Chapter 8: Introduction to Financial Optimization
Introduction to Optimization
In Chapter Six, we highlighted various types of estimation methods that rely on optimization. In those instances, the optimization problem involved obtaining some parameters of the population that best satisfied some predefined criteria. In this chapter, we will examine optimization from a different perspective. Here, the aim of optimization is to derive the values of a set of decision variables that best satisfy some criteria.
From a business point of view, organizations use optimization as a mathematical tool to achieve their business objectives in the most efficient manner possible. Therefore, optimization is used for making decisions on how to allocate organizational ...
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