2024 Math Performance Task

Raegan Loo Qi Shan (20) B3

This mathematical report explores the context of pricing and optimising sales for a café,

aiming to identify the price point that maximises revenue through graphing the relationship

between the selling price of coffee and the number of cups sold.

To determine the optimal selling price of each cup of coffee, a market survey is conducted on

the selling price, p, and the number of cups of coffee sold per week, x.

The following table shows the data collected.

Table 1.1 data collected on selling price and cups of coffee sold per week, and the revenue earned

To determine the revenue (R) earned, we can multiply the number of cups of coffee sold per

week by the selling price of each cup. This equation is as follows:

R(p) = px

The revenue earned in relation to the selling price is displayed above.

To estimate the revenue and production, a function is needed to model the data provided.

Suppose R(p) is the revenue of the café per week, where $p is the selling price of a cup of

coffee. The points of R against p are plotted in a scatter plot for 0 ≤ p ≤ 9 and 1400 ≤ R ≤

2100. Two types of functions, linear and quadratic, have been used to display and model the

data.
Figure 2.1 linear and quadratic model of revenue earned as a function of selling price

In Figure 2.1, it is evident that the linear model (purple line) does not fit the data well as it

only captures a general increasing trend and does not account for the peak observed in the

data. The linear model is not suitable for this context as it assumes a constant rate of change

in revenue with respect to price, which is not the case in this context. A linear model implies

that for every unit increase in price, there is a consistent and proportional increase in revenue.

However, the observed data shows a more complex relationship where the revenue begins to

fluctuate as the selling price continues to rise.

On the other hand, the quadratic model (blue curve) fits the data points well as shown in the

curve, capturing the peak revenue in relation to the selling price. The quadratic model is

suitable in this context as a quadratic curve is capable of representing a parabola. This is

effective for modelling the optimal point, and in this context the peak revenue at a certain

selling price, hence making it more suitable for representing the data trend than the linear

model.

We can determine the selling price that gives the most revenue through finding the vertex of

𝑏
the quadratic function. This can be found using the formula p= − 2𝑎
, where a, b, and c are

coefficients from the quadratic equation ax2 + bx + c.

 Here, a = −59.24 and b=687.68
687.68
p=− 2(−59.24)
≈ 5.80 (3.sf.)

Therefore, the optimal selling price p is approximately $5.90, as this value is closest to the

vertex of the quadratic function. However, the yield of revenue is not the highest. The selling

price of $5.60 generated the highest revenue of $1920.80 compared to $1888 at $5.90, due to

a greater number of cups sold. This shows that while the optimum price is higher, the revenue

generated is lower as it may be too expensive for customers, leading to fewer sales. In

conclusion, the best selling price for a cup of coffee should be $5.60.

Two operating companies, A and B, gave a proposal regarding his operating cost in terms of

the cups of coffee sold per week. Their cost function is as followed:

Company A: CA = 2x + 500
Company B: CB = 0.019x2 – 16x + 3500

Let R(x) be the model function for revenue in terms of the cups of coffee sold per week, for

0 ≤ x ≤ 1000 and 0 ≤ R ≤ 2200. The cost functions CA(x) and CB(x) are modelled against R(x).

To find the optimal selling price of a cup of coffee that maximises profit for each company,

we can obtain the profit function P(x) by subtracting the cost function C(x) of both

companies from the revenue function R(x).

Figure 3.3 profit function of Company A and Company B

Using the x–coordinate of the vertex of the profit function representing the quantity that

maximises profit, substitute this value into R(x) = – 0.0192921x² + 12.6683x - 199.609 to

find the total revenue. Subsequently, to find the optimal price per cup for each company,

divide the total revenue by the x–value.

For Company A, x = 276.49.

Total revenue = – 0.0192921(276.49)² + 12.6683(276.49) – 199.609 = $1828.23
Optimal price of each cup = $1828.23 ÷ 276.49 ≈ $6.61 (3s.f.)

For Company B, x = 374.34.

Total revenue = – 0.0192921 (374.34)² + 12.6683(374.34) – 199.609 = $1839.23
Optimal price of each cup = $1839.23 ÷ 374.34 ≈ $4.91 (3s.f.)

Based on the data provided, it is advisable to hire Company B. Company B is able to

generate a total revenue of $1839.23, which is higher than Company A's revenue of

$1828.23. Furthermore, Company B yields a significantly higher sales volume, selling a

significantly larger number of cups (374.34) compared to Company A (276.49). Moreover,

Company B’s optimal selling price per cup is $4.91, lower than Company A's $6.61 per cup.

Even though the selling price is lower, this lower price point makes it more attractive to

customers, potentially increasing the number of sales and overall revenue. In conclusion, this

report depicts that to achieve better revenue and customer reach, Company B should be hired

to operate the café. Additionally, a quadratic function in the context of finding the peak

revenue at a certain selling price, is more suitable for representing the data trend than a linear

function.