What is limited optimization?

Simply put, limited optimization is a set of numerical methods used to solve problems where one tries to find minimize total costs based on inputs whose limits or limits are dissatisfied. In business, finances and economics, limited optimization is usually used to find a minimum or minimum set for cost function, where costs differ depending on different availability and input costs such as raw materials, work and other sources. It is also used to find the maximum yield or a set of revenues that depend on the different values ​​of available financial resources and their limits, such as the amount and cost of capital and the absolute minimum or maximum value that these variables can achieve. There are linear, non -linear, multi -objective and distributed models of restriction optimization. Linear programming, matrix algebra, branch and bound algorithms and Lagrange Multiplicers are some of the techniques commonly used to solve these problemsat.

The selection of limited optimization method depends on the specific type of problem and functions to be resolved. More generally, such methods are related to the problems of restrictions on restrictions that require the user to meet the set of the restrictions. On the other hand, limited optimization problems require the user to minimize the total cost of dissatisfied restrictions. The restrictions can be any Boolean combination of equations such as f (x) = 0, weak inequality, such as G (x)> = 0 or strict inequalities such as G (x)> 0. It depends on whether the set of solutions is closed, ie the final number of maximum or minimum and/or bounded, which means there is an absolute minimum or maximum value.

Limited optimization is widely used in finances and economics. For example, portfolio managers and other investment bodies use it to model optimum capital assignment between defined scope of investmenth possibilities to come up with the theoretical maximum return on investment and minimal risk. In microeconomics, limited optimization can be used to minimize cost functions and at the same time maximize the output by defining functions that describe how inputs such as land, work and capital differ in value and determine the total production as well as total costs. In macroeconomics, limited optimization can be used to formulate tax policies; This may include finding the maximum value for the proposed gasoline tax, which minimizes consumer dissatisfaction or provides a maximum level of consumer satisfaction due to higher costs.