What Would Our World Be Like Without Mathematical Optimization?

Author: Edward Rothberg, PhD
Date: 1/20/2021

 

Some people say that money makes the world go round; others say it’s love. Although there is undoubtedly some truth to those statements, the reality is that — more and more every day — our world today runs on and relies on technology.

In particular, AI technologies (such as robotic process automation, machine learning and mathematical optimization) have an immense and ever-increasing impact on our daily lives.

First introduced over 70 years ago, mathematical optimization has revolutionized countless different areas of the global business landscape and influenced and shaped many elements of our everyday lives.

Today, mathematical optimization is used by leading companies in over 40 different industries — including telecommunications, financial services, aviation, manufacturing and logistics — to rapidly solve their most challenging business problems and enable automated decisions that optimize operational efficiency.

Although this AI technology is a powerful and ubiquitous force in our modern world, most people seem to lack an awareness of its importance. This is most likely due to the fact that most mathematical optimization applications are used to handle complex, large-scale business problems — such as aircraft scheduling, inventory planning, spectrum auctions and allocation, financial trade settlement and supply chain network design — which most people don’t think about on a regular basis.

In an effort to demonstrate the true impact of mathematical optimization on our lives, I decided to write about what our world would be like if we didn’t have mathematical optimization technologies. The idea is that, by imagining mathematical optimization’s absence, you can gain a better understanding of its presence in so many areas of our lives.

In this piece, I will describe how two industries — electrical power and shipping — would be changed if there was no such thing as mathematical optimization.

 

Electrical Power

Most people are in the dark (figuratively speaking) about the impact of mathematical optimization on the electrical power industry. But the truth is that without mathematical optimization, we would all be in the dark (literally speaking) for significant chunks of time.

We have all experienced the occasional brief power outages caused by faulty circuit breakers in our houses, storms that damage power lines or other factors.

But, in a world without mathematical optimization, our electrical grid would be much less robust, with unexpected events regularly leading to service interruptions. Furthermore, prices for power would be liable to skyrocket in response to surges in demand — making electricity simply unaffordable for many people.

Indeed, without mathematical optimization, it would be practically impossible to ensure the ongoing stability of power supply and prices.

Most of the major electrical power providers use mathematical optimization in one way or another, and virtually every electrical grid has a mathematical optimization model behind it that helps keep supply and demand in balance.

There are two key aspects to this electrical grid optimization:

  • Creating An Efficient Market For Electricity: Mathematical optimization enables power providers to deliver electricity in the most cost-effective way to consumers. As demand for power varies in real-time, mathematical optimization models choose the right mix of providers to satisfy current demand. By creating an efficient electricity market that optimally matches buyers and sellers, mathematical optimization mitigates volatility in prices and minimizes the likelihood of power shortages.
  • Managing The Flow Of Power Throughout The Transmission Line Network: With mathematical optimization, grid operators can make sure that their transmission lines are not overloaded or underutilized by optimally aligning generation and distribution with demand across their vast and complex networks.

Just because a source of power is the cheapest or the closest to the customer does not necessarily mean it is the best source. Indeed, sometimes transmission lines are not able to support taking power from the cheapest or closest source and delivering it to consumers. This can overload these lines, which can lead to outages and even fires.

Mathematical optimization enables automated decisions on which sources of power to use to optimally satisfy demand and utilize capacity — so that power providers can ensure that their transmission lines are able to handle the flow of electricity across their networks.

These are merely a few of the many different applications of mathematical optimization in the electrical power industry.

Today’s power providers rely on mathematical optimization to keep supply and demand in balance and consistently deliver electricity in the most cost-effective manner possible to consumers. I don’t think it’s an exaggeration to say, “Mathematical optimization powers our world.”

 

Shipping

In today’s “on-demand economy,” we are accustomed to being able to get whatever we want, whenever we want it, at the price we want to pay for it. With just one click of the mouse, we can order just about any product on the planet and it will magically appear on our doorstep in a very short while (often in a matter of hours). But, in fact, mathematical optimization (rather than magic) is the force that helps make this same-day delivery possible.

In a world without mathematical optimization, this “era of e-commerce” that we are living in would probably have never occurred — as shipping would be so much slower and less predictable than it is today.

All the global shipping and e-commerce giants use mathematical optimization to optimize the routing of packages through their shipping networks.

These companies have incredibly sophisticated and elaborate mathematical optimization models that encompass every node in their end-to-end networks and every stage and detail of the delivery process. Whenever they receive a set of orders, they can quickly and automatically determine the best routes, modes and methods of transport to use for these orders — so that they can maximize on-time delivery performance while minimizing operating costs.

With mathematical optimization, e-commerce and shipping companies can deliver just about anything, anytime, anywhere (at a reasonable cost) for consumers.

So the next time you open your door to find a package waiting there for you, remember that, without mathematical optimization, you would probably still be waiting for that package.

 

This article was originally published on Forbes.com here.