Please read the following Forbes article “Should Your Company Be Using Mathematical Optimization?Links to an external site.” and the KDnuggets article “Mathematical Optimization for BusinessesLinks to an external site..”
After reading the articles, do some research on why companies have been using optimization methods for their business decisions. Discuss how using optimization improves the profitability of the company.
Reply to at least two of your classmates.
Classmate 1: Finding the optimal answer to a problem given a set of restrictions and goals is the process of optimization. Companies have been using optimization methods due to its many benefits. Optimization has changed entire industries by enabling businesses to take on their most challenging issues and make the best choices to maximize their operational effectiveness (Rothberg, 2020, para. 7). Optimization models examine data and choose the best course of action using mathematical methods. By using optimization techniques, businesses can improve their decision-making and more effectively accomplish their objectives.
Using optimization improves the profitability of a company by reducing costs. Companies can use optimization models to find operational areas where they can cut costs. It is possible to apply optimization to establish the best price for a good or service. Optimization models can determine the price that will optimize profits by examining different factors. By optimizing the company’s product development choices, such as choosing the greatest features to add to a new product, businesses can also increase their profitability. Businesses can boost income and cut costs by making smarter judgments on product development.
References
Rothberg, E. (2020, July 06). Council post: Should your company be using mathematical optimization? ask yourself these four questions to find out. Retrieved February 27, 2023, from https://www.forbes.com/sites/forbestechcouncil/2020/07/07/should-your-company-be-using-mathematical-optimization-ask-yourself-these-four-questions-to-find-out/
Classmate 2: Companies have been using optimization methods in order to come up with cost effective ways to run their businesses. A major takeaway I was able to take from the KD Nuggets article is how efficient it can be throughout different business sectors. During the course we learned how optimization methods can be effective in situations such as transportation and how some methods allow solutions in complex situations such as determining costs when traveling however, it can also be used in financial firms to determine stock selections. Optimization allows portfolio managers to select certain stocks or bonds which can maximize yield while mitigating risk.