x =
2
1.257-, +Ox, = 0 3. Apply the operation: R, > R, + 100R
- r 0 =
2x 2
305 0 0 12200
In the matrix form, these equations can be written as:
1.25 -1 o 0
80 150 50 4| 12200 2 2
1.25
triangular form, the forward
2 Since the prime matrix A has been reduced to lower
X = B substitution may be applied as under
A
305x, = 12200
and x computed as follows.
Using the Cramer's Rule, the values of x, X2 are
40 (1)
80 150 50 (2)
2(0 + 50) 1.25x, x - = 0
AI D = |1.25 -1 0 80(1 -0) 1.25(-150 + 50) +
* 0 ..(3)
2x
=
2 Substituting x, = 40 in Eqn. (2) above we get,
80+125 + 100 = 305
1.25 x 40 x , = 0
12200 150 50 2 50
12200
D -1 0 12200(1 0) Substituting x, = 40 and x, = 50 in Eqn. (3) above, we get
-1 -1 2 x 40 5 0 * 0
g80 - 50 30
Therefore, .= 40 Therefore, the prices of products P, Q and R should be 7 40, T50 and 7 30 respectively
tO get an overall profit of R 2800.
 2.36 BUSINESS MATHEMATICS BUSINESS AND ECONOMIcs 2.37
APPLICATION OF MATRICES TO
Example 2.29. A manufacturer produces three products X, Y and Z, which he produces
in three different factories I, l1 and I1. Monthly sales and costs are given as follows: 40 2
D, =
247 2.5 1(188 200) -
40(8 7.5) + 2(160- 141)
Factory Ttems Sold Amount in thousands 3 80 4
Fixed Cost Net Profits = -12 - 20 + 38 =6
000 2500 2000 25 5 2,
2000 1500 2500 30 Therefore, X
I 3000 L3500 4000 40 40
2.5 40
Find out by algebra the contribution
matrix margin (i.e., selling price minus variable D, =
2 1.5 47 =1(120 - 164.5) 2.5(160 141) +
40(7.0 4.5)
cost) of each product.
3 3.5 80
Solution: = -44.5 - 47.5 + 100 = 8
Let z, Rz and Tx, be the contribution margin of products X, Y and Z respectively.
Total contribution margin - Fixed costs = Profits, therefore Therefore, =
1000x, + 2500x, + 2000x 25000 15000 per unit in respect of products X, Y and Z is T9, 76
Thus, the contribution margin
2000x, + 1500x + 2500x 30000 17000 and T8 respectively.
3000x,+ 3500x, + 4000x 40000 =40000 2.3.4 Cost Determination and Allocation
In the matrix form, these equations can be written as: cost determination and
Broadly viewing, the following business situations concerning
1000 2500 2000|| 40000 allocation have been exemplified using mathematical tool of matrices.
2000 1500 2500||=47000 .Determining the cost of producing different items, when the composition of their
raw material and costs associated with such raw materials is given.
3000 3500 4000| 80000 when
A X B Allocation of costs of service to
departments main production departments
the costs incurred by various interdependent service departments are given.
1 2.5
21 40
+009 2 1.5 2.5||x, =
1000 47 Kxample 2.30. A firm produces three products P, Pa and processed on 3 machines P,
M M, and M, before completion. M, can process 25 units of P, or 50 units of Pa or
3 3.5 4J 80 75 units of P, per hour. M, can process 50 units of any product per hour. M, can
1 2.5 2|| 40 process 50 or 25 or 100 units per hour of the products P, P, or P, respectively. The
2 1.5 2.5|| 47 processing hours available on machines M,, M, and M, are 12, 12 and 13 respectively.
3.5
. Using matrix notation, find:
How many units of three products can be produced per day.
*, and x, computed follows.
Using the Cramer's Rule, the values of x, are as
(i) The production cost per unit, if costs per hour of operating machines M,, M, and
1 2.5 2
M, are 500, 1000 and 71500 respectively.
A =
D =
|2 1.5 2.5= 1(6.0 8.75) -
2.5(8.0 - 7.5) +
2(7.0 - 4.5) (ii) The total cost of production. (Delhi Univ., B.Com. Hons., 2005, 2009, 2017)
3 3.5
= -2.75 - 1.25 + 5.0 1.0
Solution:
() Let the production of products P, Pz and P, be s z and z, units respectively,
40 2.5 2 then
D, =47 1.5 2.5= 40(6.0 -
8.75) -
2.5(188 200) + 2(164.5 120)
80 3.5 4 12 6x, +
3x, + 2x, = 1800 .
..(1)
= -110 + 30 + 89 = 9
*2 43 =
12 x, +
X * 3o .(2)
50 50 50
Therefore,
= 13 2x, + 4x, + x, = 1300 .(3)
50 25 100
2.38 BUSINESS MATHEMATICS APPLICATION OF MATRICES TO BUSINESS AND ECONOMICS 2.39
to three stores. The
The above equations can be expressed in matrix form as:
Kample 2.31. Dell Computers sells three types of laptops
the order is shown in
1800 number by each store and the total cost for
of laptops ordered
the following table:
|600
1300 Store Japtop 4 Laptop B Laptop C Amount
A X B Croma 21,20,000
AI 6(1 - 4) - 3(1 - 2) + 2(4 2) = -18 +3 + 4 = -11 Infotronics 18,70,000
Since AI # 0, A- exists. Accordingly,
Computech 13,00,000
Determine the cost of each type of laptop computer using matrices.
-3 5 1
Solution:
A adjA=|12 Let x,I, and Rxz be the cost per unit of Laptop A, B and C respectively, then
10x, +
8x, +
6x, = 2120000 (Sales to Croma)
1 1800 1870000 (Sales to Infotronics)
Tx, +9x, +5x,
X =A-B 2 4|| 600 t
3x, 1300000 (Sales to Computech)
8x, +4x2
2 -18 3 1300 matrix form
The above system of equations can be expressed in as:
-3x1800+ 5x600+1x1300 10 8 2120000
1x1800+ 2x 600+ (-4)x1300 7 9 1870000
2x1800+(-18) x600+3x1300] 8 4 1300000
A X B
-1100 100 40) +6(28 - 72) = 70 + 152 264 = -42
-2200|200 AI =
10(27 20) -
8(21 .
-3300 300 Since 1Al #0, Al exists. Accordingly,
Therefore, the production of products P, P, and P, is 100, 200 and 300 units respectively. -1
0:3
A dj A19-198
1
|25 50
1
75 24
44 34
3
38
0 -14 2120000
(i) Cost per unit =
[500 1000 1500] 50 7 0 90 12 X =AB =19 -18 -8|187000o
1 1 2-44 24 34 1300000
50 25 100
7x212+0x187 + (-14)x130
Hence, the cost per unit of products P1, P2 and P, is 70, 790 and R41.67 respectively. -1000019x212 +(-18)x187+ (-8)x130
of production per unit x units produced 42
(ii) The total cost of production = cost
-44x212 +24x187 +34x130
100
200=70x100+90x200+x300 -336 80000
=
70 90
3 -10000378 =90000
300 42
420 100000
=
[7,000 + 18,000+ 12,500] =
[37,500]
Therefore, the cost per unit of Laptop A, B and C is 80,000, 790,000 and 1,00,000
Hence, total cost of production is 37,500.
respectively.
2.40 BUSINESS MATHEMATICS
APPLICATION OF MATRICES TO BUSINESSAND ECONOMICS 41
Example 2.32. A firm has 3 service departments S,, S, and S, and two production =
18600(1 -
0.01) + 0.3(102600+ 3600) -0.1(-10260 36000)
departments P, and P2. The direct cost of each depart ment and the percentage of total = 18414 + 31860 + 4626 = 54900
cost of each service department allocated to various departments are given below:
D, 54900 60000
Percentage Allocation of Total Cost of the Therefore, A| 0.915
Department Department 1 18600 -0.1
D, = |-0.2 102600 -0.1
18,600 30 19
102,600 20 0 10
-0.1 36000
= 1(102600 + 3600)+ 0.2(18600 + 3600) 0.1(-1860 10260)
36,000 10 10 0
= 106200+ 4440 840 109800
220,000 30
180,000 30 30 50 D,_109800 = 120000
Therefore, A0.915
Total 100 100 100
-0.3 18600
Using matri» algebra, determine the total cost for each service department; allocate
service department cost to the production departments and find the total cost (direct D, =-0.2 1 102600
plus allocated) of each production department. Verify that the sum of service department -0.1-0.1 36000
costs allocated to the production departments is equal to the direct costs of the service 1(36000+ 10260) + 0.3(-7200 + 10260) + 18600(0.02 + 0.1)
departments. (Delhi Uniu., B.Com. Hons., 2016)
= 46260
918 2232 = 49410
Solution:
Let , r and z, denote the
total cost of is its direct service department S, S, and S, allocated
Therefore, A 4941054000
0.915
respectively. The total cost of each department cost plus its
be expressed Thus, the total cost of service departments S, Sq, and S, is 760,000, F 1,20,000 and
costs, which can as:
754.000 respectively.
1 8 6 0 0 + 0.3z, + 0.1x,
The aggregate of the service costs allocated to the production departments is given by:
102600 + 0.2x, +0.1x 60000
60000
,g36000+0.1x,+ 0.1x, [0.4 0.3 0.3|120000+[03 0.3 0.3]|120000
of simultaneous equations can be re-written as:
The above system 54000 54000
18600
-0.3x,- 0.1x,
=
= [24000+ 36000 16200]+ [18000 + 36000 27000]
-0.2x, +
lx2- 0.1x
= 1026000
0.1x + 36000
76200 + 81000 =R1,57,200
-0.1x -
lx, =
Thus, the aggregate of service costs allocated to the production departments is equal to
be presented in the matrix form as: the sum of direct costs of service departments (18600 +102600 + 36000)= R1,57,200.
The above system of equations can
18600 Example 2.33. ABC Co. Ltd. has two service department, S, and Sz, and four production
1 -0.3
-0.1| departments P, P,, Pz and P. Overheads are allocated to each production department
-0.2 1, -0.1| 102600 for incusion in the stock valuation. The analysis of the benefits received by
-0.1 -0.1 36000 department during the last quarter and the direct overhead expenses incurred by
each
A X B each department were:
0.1) + 0.99 0.063 0.012 = 0.915
0.01) + 0.3(-0.2 0.01) 0.1(0.02
=
AI =
1(1 -

-
Percentage to be Allocated to Departments
0, Al exists. Applying Cramer's Rule:
Service Departments P
Since 1A| P
18600 -0.3-0.1 20 30 25 15
30 0 10 35 20
D, = |102600
1 -0.1
36000 -0.1 1 Direct Overheads (in T,000) 20 40 25 30 20 10
 2.43
2.42 BUSINESS MATHEMATICS APPLICATION OF MATRICES TO BUSINESS AND ECONOMICS
in the form of simultaneous 2.34. A firm has 3 service departments S, S, and S, and 2 production
(i) Express the total overhead of the service departments Example
The direct cost of each department and the percentage of total
equations; departments P, and Pp.
cost of each
service department allocated to various departments are given below
and solve for total overhead of service
i) Express these equations in a matrix
departments using matrix inverse method;
form
Percentage Allocation of Total Cost of Department
(iii) Determine total overheads to be allocated from each S, and S, to the production Deparlment
Direct Cost
departments. (Delhi Uni., B.Com. Hons., 2003) S S, S
Solution: 14,000 30 20
Let Fr and y represent the overheads of service departments S, and S, respectively,
12,000
then 0
45,000 10 10
(1) Equations expressing total overheads of service departments:
x = 20000 + 0.3y x - 0.3y = 20000 50,000 50 30 40
= 40000+0.2x -0.2x +y = 40000 60,000 30 30 30
y
In matrix form, the above system of linear equations appears as: Tota 100 100 100
)
20000 Find the total cost (direct plus allocated) of each service department by using
matrix
-0.2 of service costs allocated to the production departments
algebra. Verify that the sum
A X =
B equals the sum of the direct of the service departments.
costs
(Delhi Univ., B.Com. Hons., 1992)
Al =
1(1) -
(-0.3)(-0.2) =
1 -
0.06 =
0.94 0 implies that A-l exists.
ofA) = 0.2 Solution:
Let x, and Tz, denote the total costs of servrice departments S,, S, and S,
respectively.The total cost of department is its direct costs plus its allocated
each
0.3
adj A02 1
costs and can be expressed as:
= 14000 + 0.3x +0.2x r 0.3x, 0.2x,
-
-
= 14000
0.94 0.2 1 x =12000 +0.1x, + 0.lx -0.1x, + lx, -0.1x, = 12000
x = 45000 +0.17, +
0.1x 0.1x, 0.1, + lx, - = 45000
X = A--B
The above system of equations can be presented in the matrix form as:
11 0.31 20000
0.94 0.2 1 40000
-0.3
-0.2||7| 14000
-0.1 1 -0.1|| |12000
1 1x20000+0.3x40000 -0.1 -0.1 1 45000
0.94 0.2x20000+1x40000 A B
1 32000 34043 AI = 1(1 - 0.01) + 0.3(-0.1 0.01) 0.2(0.01 0.1) = 0.99 - 0.033 0.022 0.935
0.94 4400046809 Applying Cramer's Rule:
Thus, x 34043 and y =46809 implying that the overheads of S, are F34,043
and that of S, are 46,809. 140000.3 -0.2
(ii) The total overheads (in ) of S, allocated to production departments P, P2» Ps
D r2000 1-0.1
45000 -0.1 1
and P
34043 x [0.3 0.25 0.15 0.10
= 14000(11 - 0.01) + 0.3(12000 + 4500)- 0.2(- 1200 45000)
[10213 8511 5106 3404]
=
13860 4950 + 9240 28050
The total overheads (in ) of S, allocated to production departments P, Pz» Pa
and Therefore, D28050 30000
P X
AL 0.935
46809x [0.1 0.35 0.20 0.05 =
[4681 16383 9362
2340
 2.44 BUSINESS MATHEMATICS APPLICATION OF MATRICES TO BUSINESS AND ECONOMICS 2.45
cost of production if cost of operating per hour two machines is 400
1 14000 -0.2 () Per unit on
and 300 respectively.
D, =-0.1 12000 -0.1
of production. (Delhi Univ., B.Com. Hons., 2013)
-0.1 45000 (ii) Total cost
1(12000+ 4500) 14000(-0.1 0.01) 0.2(-4500 + 1200) Solution:
(i) If the firm produces x units of P, and y units of P2, then
16500+1540+660 18700
D, 1870020000o 33 5x + 4y =
1320 (Production capacity of machine M,)
Therefore, A 0.935
x+y =300 (Production capacity of machine M)
=25
-0.3 14000|
D, -0.1 1 12000 The above system of equations can be presented in the matrix form as:
-0.1 -0.1 45000 1320
1(45000 + 1200) + 0.3(-4500+ 1200) + 14000(0.01 + 0.1) 300
A X = B
46200- 990+ 1540 46750
AI =
5x 1 4 x 1 =1 * 0, therefore A-' exists, and the solution is given by
D
-
Therefore, , 467b =50000 X = A- B.
A 0.935
Thus, the total cost of service departments S, S, and S, is 730000, 720000 and
T50000 respectively.
The aggregate of the service costs allocated to the production departments is: 413201x1320+(-4)300 120
30000 [30000 300-1x1320+ (5)300 180
Therefore, production of P, and P, is 120 units and 180 units respectively.
=
[0.5 0.3 0.4] 20000+[0.3 0.3 0.3]|20000
50000 50000 (i) Per unit cost of production:
[15000+6000 + 20000] + [9000 + 6000 + 15000] Let matrix P represent the production capacity of machines and matrix C represent
the cost of operating per hour on two machines:
= 41000+ 30000 7 1 0 0 0
The aggregate of service cost is the same as the sum of direct costs of service P P2
M, M2
departments R14000+ 12000 45000) =
R71000. P
M[1/8 1/10 and C=[400 300]
M,1/12 1/12
2.3.5 Production Capacity Per unit cost of production = Cx P
Broadly viewing, two types of production problems have been exemplified using the
matrix methods: = [400 300]1/18 1/10|
Determining the production capacity for the available machine hours when various
1/12 1/12
items are to be processed in different machines for varying number of hours. =
[400(1/8)+ 300(1/12) 400(1/10) +
300(1/12)
Determining the quantities of raw materials when diferent grades of raw material1 = [75 65
in different quantities are needed for production. Therefore, cost per unit of production of P, and P, is 75 and 7 65 respectively.
two machines (iii) Total cost of preduction = Cost per unit of production x Number of units
/Example 2.35. A firm produces two products P, and P2 processed on
M, and M, before completion. M, can process either 8 units of P, or 10 units of P
120
[75 65],a [20700]
M, can process 12 units of either product per hour.
per hour.
=
[75(120) + 65(180)) =
180
Using matrix notation determine
Therefore, total cost of production is 20,700.
Production of P, and Pz if time available on two machines is 33 hours and
25 hours respectively.
 2.46 BUSINESS MATHEMATICS APPLICATION OF MATRICES T BUSINESS AND ECONOMICS 2.47
D =
1(2 -0)-1-2 0) + 1(1 + 1) =2 + 2 2 6 # 0, therefore A-l exists.
Example 2.36. A firm produces two products P, and P2 passing through two machines LAL
M, and M, before completion. M, can produce either 10 unis of P, or 15 units of P Using Cramer's Rule, we get
per hour. M, can produce 15 units of either product per hour. Find daily production 90 1 1
of P, and P, if time available is 12 hours on M, and 10 hours on M, per day using D, = 20 -1 0
matrix inversion. (Delhi Univ., B.Com. Hons., 2014
0 -2
Solution:
0) 1(-40 0) + 1(20 0) =
180 + 40 + 20 240
Let the firm produce r units of P, and y units of Pa implying thereby that 90(2 -
-
Therefore, x = = 40
1112 3x + 2y =
360
1 90 1
1
15 150
*+y= 150
D 120
The above system of equations can be presented in the matrix form as:
10 -2
360 =1(-40 0) - 90(-2 0) +1(0 20) = -40 + 180 20 120
A X =
150
B Therefore, = D-220-20
6
A = 3 x 1 - 2.x 1 = 1 # 0, therefore A-l exists, and the solution is given by
90
X =A-'B.
D, =1-1 20
11
-2|360 1x360+(-2)x150 1(0 20) 1(0 20) + 90(1 + 1) =-20 + 20 + 180 =
180
X 350-1x3E0+3x1509o
It implies that x = 60 and y = 90. Therefore, the daily produetion of P, is 60 units
Therefore, 18030
and that of P2 is 90 units. Thus, the production of three products is 40 kg, 20 kg and 30 kg respectively.
Example 2.37. A company produces three products every day. Their total production Example 2.38. Three products X, Y and Z are produced after being processed through
on a certain day is 90 kg. It is found that the production
offirst
product exceeds the
production of second product by 20 kg while the total production of first and second
three departments D,» D, and D3. The following data are available:
product is twice the production of third product. Determine the produetion level of
Product Hours Reyuired for Unit Product in
each product using matrix algebra. (Delhi Univ., B.Com. Hons., 2012)
Solution:
Let , 1, and x, be the of
production three products. As per given information, the
system of linear equation may be formed shown below:
as
Z
t2 tx =
90 (Total production of three products) Maximum Hours 1100 1800 1400
x+20 - + Ox = 20 Find by matrix method the number of units produced for each product to have full
(Relationship between production of products z, and x utilization of capacity. (Delhi Univ., B.Com. Hons., 1986)
+ 2 2x3 + - 2x, =0 Solution:
(Relationship between production of products x, z, and x) Let z, y and z denote the number of units to be produced for products X, Y and Z, then
In the matrix form, the above equations can be written as: 2x +y + 22 = 1100 (Processing hoùrs in Department D,)
5x + 2y + 22 = 1800 Processing hours in Department D,)
x + 3y + 32 = 1400 (Processing hours in Department D)
A
 2.49
2.48 BUSINESS MATHEMATICS APPLICATION OF MATRICES TO BUSINESS AND ECONOMICSs
In the matrix form, the above system of equations can be written as: Solution:
denote the number of units of C, C2 and C, respectively, then
2 1100 Let x, y and
z cars
5 1800 2x + 3y + Az = 29 (Requirement of steel S,)
1400 x +y + 22 = 13 (Requirement of steel S,)
(Requirement of steel S)
X B 3x + 2y + z = 16
The determinant of coefficient matrix A is computed as: the above system of equations can be written as:
In the matrix form,
A 2(6 6) 1(15 -
2) + 2(15 2 ) =
0 -
13 + 26 =
13 # 0, therefore A-l exists.
2 3 29
[o -13 13 1 1 13
Cof(A) = 3 4 -5 3 2 16
-2 6 A X = B
A is computed
The determinant of coefficient matrix
as:
-13 13 [ 0 3
4(2 3) =-6 + 15 4 5 # 0, therefore A-' exists.
adjA = 3 =D 2(1 4) - 3(1 6) + -
-5and A"AT Gdj A=-13
=
4 6 AI
-2 6 -1 13 -5 Using Cramer's Rule, we get
The solution is given by X = A-l B as:
29 3 4
= 29(1 - 4) - 3(13 - 32) + 4(26 - 16)
D
3 -211100
X=13 6 18oo = -8757 + 40 10
13 13 55 -1400
0x1100+3x1800 + (-2) x1400
Therefore, -2
-13x1100+4x1800 +6x1400 2 29 4
13x1100+(-5)x1800+(-1)x1400 D, = 1 13 2 213 32) 29(1 6 ) + 4(16 39)
3 16 1
2600 200 = 3 8 + 145 92 = 15
1300- 100
3900 300 Therefore, - 3
Thus, = 200, y = 100 and z = 300. Accordingly, the number of units to be produced
in respect of products X, Y and Z are 200, 100 and 300 respectively. 23 29
D, 1 1 13= 2(16 26) 3(16 39) + 29(2 3)
Example 2.39. An automobile company uses three types of steel S,, Sa and S, for
3 2 16
producing three types of cars C, C, and C. Steel requirements (in tons) for each
type of given below:
car are
=
-20 +69 29 =
20
Therefore, = 4
Cars
Steel Types
Thus, the production of three types of cars is 2, 3 and 4 units respectively.
2 Example 2.40. In an engineering workshop there are 10 machines for drilling,
8
machines for turning and 7 machines for grinding. Three types of brackets are
I brackets require 0 minutes for drilling, 5 minutes for turning and
made. Typefor grinding. The corresponding times for type II and III brackets are
Determine the number of cars of each type which can be produced using 29, 13 and
4minutes
, 3, 2 and 3, 2, 2 minutes respectively. How many brackets of each type should be
16 tons of steel of three types respectively. (Delhi Univ., B.Com. Hons., 1985) per hour that all the machines remain fully occupied during an hour?
produced
Solve
so
using matrix algebra. (Delhi Uniu., B.Com. Hons., 2008, 2010)