Multivariable Cost Functions: Analysis of Cost Minimization

Abstract

In the era of an economy based on efficiency and optimization, cost reduction has become a strategic priority for any company. The article addresses the topic of multivariable cost functions, highlighting their role in the process of optimizing economic decisions, especially in the context of minimization of the production expenses. The study deals with theoretical aspects of cost functions, including their typology: total, marginal and average. The article debates the historical concept and evolution of the economical analysis process, basing on the contribution of classical economists such as Adam Smith, David Ricardo, Alfred Marshall, Paul Samuelson și George Dantzig. In the practical side of the article, there are presented diverse mathematics methods, used while optimizing the costs. Methods such as linear programming, nonlinear programming, dynamic programming and stochastic, are considered essential when optimizing the costs. Finally, the advantages and the disadvantages of each method are debated, in order to identify the optimal solution for minimizing the cost. The article concludes that it is essential to include mathematics methods when decision-making, to maximize the performance and the sustainability of the enterprise. CZU: 657.47:330.4; JEL: C3, D24, C61