Systems of linear equation are used widely in business application. It is important to study linear equations in business because the profit or loss of any business is the result of the choices made on factors like capital, market, market situation, labor etc. In business involving multiple monthly payments plans, system of linear equations can be used can be used to determine the time before the monthly amount will coincide. In simple terms it can be used to determine the profit or loss of a business. Systems of linear equations can be used to calculate the break even points in a business.
Calculating the values of shares and debentures and also the appreciation or depreciation of stocks or goods uses system of linear equations. Cost measures like fixed cost, total cost, total variable cost, marginal cost, average fixed costs, average variable costs etc can be determines easily with the help linear equations when the total costs and quantity produced are unknown. Industries like military, capital budgeting, resource conservations, economic growth prediction, factory manufacturing etc rely on linear equations for their economic enhancement.
In particular can you provide examples where the relationship between items that can be affected by management and ‘items’ that management wished to achieve or attain may be ‘linear’?
An example can be shown in with the airline industry. “The airline industry uses linear programming to optimize profits and minimize expenses in their business.”. Long back, airlines charged the same price for all seats in the aircraft. Differentiating the prices for different seats depending upon the time of the ticket reservation was introduced later. Determining the profit obtained by doing so requires solving by system of linear equations.
The number of people that will be booking a ticket at the last minute for a higher price will be mostly people who have flexible traveling times. The number of people who go for low price ticket should also be known. These factors are linear. Airline management uses systems of linear equations to find the breakdown of the number of tickets sold at different price levels. The salary and lifestyle factors of pilots and aircraft crews are also linear. Economic decisions on pilot’s salary, maintain costs levels and optimizing the expenses are all linear. The other factors which are linear is the time schedule and location of services provided by the airline.