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Profit Maximization Strategy in an Industry: A Sustainable Procedure

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  • Mohajan, Devagit
  • Mohajan, Haradhan

Abstract

This article tries to discuss profit maximization policies by using four variable inputs, such as capital, labor, principal raw materials, and other inputs in an industry, where mathematical economic models are applied by considering budget constraint. For the sustainable production, every industry should apply scientific method, such as mathematical techniques to obtain more accurate results. In the study Cobb-Douglas production function is analyzed with detail mathematical analysis. The sensitivity analysis is included in the operation to show profit maximization that is a pivotal goal of the industry. The economic predictions of future production are provided through the comparative statics to become sure of profit maximization before starting of production in the industry. In the study Lagrange multiplier technique is applied to achieve optimal result in every step of industrial operation.

Suggested Citation

  • Mohajan, Devagit & Mohajan, Haradhan, 2022. "Profit Maximization Strategy in an Industry: A Sustainable Procedure," MPRA Paper 114675, University Library of Munich, Germany, revised 21 Jun 2022.
    • Handle: RePEc:pra:mprapa:114675
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    References listed on IDEAS

    as
    1. Jamal Nazrul Islam & Haradhan Kumar Mohajan & Pahlaj Moolio, 2010. "Utility Maximization Subject to Multiple Constraints," Indus Journal of Management & Social Science (IJMSS), Department of Business Administration, vol. 4(1), pages 15-29, December.
    2. B. Curtis Eaton & Richard G. Lipsey, 1975. "The Principle of Minimum Differentiation Reconsidered: Some New Developments in the Theory of Spatial Competition," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(1), pages 27-49.
    3. ROY, Lia & MOLLA, Rashed & MOHAJAN, Haradhan Kumar, 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.
    4. MOHAJAN, Haradhan Kumar, 2021. "Estimation Of Cost Minimization Of Garments Sector By Cobb-Douglas Production Function: Bangladesh Perspective," Annals of Spiru Haret University, Economic Series, Universitatea Spiru Haret, vol. 21(2), pages 267-299.
    5. Haradhan Kumar MOHAJAN, 2018. "Qualitative research methodology in social sciences and related subjects," Journal of Economic Development, Environment and People, Alliance of Central-Eastern European Universities, vol. 7(1), pages 23-48, March.
    6. Mohajan, Haradhan, 2017. "Optimization Models in Mathematical Economics," MPRA Paper 83185, University Library of Munich, Germany, revised 11 Apr 2017.
    7. Michael Carter, 2001. "Foundations of Mathematical Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262531925, December.
    8. MOHAJAN, Haradhan Kumar, 2017. "Two Criteria For Good Measurements In Research: Validity And Reliability," Annals of Spiru Haret University, Economic Series, Universitatea Spiru Haret, vol. 17(4), pages 59-82.
    9. Pahlaj Moolio & Jamal Nazrul Islam & Haradhan Kumar Mohajan, 2009. "Output Maximization of an Agency," Indus Journal of Management & Social Science (IJMSS), Department of Business Administration, vol. 3(1), pages 39-51, June.
    10. Harald Wiese, 2021. "Cost minimization and profit maximization," Springer Books, in: Advanced Microeconomics, chapter 0, pages 231-260, Springer.
    11. Dixit, Avinash K., 1990. "Optimization in Economic Theory," OUP Catalogue, Oxford University Press, edition 2, number 9780198772101.
    12. Mohajan, Haradhan, 2021. "Utility Maximization of Bangladeshi Consumers within Their Budget: A Mathematical Procedure," MPRA Paper 109993, University Library of Munich, Germany, revised 20 Jul 2021.
    13. Mohajan, Haradhan, 2020. "Quantitative Research: A Successful Investigation in Natural and Social Sciences," MPRA Paper 105149, University Library of Munich, Germany, revised 15 Nov 2020.
    14. Hussain, Waheed, 2012. "Corporations, Profit Maximization And The Personal Sphere," Economics and Philosophy, Cambridge University Press, vol. 28(3), pages 311-331, November.
    15. Mohajan, Haradhan, 2015. "Sustainable Development Policy of Global Economy," MPRA Paper 82815, University Library of Munich, Germany, revised 30 Mar 2015.
    16. Steven D. Levitt, 2006. "An Economist Sells Bagels: A Case Study in Profit Maximization," NBER Working Papers 12152, National Bureau of Economic Research, Inc.
    17. Michael Carter, 2001. "Foundations of Mathematical Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262032899, December.
    18. Mohajan, Haradhan, 2021. "Product Maximization Techniques of a Factory of Bangladesh: A Sustainable Procedure," MPRA Paper 108094, University Library of Munich, Germany, revised 15 May 2021.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Lagrange multiplier; Cobb-Douglas production function; profit maximization;
    All these keywords.

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D6 - Microeconomics - - Welfare Economics
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

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