Black Box
Black Box

The optimization has no human in the loop for each decision.

There are two common approaches to harnessing optimization into a decision making process in a modern organization: Black Box and Human in the Loop.

By  Black Box, we mean that the optimization model will be directly responsible for making a choice that was formerly performed by either a person or a prior model.

The complexities of this approach include:

  • Getting definitive rule and cost data out of subject matter experts’ heads and into the optimization model
  • Employing automated data cleaning, automated parameter tuning, and other advanced techniques that eliminate the need for human quality assurance on each transaction
  • Gaining the confidence of the sponsoring organization that there are sufficient safeguards installed; that the machine-driven approach has a lower error rate than the one it is replacing

Examples of Black Box Optimization are:

  • High speed buying and selling for the high frequency hedge fund – providing the jump on other market participants
  • Offering web customers capacity and rates for the freight railroad without an internal salesperson – providing fast booking confirmations for customers while reducing commission costs
  • Automatically scheduling follow up lab tests for the pharmaceutical company on the same blood sample; providing faster diagnostics at low costs without requiring additional visits to the lab by the patient.