Real Numbers and the role of mathematics in business
Various types of numerical values fall under the heading of real numbers. It is a continuous quantity of numbers that can go on forever. They are often represented in the number line
Number line:
A horizontally drawn straight line on which different types of real numbers
Types of real numbers:
1) Natural numbers OR continuous numbers:
A consistent pair of numerical values with no gap between them e.g. 1,2,3,4,5,6,7,8,9,10.
2) Whole numbers:
A number “0” (zero) is written before the natural numbers start.
3) Integers:
These are the numbers that come before the whole numbers. These are usually denoted with the negative sign before the number and are presented on the number line on the left side
Note: Natural numbers are written on the right side while integers are written on the left side when writing both on the same number line.
4) Rational numbers:
The word rational comes from word ratio which means a numerical number being divided by the one written on the denominator in the fraction. E.g. 2 in 1/2 or 4 in 2/4. The denominator cannot be zero.
It is possible to divide when the numerator is zero. The answer would be zero as 0÷4=0 but it is not possible to divide the zero as denominator.
Previously studied natural numbers, whole numbers and integers are a part of rational numbers when the denominator is 1 as 3÷1=1
5) Irrational numbers:
When these numbers are divided, they provide an answer in decimals e.g, 4÷3=1.33
COORDINATES
A specific point on the number line e.g. 1.5.
Role of mathematics in business
Mathematics is used in every field regardless of daily routine or official business matter. A good manager should have command over the mathematical terms used in business. Mathematics can make business more effective and efficient and helps in better and rational decision making and also plays a vital role to achieve the corporate aim ranging from long term goals to short term objectives. Without mathematics, business wouldn’t be able to run for the destined time.
1) Business start-up:
A specific amount of budget is allocated for the business start-up which is also known as capital. Purchasing of land requires the estimated price of the area being purchased. Capital will be calculated using mathematics formula e.g. multiplication, addition, subtraction and division. If the land is being rented, it will be needed to calculate an estimated amount of rent to be paid in a specific period of time.
Being a capital-intensive business, the cost of machines that will be purchased will have to be calculated. If the business uses the labour-intensive method of production, the likely number of workers likely to be hired and their wages will be calculated. This can also help in deducing whether to choose labour-intensive or capital-intensive production method after looking at the mathematical comparison of both production methods
2) Development:
Production decision of production quantity in the start depends on marketing research. Marketing research will provide numerical data of how much on an average, the product will be liked by the customers. This will then help to identify how much raw material will be required for production and cash needed to purchase the raw material. It also helps to decide which product to produce after calculating the labour costs and other costs.
3) Pricing:
Cost of production plus mark-up set by the company is in fact calculated by mathematics. Other pricing methods will be calculated using mathematics.
4) Promotion:
Promotional budget is allocated and planned using mathematics. These strategies include Above the line promotion (ATL) method (this one is more expensive because it focuses on mass communication) while Below the line (BTL) is less expensive and targets a lesser number of customers than ATL. Marketing budget will help identify which one to use.
5) Financial statements:
Mathematics is the key part of financial statements and the accounting equation. Calculating the net profit or loss and liabilities and assets and owner’s equity would not be possible without mathematics
6) Cash flows:
This is calculated using the formula NET CASH INFLOW — NET CASH OUTFLOWS = NET CASH FLOWS. Using this formula, we can calculate what is the cash position of the company. If the answer is in positive, cash is available to the business but this shouldn’t be too high as the opportunity cost of money is there.
Above discussion concludes that mathematics is no doubt an essential part of the business and could boost business profit if calculated properly otherwise it could lead the business to losses.