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System Optimization

Optimization tasks are concerned with maximizing or minimizing some quantity.

Different quantitative tools can be used to accomplish this objective. One of which is linear programming. Here are a few examples of the use of linear programming as a problem solving tool to help managers make decisions:

1. A manufacturer wants to develop a production schedule and an inventory policy that will satisfy sales demand in future periods. Ideally the schedule and policy will enable the company to satisfy demand and at the same time minimize the total production and inventory costs.

2. A financial analyst must select an investment portfolio from a variety of of stock and bond investment alternatives. An analyst would like to establish the portfolio that maximizes the return on investment.

3. The marketing manager wants to determine how best to allocate a fixed advertising budget among alternative advertising media such as radio, TV, newspaper, Internet, etc.. The manager would like to determine the media mix that maximizes advertising effectiveness.

4. A company has warehouses in a number of locations throughout the United States.

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