How to Use Polynomials in the Business World

By Melissa Bajorek; Updated April 25, 2017
Polynomials can be used to forecast sales trends over time.

Polynomials are used in the business world in dozens of situations. Polynomials -- algebraic expressions made with constants, variables and exponents -- can be used to forecast sales trends, develop profit margins and attract investors. Polynomials are combined using addition, subtraction and multiplication, but never division.

To use polynomials in business, start by working with the simplest forms. The most basic polynomials with just one term, called monomials, are used in everyday business. A supervisor can use a polynomial such as 12X, where X represents his average sales in a month, to determine the average sales of a whole year. Polynomials can also help figure overhead costs. For example, 12 months of rent may be figured as 12R. You can use more extensive polynomials to determine, for example, how much profit is left after accounting for overhead costs, wages and other liabilities, such as payroll taxes.

Once you have mastered the simplest polynomials, try using more-complicated ones for your payroll. For instance, a polynomial that describes an employee's regular wages plus 20 hours of overtime may read like:

40H + 20(H+ 1/2H) where H is the employees standard hourly pay.

A polynomial describing another employee who works part time but earns a 20 percent commission on sales may read like:

20H + 0.2S

Each of these polynomials uses two terms, making them binomials.

For complicated polynomials that will affect whether your business succeeds, get professional help. Retail businesses use market research companies to set prices and develop pricing strategies over time. Polynomials can be used in a demand equation to show how much money people will pay for a product, depending on how much of that product is available. A good example is fuel. When fuel prices are low, consumers may buy much more and use their cars more often. When fuel prices are high (meaning fuel is less available), consumers will curtail their driving habits. So, a demand equation uses polynomials to figure how high or low you can price a product. Marketing companies use these polynomials to determine that at a certain high price point, no one will purchase a product. At a very low price, the items will sell quickly but create no profit.

Accuracy is key when using polynomials for business. Many professionals rely on spreadsheet software and graphing calculators to figure more-complicated polynomials. If you plan on using polynomials often, consider taking a few algebra classes and investing in a quality calculator.

About the Author

Melissa Bajorek began writing professionally in 2001. Her work has appeared online, in daily newspapers and on websites owned by Gatehouse Media, in monthly periodicals and for local and regional radio. She writes about a variety of topics, from new technology to animal husbandry. Bajorek has an Associate of Arts in business management from the University of Phoenix and holds certifications in marketing and advertising.