Cost and Optimization in Government

By Aman Khan | Go to book overview

Chapter 5
Classical Optimization

Optimization is a natural human tendency. When we encounter a problem, our mind automatically dissects it, evaluates alternatives for possible courses of action, and lets us choose the best course of action. This sequence of events (dissection, evaluation, and action) constitutes the basis of optimization. Optimization can be qualitative or quantitative. Qualitative optimization involves individual judgments and preferences, such as a sociologist predicting social unrest in a community resulting from a political decision or a financial analyst predicting the most likely return a government could earn from a securities portfolio based on their own personal experience, knowledge, and skill. Quantitative optimization, on the other hand, requires precise mathematical rules to produce the best result.

As a concept, optimization is nothing new. The ancient Greeks, Romans, and Egyptians are known to have used it extensively in many of their works of art, architecture, and astronomy. Optimization plays just an important role in government today as it did centuries ago. The use of optimization as a means to improving performance can be found in almost every sphere of governmental activity. As the public demand for lean and efficient government continues to increase, so does the need for better and more efficient optimization tools to deal with the complex tasks of everyday government. This chapter presents a brief discussion of the nature of optimization, focusing in particular on classical optimization and two special cases of suboptimization that have received considerable attention in the literature: inventory and queuing models, with an emphasis on application in government.


NATURE OF OPTIMIZATION

In conventional terms, optimization means maximizing or minimizing an objective function, such as maximizing revenue for a government or minimizing cost(s) of operation for a service agency. To a mathematician, optimization does not necessarily mean maximization or minimization since there may be more than one mathematical

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Cost and Optimization in Government
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Preface ix
  • Acknowledgments xii
  • Chapter 1 Basic Cost Concepts 1
  • Chapter 2 Cost Behavior 23
  • Notes 59
  • Chapter 3 Cost Analysis 60
  • Notes 105
  • Chapter 4 Cost Accounting 106
  • Notes 146
  • Chapter 5 Classical Optimization 148
  • Chapter 5 Classical Optimization 148
  • Notes 190
  • Chapter 6 Network Analysis 191
  • Notes 213
  • Chapter 7 Mathematical Programming 215
  • Notes 251
  • Chapter 8 - Games and Decisions 253
  • Notes 279
  • Chapter 9 Multicriteria Analysis 281
  • Chapter 9 Multicriteria Analysis 281
  • Notes 305
  • Chapter 10 Productivity Measurement 346
  • Chapter 11 Quality Control 348
  • Notes 373
  • Chapter 12 Besides Cost and Optimization 375
  • Notes 381
  • Bibliography 383
  • Index 389
  • About the Author 395
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