Production/Acquisition
Production/Acquisition

How much to make/get/have?

Production  / Acquisition decisions usually involve what and how much to either manufacture or to purchase.

Prior to optimization, production/acquisition decisions are often made simply according to rules, such as “When the amount is under X%, then reorder.” Optimization can provide smarter, dynamic decisions that consider many more features than simple rules, achieving better results.

  • For the high frequency hedge fund, positions in financial securities are created, increased or decreased to optimize return by maximizing forecasted return while minimizing risk
  • For the business publication, different sections are enlarged or shrunk to maximize advertising revenue
  • For the airline, the optimization is run 1, 2 and 3 days in advance to help the business determine how much vendor capacity will be needed ahead of time, and acquire/negotiate the best prices