I have to find the range of function $f(x) = x+(1/x) +1$, where $x$ is positive. Now I did it with two ways which we can see below, in equations $(1)$ and $(2)$, by using the AM-GM inequality.
$$\frac 1 3 \left( x + \frac 1 x + 1 \right) \ge \sqrt[3]{x \cdot \frac 1 x \cdot 1} \implies x + \frac 1 x + 1 \ge 3 \tag 1$$
$$\frac 1 4 \left( x + \frac 1 x + \frac 1 2 + \frac 1 2 \right) \ge \sqrt[4]{x \cdot \frac 1 x \cdot \frac 1 2 \cdot \frac 1 2} \implies x + \frac 1 x + 1 \ge 4 \cdot (1/4)^4 \tag 2$$
So now after seeing these my question is why is my answer different in each case? Are there any limitations of this inequality?
Your both answers are correct. In first case you have $f(x)\ge 3$ and in second case if you compute you get $4\times (1/4)^{1/4} = 2.828$ which is also true, i.e $f(x)\ge 2.828$.
In first case you have a tighter bound than second case.