Solvers, or optimizers, are software tools that help users find the best way
to
allocate scarce resources. The resources may be raw
materials, machine time or people time, money, or anything else in limited
supply. The "best" or optimal solution may mean maximizing profits,
minimizing costs, or achieving the best possible quality. An almost
infinite variety of problems can be tackled this way, but here are some typical
examples:
Finance and
Investment
- Working capital
managementinvolves allocating cash to different purposes (accounts
receivable, inventory, etc.) across multiple time periods, to maximize
interest earnings.
- Capital budgetinginvolves allocating
funds to projects that initially consume cash but later generate cash, to
maximize a firm's return on capital.
- Portfolio optimization -- creating
"efficient portfolios" -- involves allocating funds to stocks or
bonds to maximize return for a given level of risk, or to minimize risk
for a target rate of return.
Manufacturing
- Job shop scheduling involves allocating
time for work orders on different types of production equipment, to
minimize delivery time or maximize equipment utilization.
- Blending(of petroleum products,
ores, animal feed, etc.) involves allocating and combining raw materials
of different types and grades, to meet demand while minimizing costs.
- Cutting stock(for
lumber, paper, etc.) involves allocating space on large sheets or timbers
to be cut into smaller pieces, to meet demand while minimizing waste.
Distribution and
Networks
- Routing(of goods, natural gas,
electricity, digital data, etc.) involves allocating something to
different paths through which it can move to various destinations, to
minimize costs or maximize throughput.
- Loading(of trucks, rail cars,
etc.) involves allocating space in vehicles to items of different sizes so
as to minimize wasted or unused space.
- Schedulingof everything from
workers to vehicles and meeting rooms involves allocating capacity to
various tasks in order to meet demand while minimizing overall costs.
