Educational White Paper on Bi-Objective Optimzaiton

IBM just published an educational white paper by Pete Cacioppi on bi-objective optimization.

This white paper provides details for the interested business user as well as the researcher into the latest thinking in solving problems with more than one objective.

The paper discusses the business benefit of viewing the trade-off curve between two objectives and how this can give valuable insights into your problem.

It also explains some of the science behind this bi-objective optimization and how  massively parallel cloud computing can effectively solve these problems.

Efficient Frontier

Business problems do not usually have a single correct solution.  Instead, someone has to make a tough trade-offs.

But, how do you know you fully understand the trade-offs?  That is, how can you be sure that there isn’t a better solution than the one you considering?

Determining the efficient frontier– a tool originally developed for finance and now applied to many business problems, will help you.  In finance, the efficient frontier is the curve of all investments that maximize return for a given level of risk (standard deviation).  The graph below (from InvestingAnswers) shows the curve and points that are not on the curve.  So, for any point not on the curve, you could find either an investment with a better return with the same risk or an investment with the same return and a much lower risk.  You still have to make the tough decision between return and risk, but the curve narrows your choices to  the best solutions.









In network design, you face similar trade-offs between cost and service levels, between capital invested and operating costs, and many more.  To better analyze these trade-offs, you need to create this efficient frontier.  Multi-objective optimization builds this trade-off curve for you.

Multi-Objective Optimization in Network Design

One of the big improvements in commercial network design technology is the additional of multi-objective optimization.  As supply chain managers know, designing the right supply chain means balancing different objectives.  By being able to understand how different objectives relate to each other, you can make better decisions.

We recorded a short interview with Supply Chain Television Channel and CSCMP on multi-objective optimization (it starts at about the 7:00 minute mark).

The book has a chapter devoted to multi-objective optimization as well as information throughout the book.  For example, in Chapter 4 where we talk about different service levels we provide some insight on how to think about different objectives.