Applications of Business Mathematics

Mathematical Analysis &
Case Study on Polly Bodhu Trading

Corporation
Submitted to:
Tazrina Farah
Assistant Professor,
Faculty of Business Studies
University of Dhaka.
July 23, 2016
Prepared by
Group # 02
Evening MBA Program
Batch # 33
Polly Bodhu Trading Corporation
Business Mathematics
(F - 502)
Report
On
Real Life Case Solve Using Mathematical Applications:
Polly Bodhu Corporation.
Group 02: Members

Sl. No
1
2
3
4
5
6
7
8
Name
Mohammad Mahmudul Hasan
Rashed Latif
Hasan Rahman Shuvo
Mohammad Amirul Islam
Md. Asabur Rahman
Md. Saleh-Ibne- Rashid
Najmul Huda Riad
Md. Masud Rana Sikder
ID
33013
33075
33001
33003
33005
33016
33027
33030
University of Dhaka
Date of Submission: 21 April, 201
July 23, 2016
Tazrina Farah, Assistant Professor

Course Teacher
Department of Finance
EMBA Program
University of Dhaka.
Sub: Submission of Report.
Dear Sir
We would like to submit this report on Mathematical Analysis & Case Study on Polly
Bondu Trading Corporation. Thank you very much for providing us an opportunity to
work in such an interesting topic. We have enjoyed working on it. We have tried our level
best to make it a good one.
This project enhanced our practical knowledge in a greater extent and we would like to
thank you for allowing us to prepare a report on such a successful venture.
Sincerely yours
(Mohammad Mahmudul Hasan)

On Behalf of the members of Group #02, Batch#33
Acknowledgement
We express our deepest gratitude to Tazrina Farah, Assistant Professor, Department of
Finance, Dhaka University, our course teacher, for her valuable guideline and support in
completion of our report.
We also acknowledge the stakeholders Polly Bodhu Trading Corporation who gave us
valuable time to provide us information.
Finally we again express our deepest gratitude to our Honorable course teacher Ms.
Tazrina Farah who always support and guidance guided us to complete such a report.
Without her valuable support and guideline it was impossible for us to complete this
report in time.
Table of Contents
INTRODUCTION....6
1.1
Origin of Study..........................................................................................7
1.2
Objectives of the Report............................................................................7
1.3
Scope of the Report...................................................................................8
1.4
Data collection..........................................................................................8
1.5
Methodology Analysis...............................................................................8
1.6
Limitations
OVERVIEW OF THE COMPANY.........9
2.1
Company Background.............................................................................10
2.2
Capability................................................................................................10
2.3
Classification of Product........11
2.4
Mission....................................................................................................12
2.5
Values ....................................................................................................12
2.7
Company at a Glance..............................................................................12
CASE STUDY ..13
3.1
Feasibility of Investment : Polly Bodhu Trading Corporation.................14
ANALYSIS AND EVALUATION
4.1
Break-Even analysis in case....................................................................16
4.2
Break-Even interpretation I ....................................................................18
4.3
Break-Even interpretation II....................................................................21
4.4
Application of Linear Equation...............................................................23
4.5
Application of Matrix in Case.................................................................24
4.6
Matrix Interpretation...............................................................................24
4.7
Application of Differentiation in Case....................................................25
FINDINGS, CONCLUDING REMARKS AND CONCLUSION.....................................

..26
5.1
Findings..................................................................................................27
5.2
Recommendations..................................................................................27
5.3
Concluding Remarks...............................................................................28
BIBLIOGRAPHY
CHAPTER
Introduction
1.1
Origin of Study
1.2
Objectives of the Report
1.3
Scope of the Report
1.4
Data collection
1.5
Methodology Analysis
1.6
Limitations
Chapter
1
Introduction
1.1 Origin of Study
Bangladesh is one of the most densely populated countries in the world and it would be
impossible to alleviate poverty without creating jobs and investment. But highly
extractive models of investment might also not help the poor in a true manner.
Inaugurating the organic tea garden of the country in the underdeveloped regions of
Panchagar of the northern most districts Tetulia, nestled against the Himalayas to the
North and the Brahmaputra and Ganges Rivers to the south is a sustainable source of
income for an underprivileged community and environmental enrichment to virgin lands.
Polly Bodhu Trading Corporation is an initiative of an entrepreneur to facilitate those
opportunities in our country. This study is conducted in order to understand the
mathematical equations in the companys business aspect.
1.2 Objectives of the Report

The main objective of the study is the evaluation of the application of the
mathematics in business with the help of a case study.
To get practical knowledge of applications of mathematic.
To broaden our outlook regarding the mathematical term we have learnt earlier.
1.3 Scope of the Report

The study is conducted on the basis of both primary and secondary data.
1.3.1 Primary Data
For conducting the research project and accomplishing the research objectives primary
data are collected by some interviews of people who are involved to the process of
collecting tea from garden, refine and packaging. Ten stakeholders were surveyed to
collect the necessary primary data.
1.3.2 Secondary Data:
The secondary data are collected from Internet, Newspapers, journals and a project paper
of Bangladesh Agriculture Research Institute (BARI) and The World Tea Academy.
1.5 Methodology of Analysis

The survey process of this research was designed by the questionnaire method. The report
is based on primary and secondary data. Major sources of information are Financial report of Polly Bodhu Trading Corporation
Data, information and insight of Polly Bodhu officials.
1.6 Limitations
1. The time limitation is the major among all other constrains.
2. Confidentiality corporate and production data has created limitations to analyze
the data and mathematical analysis.
10
11
Chapter
2CHAPTER
Overview
Overview
2.1 Company Background
2.1
Company Background
2.2
Capability
2.3
Classification of Product
2.4 Mission
Polly Bodhu Trading Corporation has been doing business since 2013. The company is
2.5 Values
committed to change the economic condition of the rural women through cultivation of
2.7 Company at a Glance
organic plants such as Tulshi Tea, Sliming Tea and Green Tea. Many farmers from the
garden are associated with the company and are the sole supplier of raw leaves. The
company is producing high-quality organic tea to meet the growing demands of both
local and foreign markets. Currently the company produces herbal tea, in which all the
essence and ingredients come from the garden. The company is growing them 100%
organically as well. The companys Head Office is in Dhaka and two regional offices are
in Rangpur and Sylhet with a factory in Narsingdi.
2.2 Capability
Polly Bodhu Trading Corporation has countrywide sales network reinforced with fast
logistical support and state-of-arts manufacturing and R&D facilities.
12
2.3 Classification of Product

Some marketing features of vegetables in our country are as follows:
1. Tulshi Tea
This product is a herbal tea without any side effect.
2. Sliming Tea
Smilimg tea is customised for low cholesterol, low fat.
3. Green Tea
The product is very popular today for its sponting image to the consumer for
various reasons in herbal essence.
They are also planning to introduce two new products such as- Tulshi Juice and
Diabetes Tea.
13
Figure01: Product Leaflet
2.4 Mission
To combine bold strategic marketing with quality products and services at competitive
prices to provide the best value for consumers.
2.5 Values
The products of Polly Bodhu Corporation are affordable and accessible to our respected
customers without sacrificing quality and build long-term relationship for sustainable growth.
2.6 Company at a glance
14
Company Name
Brand Logo
Establishment Year
2013
Type
Private Company
Industry
Herbal Tea Product
Company Size
25+ Employee
Address
74/3/1, Bashaboo, Dhaka
Telephone
+8801911488535
Web address
https://www.pollybodhu.com/
Face book page
https://www.facebook.com/pollybodhu
Figure02: Company Overview
15
CHAPTER
CASE STUDY
3.1
Feasibility of Investment : Polly Bodhu
Trading Corporation
16
Chapter
3
Case Study
3.1 Feasibility of Investment : Polly Bodhu Trading
Corporation
Case: 1 Calculate the recent BEP from Production as well as sales point of view. So, we
can show a relative comparison with the expansion project.
Case: 2 Management of Polly Bodhu Trading Corporation wants to know the monthly
production capacity. Therefore, they can set a proper sales target and calculate if it is a
profitable investment or not. They are using 3 types of machine to process tea bag- One
is Dryer machine, one is Mixer Machine and another is Tea bag Packing Machine. Each
machine has different machine minutes. Estimated monthly running time for Dryer,
Mixer and tea bag packing machine is 11850, 13650 and 15600 minutes respectively.
The processing time (in minutes) for single unit of Tulsi tea, Green tea and Sliming tea
are given below.
Table: Production Capacity (Minute/Unit)
Dryer Machine
Mixer Machine
Tea bag Maker
Tulsi Tea
0.1
0.14
0.17
Green Tea
0.12
0.11
0.15
Sliming Tea
0.15
0.16
0.14
The company is now thinking about the prospects and viability of the investment.
Case: 3 Checking the revenue, total cost and profit of the existing products of company.
17
Case: 4 using differential calculus show the minimum cost of another expansion project
where the variable cost will be 37q, fixed cost will be Tk. 400000
18
19
Chapter
4CHAPTER
Analysis and Evaluation

Analysis and Evaluation
4.1 Break-Even analysis in case
Break-Even
in cover
case all its
Breakeven analysis is used to determine when 4.1
your business
will analysis
be able to
4.2 to
Break-Even
interpretation
I which
expenses and begin to make a profit. It is important
identify your
startup costs,
will help you determine your sales revenue needed
pay ongoing
business expenses.
4.3 to
Break-Even
interpretation
II
Break Even Point is a way for a manager to make sure he or she is making a profit. is to
4.4 Application of Linear Equation
first analyze the circumstances necessary to Break Even (i.e., neither make a profit nor
Matrix
in Case
suffer a loss). Then the manager can develop 4.5
a planApplication
to do betterofthan
break
even (i.e.,
make a profit).
4.6 Matrix Interpretation
Now to break-even simply means that revenues4.7
must Application
equal costs. of Differentiation in Case
So since
4.8 Interpretation of Differentiation in Case
Profit= Revenue Cost
Then at a break-even,
Revenue = Cost
Which means,
Profit = 0
In this report, we will present two break-even interpretations. The first will be from the
point of view of a production manager and the second one is from that of a financial
manager. The underlying principle, however, is the same in both situations (i.e. breakeven occurs when Profit = 0).
20
Figure: Break-Even Analysis
4.2 Break-Even interpretation I

On the production side, the cost of operation is made up of the fixed cost plus the variable
cost for the number of units produces. The revenue depends on the selling price and the
number of units sold.
The list of fixed cost and variable cost of the company and information supplied by its
owner and workers are given below:
Fixed Cost:
SL#
1
2
3
4
5
Account Name
Property
Machineries
Rental Expense
Utility Bill
Administrative Expense
Amount (BDT)
14,60,000
7,06,700
40,000
20,000
66,480
Total 22,93,180
Table 3: Fixed Cost
Hence, we have got the Total Fixed Cost = Tk. 22,93,180

Variable Cost:
SL# Account Name
1
Raw Material
2
Processing Cost per unit
3
Administrative cost
4
Operating Cost
Amount (BDT)
19.4
4.6
5.73
4.27
Total 34.00
Table 4: Variable Cost
21
From the above data we have got the total fixed cost = Tk. 22,93,180
Variable cost per unit = Tk. 34
We denote the number (quantity) of unit made and sold by q. Then since units are sold at
Tk. 66 a packet (on an average), the revenue function is
R (q) = 66q
Now since the variable cost per unit is Tk. 66, the variable cost of making q units will be
700q. Adding the fixed cost of Tk. 22,93,180, the cost function becomes
C (q) = 34q + 22,93,180
22
Lastly, since profit is revenue minus cost, the profit function is

P (q) = R (q) C (q)
= 66q-34q-22,93,180
= 32q-22,93,180
Using cost function, revenue function and profit function the BE (q) and profit of the
Polly Bodhu Trading Corporation for the current year is shown below.
Interpretation:
Here the coefficient 32 of q represents the profit per unit and is precisely the difference
between the selling price per unit of taka 66 and the variable cost per unit of taka 34.
At break-even, profit will be 0.
Thus
P (q) = 0
32q-22,93,180 = 0
q = 71,662
So, the break even quantity, q = 71,662 units
The break-even taka volume of sales (revenue) is
R (71,662) = 71,66266
= 47,29,692 taka
Polly Bodhu Trading Corporation produces approximately 1,00,000 units per month on
an average so they are getting profit of
P (q) = 321,00,000 - 22,93,180
= Tk. 9,06,820
So, per unit profit = 9.07 9 taka
Figure Graph-01
23
4.3 Break-Even interpretation II

Production managers and other operations executives tend to think of break-even
analysis in the way that we presented in the previous section. Controllers and other
financial managers are more likely to think in accounting terms. To illustrate this latter
way of viewing of break-even, we shall consider the company that purchases products
and sells them at a price that is presumably above the cost.
Now we know that the margin is the markup as a percentage of the selling price. The
Margin of PollyBodhu Trading Corporation is 48% of sale or 0.48s.
Cost of goods sold+ selling expenses = 52% of sale
= 0.52s.
The company budgets fixed expense at taka 22,93,1809 so that
Fixed expense = F = 2293180
So the total cost function is
C(s) = 0.52s+2293180
Now, if Pallibadhu Trading Corp sells Tk. s worth of products, its revenue will
clearly be the same taka s. So, the revenue function is
R(s) = s
Since profit is still revenue minus cost, the profit function is
P(s) = R(s) - C(s)
= s - (0.52s+2293180)
= 0.48s-2293180
Here the coefficient 0.20 of s represents the profit per taka of sales; it is precisely the
difference between each Tk. 1.00 of sales and the associated Tk.0.52 cost per taka of
sales. Alternatively, the 0.48 can be viewed as the difference between the 0.48 margin
per taka of sales and the 0.52 selling expense per taka of sales. As before, the constant
24
term of -2293180 indicates that the company will have to sell Tk. 2293180 worth of
products to compensate for the fixed cost of Tk. 22,93,180
Now, as before, break-even will occur when profit is 0. That is
P(s) = 0
0.48s - 2293180 = 0
s = 47,77,458
So, Polly Bodhu Corporation needs to maintain at least Tk. 47,77,458 as a sales target to
assure its breakeven point.
Figure Graph-01
25
4.4 Application of Linear Equation

Marketing and Sales managers may want to know about the production capacity of
existing products to set monthly sales target. It can be found out by building and solving
system of linear equations using necessary data.
For case-2, we already have a chart of product vs. machine minutes for 3 different
Machines as belowGreen Tea
Tulshi Tea
Sliming Tea
Dryer Machine 0.1
0.12
0.15
Mixer Machine 0.14
0.11
0.16
Tea bag Maker 0.17
0.15
0.14
Estimated monthly running time for Dryer, Mixer and tea bag maker is 11850, 13650 and
15600 minutes respectively.
We can construct following Linear Equations from the above chart.
0.1x+0.12y+0.15z=11850
0.14x+0.11y+0.16z=13650
0.17x+0.15y+0.14z=15600
Where we assume that we can produce X units of Green Tea, Y Units of Tulshi Tea and Z
units of Slimming Tea.
Now we will solve the above system of Linear Equations using Cramers rule
Here,
|
|
|
|
0.1
0.12 0.15
D= 0.14 0.11 0.16
= 0.0004
0.17 0.15 0.14
Dx =
|
|
|
11850 0.12 0.15

13650 0.11 0.16
15600 0.15 0.14
0.1
= 18.015
11850 0.15
Dy= 0.14 13650 0.16
= 11.085
0.17 15600 0.14
Dz =
0.1 0.12 11850

0.14 0.11 13650
0.17 0.15 15600
= 10.485
26
Hence,
Dx
D
18.015
=
0.0004
X=
Y=
=
=45037
11.085
0.0004
Dy
D
= 27712
Z=
=
10.485
0.0004
Dz
D
= 26212
So, PolliBodhu Corporation can Produce 45,037 units of Green Tea, 27,712 units of
Tulshi Tea and 26,212 units of Sliming Tea.
Total Production Capacity = X+Y+Z
= 45037 + 27712 + 26212
= 98961
4.5 Application of Matrix in Case

From the previous calculation, we have PolliBodhu Corporation can Produce 45037 units of
Green Tea, 27712 units of Tulshi Tea and 26212 units of Sliming Tea. Selling Price of
Green Tea, Tulshi Tea and Sliming Tea is 95 Tk, 42 Tk and 75 Tk respectively. And the
Cost per unit of Green Tea, Tulshi Tea and Sliming Tea is 84 Tk, 32 Tk and 66Tk
respectively.
The total revenue and total cost can be explained with the help of matrix. The interpretation is
given below
Revenue will be
( )
45037
27712
26212
( 95 42 75 ) =
( 74,08,319 )
Total Cost will be-
( )
45037
27712
26212
So, Profit
( 84 32 66 ) =
( 63,99,884 )
= 74,08,319 63,99,884
= 10,08,435 Taka
27
4.6 Application of Differentiation in Case

Differential Calculus is a branch of mathematics concerned chiefly with the study of the
rate of change of functions with respect to their variables especially through the use of
derivatives and differentials.
4.7 Interpretation of Differentiation in Case

The minimum cost is calculated with the help of differentiation for another expansion
project of Polly Bodhu Corporation where the variable cost is assumed TK. 22 per unit,
fixed cost is decided Tk. 4,00,000 and the other cost of is Tk. 13. Assuming target
production line is 20000 units, if q amount of products have been produced in one
month the cost function can be written as,
C (q) = 400000 + 22q +
13 20000
q
= 400000 + 22q + 260000 q1

Differentiating with respect to q we get,
dC
dq
= 0 + 22 - 260000 q2
For maximum or minimum values the first derivative must be equal to zero.
So,
dC
dq
=0
Or, 0 + 22 - 260000 q2 = 0
Or, 260000 q2 = 22
q = 108.71 units
Also
d2C
d q2
= 0 260000(-2) q3
= 520000 q3 , which is positive.

This is the minimum value.
So, cost is minimum when q = 108.71 units.
Minimum cost = 400000 + 22 108.71 +
260000
108.71
= 4,04,783Tk
28
29
Chapter
5CHAPTER
Findings, Concluding remarks

5.1 Findings
and Conclusion
In terms of cost of operation the break5.1

even
quantity is 71,662 units and break
Findings
even sales is Tk. 47,29,692.
5.2 Recommendations
Polly Bodhu Corporation can produce 1,00,000

units perRemarks
month on an average so
5.3 Concluding
they are getting profit of Tk. 9,06,820. Per unit profit is= 9.06 = Tk. 9
In terms of selling point of view the break even quantity is 72,386 units and break
even sales is Tk. 47,77,458.
Break even and matrix both application method is showing the same amount of
profit (approx.)
Minimum cost that will be incurred because of new project expansion is
Tk. 4,04,783
5.2 Recommendation:
In case of existing product Polly Bodhu Corporation needs to maintain at least
Tk. 47,77,458 as a sales target to assure its breakeven point.
The new project will not make much profit like previous projects were doing
earlier. So, Polly Bodhu Coporation will have to either increase the price of
product or cut the cost.
30
5.1 Concluding Remarks

This report, Mathematical Analysis and Case Study on Polly Bondhu Trading
Corporation. explains in details of analysis and knowledge implementation through our
learning. Various mathematical analysis have been taken out on the basis of the data
provided so as to find out the business performance of Polly Bondhu Trading
Corporation., a small scale manufacturer of organic tea in Bangladesh.
Major sources of information are collected from Company financial statements and
reports.
The mathematical applications which have used in evaluating and analyzing the data are
break even analysis from cost of operation and selling point of view both, matrix
application and also differentiation calculus. BEP and matrix have been used to determine
the minimum profit the company needs to maintain;
Differentiation has been used to determine the minimum cost that will occur during the
project expansion.
On our findings it can be suggested that new project expansion will not be as profitable
like the previous project. To make profit the company will have to either increase the
price of product or cut the cost.
In spite of having the wholehearted effort, there were some limitations, which acted as a
barrier to conduct the report, such as confidentiality in the company in case of
providing data, fraction in calculating profit and cost etc. At last, from the evaluation it
can be said that the present performance of the company is well balanced.
31
32
Bibliography
Books:
Business Mathematics, 11th Edition, , D.C. Sancheti & V.K. Kapoor (Pg: 701 & 791
856)
Mathematics with Application in Management and Economics, 7 th Edition, Bowen, (Pg:

42 60)
Reports:
Annual Report Polly Bodhu Trading Corporation
Web:
https://www.facebook.com/pollybodhu
https://www.pollybodhu.com/
33

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Mathematical Analysis &

Case Study on Polly Bodhu Trading

Polly Bodhu Trading Corporation

Group 02: Members

Date of Submission: 21 April, 201

Polly Bodhu Trading Corporation

July 23, 2016

Tazrina Farah, Assistant Professor

(Mohammad Mahmudul Hasan)

Polly Bodhu Trading Corporation

Polly Bodhu Trading Corporation

Objectives of the Report............................................................................7

Scope of the Report...................................................................................8

OVERVIEW OF THE COMPANY.........9

CASE STUDY ..13

Feasibility of Investment : Polly Bodhu Trading Corporation.................14

ANALYSIS AND EVALUATION

Break-Even analysis in case....................................................................16

Break-Even interpretation I ....................................................................18

Break-Even interpretation II....................................................................21

Application of Linear Equation...............................................................23

Application of Matrix in Case.................................................................24

Application of Differentiation in Case....................................................25

Polly Bodhu Trading Corporation

FINDINGS, CONCLUDING REMARKS AND CONCLUSION.....................................

Polly Bodhu Trading Corporation

Polly Bodhu Trading Corporation

Objectives of the Report

Scope of the Report

1.2 Objectives of the Report

Polly Bodhu Trading Corporation

1.3 Scope of the Report

1.5 Methodology of Analysis

Polly Bodhu Trading Corporation

Polly Bodhu Trading Corporation

2.3 Classification of Product

Polly Bodhu Trading Corporation

Figure01: Product Leaflet

2.6 Company at a glance

Polly Bodhu Trading Corporation

Polly Bodhu Trading Corporation

Herbal Tea Product

74/3/1, Bashaboo, Dhaka

Face book page

Polly Bodhu Trading Corporation

Feasibility of Investment : Polly Bodhu

Polly Bodhu Trading Corporation

Polly Bodhu Trading Corporation

Polly Bodhu Trading Corporation

Analysis and Evaluation

Polly Bodhu Trading Corporation

Figure: Break-Even Analysis

4.2 Break-Even interpretation I

Hence, we have got the Total Fixed Cost = Tk. 22,93,180

Polly Bodhu Trading Corporation

Polly Bodhu Trading Corporation

Lastly, since profit is revenue minus cost, the profit function is

Polly Bodhu Trading Corporation

4.3 Break-Even interpretation II

Polly Bodhu Trading Corporation

Polly Bodhu Trading Corporation

4.4 Application of Linear Equation

D= 0.14 0.11 0.16