Prescriptive Analytics: The Final Frontier for Evidence-Based Management and Optimal Decision Making

2. Optimization and Optimal Decision-Making

Optimization is usually perceived as a positively connotated word that relates to rational or normative decision-making—a process that is concerned with identifying the best decision to make, under the assumption that an ideal decision-maker is fully informed, able to compute with perfect accuracy, and fully rational. Generally speaking, optimization is being used to refer to the process of achieving “the best” possible outcome from a given situation—that is, identifying the best possible choice-of-action from within a given set of options or alternatives. This set of options may sometimes be deterministic—all related variables and their possible values are known with certainty, yet near infinite in ...