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Cost Minimization Is Essential For The Sustainable Development Of An Industry: A Mathematical Economic Model Approach

Author

Listed:
  • Lia ROY

    (Department of Mathematics, Premier University, Chittagong, Bangladesh)

  • Rashed MOLLA

    (Department of Mathematics, Premier University, Chittagong, Bangladesh)

  • Haradhan Kumar MOHAJAN

    (Department of Mathematics, Premier University, Chittagong, Bangladesh)

Abstract

The method of Lagrange multiplier is a very useful and powerful technique in multivariable calculus. In this study, interpretation of Lagrange multiplier is given with satisfactory mathematical calculations and shows that its value is positive. For the sustainable development of an industry, cost minimization policy is crucial. In any industry, the main objective is to minimize production cost for maximizing its profit. By considering Lagrange multiplier technique application an attempt has been taken here in cost minimization problem subject to production function as an output constraint. To predict future performance of an industry, mathematical calculations are necessary and all the procedures are given in this paper with detail mathematical procedures. In this study, an attempt has been taken to minimize cost by considering three variables capital, labour, and other inputs of an industry by the application of economic models subject to a budget constraint, using Lagrange multiplier technique, as well as, using necessary and sufficient conditions for minimum value.

Suggested Citation

  • Lia ROY & Rashed MOLLA & Haradhan Kumar MOHAJAN, 2021. "Cost Minimization Is Essential For The Sustainable Development Of An Industry: A Mathematical Economic Model Approach," Annals of Spiru Haret University, Economic Series, Universitatea Spiru Haret, vol. 21(1), pages 37-71.
    • Handle: RePEc:ris:sphecs:0380
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    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C65 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Miscellaneous Mathematical Tools
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models

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