APPLICATION OF

APPLIED MATHEMATICS
IN REAL LIFE
NAME: Tanima Lal
CLASS: XII-D
 TABLE OF CONTENT
◦ Objectives
◦ About the store
◦ Cost Function
◦ Revenue Function
◦ Profit Function
◦ Breakeven Analysis
◦ Case Study
◦ Conclusion
 OBJECTIVE
◦ The objective of this project is to show the application of applied mathematics
in minimizing the cost of a convenient store WALMART
 ABOUT THE STORE
◦ Walmart Inc. is an American multinational retail corporation
that operates a chain of hypermarkets (also called
supercenters), discount department stores, and grocery
stores from the United States, headquartered in Bentonville,
Arkansas. The company was founded by Sam Walton in
nearby Rogers, Arkansas in 1962 and incorporated under
Delaware General Corporation Law on October 31, 1969.
◦ As of October 31, 2021, Walmart has 10,566 stores and
clubs in 24 countries, operating under 48 different names.
The company operates under the name Walmart in the
United States and Canada, and as Flipkart Wholesale in
India
◦ Walmart is the world's largest company by revenue, with
US$548.743 billion, according to the Fortune Global 500
This Photo by Unknown Author is licensed under CC BY
list in 2020. It is also the largest private employer in the
world with 2.2 million employees.
 COST FUNCTION
◦ FIXED COST (TFC) : Fixed Cost are those which are incurred regardless of the level of production –
like interest , rent , wages of permanent staff, etc. Fixed cost does not change whether there is any
increase or decrease in the level of production.
◦ VARIABLE COST ( TVC): Variable Cost are those which vary with he output. For eg: Raw materials
and wages of casual labour.
TC= TVC + TFC
◦ AVERAGE COST (AC): Average Cost is the total cost divided by the number of units produced. AC=
TC/x
◦ AVERAGE FIXED COST ( AFC): Average Fixed Cost is the fixed cost divided by number of units
produced . AFC= TFC/x
◦ AVERAGE VARIABLE COST (AVC) : Average Variable Cost is the total variable cost divided by the number
of units. AVC= TVC/x
AC= AVC+AFC
 REVENUE FUNCTION
Revenue means the amount received by the company by selling a certain numbers of units of units of a
commodity. Let ‘p’ be the price per unit an ‘x’ be the number of the units sold.
Then the total revenue R(x)= x.p
Average Revenue or the Revenue per unit is given by
AR = r/x = px/x = x
Thus , average revenue is the same as price per unit.
 PROFIT FUNCTION
The profit function P(x) of producing , marketing and selling ‘x’ units of a commodity is ,
P(x)= R(x)-C(x) ,
Where R(x) is the revenue function and C(x) is the cost function.
Average Profit :- P(x)/x = R(x)/x – C(x)/x
Hence , Average Profit = Average Revenue – Average Cost
 BREAKEVEN ANALYSIS
The breakeven point is the level of production where the revenue from the sales is equal to the total cost of
the production. At this point, the company makes neither profits or losses.
Thus at breakeven point ,
R(x)=C(x)
R(x)-C(x)=0
P(x)= 0
 CASE STUDY
WALMART incurs a fixed cost of Rs 80,00,000 which includes bill payments , salary of permanent staff and other fixed costs.
The variable is estimated to Rs ( 4x² - 1600x). We are going to find number of units it should produce to minimize its cost

COST FUNCTION = C(x) = 4x²-1600x

C’(x) = 8x- 1600
equating the cost function to 0 to get critical points
C(x)=0
8x-1600=0
x=200
Double differentiating
C”(x)=8>0
Since C”(x)>0, the cost function is minimum at x=200
 CONCLUSION
This shows that WALMART should produce 200 units for minimizing its cost.