Applications of Derivatives

Optimization
Looking Back
In previous lessons, we have seen examples where there is an obvious highest point
or lowest point on a graph. These extrema points are of interest and finding and
interpreting these points is a process called optimization.

Part A – Optimization
Identifying and Classifying Critical Values

From the graph we see:

Collectively, these points are

called _________________________.

The term “relative” means that the point is the highest or lowest point within its
immediate neighborhood. Later in this lesson, we will discuss “absolute” extrema,
which is the highest or lowest point (if it exists) of a function over its entire domain.

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 Now look at the graph again. How can we use calculus concepts to describe where
these maxima/minima exist?

At (2,5) and at (4,1), the _______________________________________________________________.

At (6,4), the ______________________________________________, indicating that the derivative

does not exist here (recall that a derivative does not exist at any corners of a
graph).

This is summarized: Given

a continuous function 𝑦 =
𝑓(𝑥), possible maximum or
minimum points exist at x
values where the first
derivative equals 0 or
where the first derivative
does not exist.

These x-values are called

____________________________.

The corresponding points

are called __________________

____________________.

Not all critical values result in a maximum or minimum point. However, the converse
is true: if a point on a continuous graph is a relative maximum or minimum point, then
either the function’s derivative is 0 at that point or does not exist at that point.

• Critical values:

• Critical points:

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Discussion - Critical Values: The First Derivative Test

Once we have found the critical values, we need to determine whether these
correspond to a relative maximum point or a relative minimum point, or possibly
neither. There are two ways to do this:

We look for a change in sign of the first derivative as we move from the left to the
right of the critical value.

• If the sign of the derivative changes at a critical point from

_____________________________________to _____________________________________,

then that critical point is a _____________________________________.

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• If the sign of the derivative changes at a critical point from

_____________________________________ to _____________________________________,

then that critical point is a _____________________________________.

• If the sign of the derivative __________________________________________________,

then that critical point is _____________________________________________________.

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Part B – Optimization
Cubic Function & Application
Example: Cubic Function

Let 𝑓(𝑥) = 𝑥 3 − 3𝑥 2 + 2𝑥 + 4. Find all relative extrema points and classify them.
State all coordinates to three-decimal places.

You should always graph the function to see its general shape first:

Domain is all real numbers:

First derivative:

We set the derivative equal to 0 and solve. Using the quadratic formula, we get two
critical values:

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Optimization
Evaluate the original function to get two critical points:

The critical values divide the domain into three subintervals:

Subinterval Subinterval Subinterval

Test point ______________ Test point ______________ Test point ______________

Derivative is ______________ Derivative is ______________ Derivative is ______________

Note that this process allows us to find locations of maximum or minimum points
with extreme accuracy.

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Optimization
Example: Order of Products
A product goes on the market, and the number of daily orders made through its
website is modeled by 𝑆(𝑡) = 200𝑡𝑒 −0.006𝑡 , where 𝑡 is the number of days since the
product first went live.

Find the day at which the number of orders is maximized and state the number of
orders on that day. Graph the function first! Do you see any possible extreme
points?

𝑆(𝑡) = 200𝑡𝑒 −0.006𝑡

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In our earlier work with the Product Rule, the example, “Daily Orders Rate Change”
showed the derivative is:

The critical values will be found by setting the derivative equal to 0, and solving for 𝑡:

Number of orders that day: ____________________________________________

We check for the signs of the derivative on either side of the critical value _________.

The graph is _____________________ The graph is _____________________

on the interval (0,167). on the interval (167, ∞).

The point _____________________is a _______________________________

On the _________________ day after the product is released, the number of orders is

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________________________, with _____________________orders.

𝑆(𝑡) = 200𝑡𝑒 −0.006𝑡

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Optimization
Part C – Optimization
The Extreme Value Theorem: Absolute Maxima and Minima

Often, a scenario will be defined over a practical domain, usually a closed interval
(one that includes its endpoints). This leads to an important theorem:

The Extreme Value Theorem: If 𝑦 = 𝑓(𝑥) is continuous over a closed and bounded
interval [𝑐, 𝑑], then 𝑓 is guaranteed to have both an absolute maximum point, and an
absolute minimum point.

It is possible that the absolute minimum or maximum point occurs at the endpoint of
the interval. These need to be checked along with the critical value(s) when finding
absolute maximum or absolute minimum points.

Example: Maximizing Revenue & the Extreme Value Theorem

The manager of a large hotel charges $90 per room and at that price rents on
average 100 rooms per night, for a nightly revenue of ($90)(100) = $9000. For
every dollar she reduces the price, she rents two more rooms (for example, at $89
per room, she rents 102 rooms; at $88 per room, she rents 104 rooms, and so on).

Price model:

Number of rooms:

Where x is the amount, in dollars, that she is subtracting from the $90 base rate.

Revenue is the product of the price 𝑝, and the quantity 𝑞:

The hotel manager’s revenue model:

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 How much should she reduce the price of a room in order to maximize her nightly
revenue?

Since $90 is the most that she can reduce the price of a room, the domain of 𝑅 is

the closed and bounded interval:

Multiply:

Derivative:

Set derivative equal to 0:

Critical value:

Critical point:

Check the sign of the derivative on either side of 𝑥 = 20. Use convenient test points
𝑥 = 10 and 𝑥 = 30:

Graph is ________________ over 0 ≤ 𝑥 < 20 Graph is _______________ over 20 < 𝑥 ≤ 90

Since there is a sign change of the first derivative from _______________to _____________

as we move from the left to the right of the critical value x = 20, then the critical

point must be a _____________________.

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If she reduces the price per room by ________, her revenue will be maximized at

___________________. Since 𝑥 = 20 is in the domain [0,90], and the values of the

function at the endpoints, 𝑅(0) and 𝑅(90) are smaller than 9800, the point

_____________________ is the ________________________________.

In case you are curious, the absolute minimum occurs at the right endpoint, (90, 0).
If she drops the price $90 down to $0 per room, her revenue will be $0.

Looking Ahead
In the next lesson we continue the discussion of optimization by considering the
second derivative of a function. The second derivative of a function tells us much
about the behavior and appearance of the function and can be used to classify critical
points, as well as finding where the rate of change itself is maximized or minimized.

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