Abstract: Science Set Journal of Economics Research

Abstract:
The break even points play important role in business analysis and industrial management. Traditional break even analysis is used when a company is trying to determine what single level of sales, prices, and costs is necessary to reach zero profit. We extend a traditional break even points by introducing a new notion of constrained break even points with respect to parameters. In this case, a traditional method of finding break even points may fail. For this purpose, for finding constrained break even points, we propose inner point method and optimization approach. Inner point method finds relative interior points of a set for the constrained break even points with respect to volume while optimization methods deal with feasible points of the set. For finding feasible points of the set of constrained break even points, convex minimization and convex maximization algorithms are used. We show that global minimum, local maximum, and stationary points of both problems are the constrained break even points. The proposed approaches are illustrated on some examples providing numerical results.