Sue, this is not made in the round, but back and forth. She is supposed to have 177 sts; 48, marker, 81, marker, 48 sts.
Linda, you don't do any decreases until you have the sleeves done and join the whole works into one piece for the yoke. After you knit your 13 3/4" over the 177 stitches and have the markers placed, you bind off four stitches on each side of the markers, so that you have 8 stitches gone at each underarm. Then you will have 161 sts. At that point you set this piece aside and knit the two sleeves. Then join it all together and begin the yoke.
It tells you how to decrease for the raglans in the note:
DECREASING TIP (applies to raglan):
Make all dec from the RS. Beg 2 sts before marker: K2 tog, marker, slip 1 st as if to K, K1, psso.
But it also tells you to do the first dec only on the body stitches and not the sleeves. So on the first right side row after joining everything together you will knit across the first front, slip the marker as you begin the sleeve stitches, knit across the sleeve part, slip the marker and then slip one as if to knit, knit one, pass the slipped stitch over, knit on across the back section until you are 2 stitches before the next marker, k2tog, slip the marker, knit the sleeve stitches, slip the marker, knit the other front section.
After that on each right side row you will decrease at each marker, before and after it. So: knit across the front till 2 before the first marker. Knit 2tog, slip the marker, slip 1 as if to knit, k1, pass the slipped stitch over. Knit across the sleeve stitches until 2 before the marker and repeat the decreases as you did them on each side of the marker at the first marker. Knit across the back stitches till two before the next marker, repeat the decreases, knit across the second sleeve till 2 before the marker and repeat the decreases on each side of the marker. Knit across the other front section. (Keep the bands on each side and add in the buttonholes as needed.)