Why use Optimization?

Optimization is a rigorous approach which takes into account the factors that influence decisions in business:

• Decision variables. These are the things we can change, the things we need to decide upon. For example, how much product will we make? Where? How should we make it? How should we transport it?


• Constraints. These state the limitations on our decisions. For example, in a logistics problem each mode of transport has a maximum speed and maximum payload. Operations may be limited to so many hours in a day.

Some problems will not require formal optimization. For example the problem may be simple, or the answer may be obvious, or there may be no decision variables so we have no choices. But most problems are complex, require making decisions, and so need optimization. In addition, as many problems change over time, particularly data, optimization is required on an ongoing basis.

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