Linear Optimization Problems, Essay Example

Linear optimization can be utilized by business professionals in order to determine improvement in performance. A specific example of this is when an organization would like to quantitatively measure how the company has improved as a consequence of a new product that is sold. In this particular case, we can pretend the Coca-Cola Company decided to begin selling its Mello Yello product again and that they want to determine whether this has improved overall sales. This is ideal for this situation because linear optimization will help the company reduce costs, use their resources efficiently, provide benefit, and reduce risk (IBM, n.d.). In this situation, the objective function is how the addition of Mello Yello affects the cost or value of the company. The constraints are the amount of money that the product is sold for, how much of the product is sold, the distribution of the product and how this impacts purchasing, production costs, and related expenses. Ultimately, if this calculation is done before the re-release of Mello Yello, the company will be able to predict its profitability. If it’s done after the release, it will help the company determine whether they should continue to produce it.

An article entitled “Linear Optimization Problems With Inexact Data” explains how business professionals can integrate statistics into linear optimization calculations in order to determine the most reasonable predictions and estimations. This article is very in depth and there are many ways to do this in practice, but one way to do so would be by using the normal curve to predict a data distribution. This is also accomplished by using a series of inequalities. Ultimately, they demonstrate that inexact data can be used for these predictions, although this somewhat complicates the process (Fiedler et al., 2006).

References

Fiedler et al. (2006). Linear Optimization Problems With Inexact Data. Retrieved from http://interval.ict.nsc.ru/Library/InteBooks/InexactLP.pdf

IBM. (n.d.). Linear programming. Retrieved from http://www-01.ibm.com/software/commerce/optimization/linear-programming/