Section 10: Building Optimization Models

Last edited 474 days ago by Makiel [Muh-Keel].

Section 10.2 Using Solver for Optimization

Excel has a number of features that allow users to conduct powerful data analyses. Among these is the capability to perform optimization analyses, which are used to find an optimal or best possible solution to a problem.

Business problems that might be solved with optimization include the following:

determining the mix of stocks to include in an investment portfolio.

deciding the production mix for a set of products that share a manufacturing facility.

determining the location of a warehouse to minimize shipping costs to branch locations.

scheduling employees to minimize payroll costs while ensuring appropriate coverage.

Optimization techniques are particularly valuable when the problem you are solving has one or more of the following characteristics:

There is a best answer to the problem. You are not looking for a satisfactory solution. You want to find an optimal solution.

There are multiple decisions that must be made to arrive at the optimal solution.

There are multiple constraints on the decisions that can be made.

Solver

Solver is an add-in that you can use to solve optimization problems. Before you can effectively use Solver, it is important that you understand how to build an optimization spreadsheet model.

Building Blocks of Optimization Models

3 major elements of an optimization model:

Objective - represents the best possible outcome for the model or optimal solution

Decisions - represents the best possible outcome for the model or optimal solution

Constraints -

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Solver

Building Blocks of Optimization Models

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