Optimization Problem Formulation

Optimization problems arise naturally in many different disciplines. A structural engineer designing a multistory building must choose materials and proportions for different structural components in the building in order to have a safe structure that is as economical as possible. A portfolio manager for a large mutual fund company must choose investments that generate the largest possible rate of return for its investors while keeping the risk of major losses to acceptably low levels. A plant manager in a manufacturing facility must schedule the plant operations such that the plant produces products that maximize company’s revenues while meeting customer demands for different products and staying within the available resource limitations. A scientist in a research laboratory may be interested in finding a mathematical function that best describes an observed physical phenomenon.