Economics In
economics, many problems involve multiple objectives along with constraints on what combinations of those objectives are attainable. For example, consumer's
demand for various goods is determined by the process of maximization of the
utilities derived from those goods, subject to a constraint based on how much income is available to spend on those goods and on the prices of those goods. This constraint allows more of one good to be purchased only at the sacrifice of consuming less of another good; therefore, the various objectives (more consumption of each good is preferred) are in conflict with each other. A common method for analyzing such a problem is to use a graph of
indifference curves, representing preferences, and a budget constraint, representing the trade-offs that the consumer is faced with. Another example involves the
production possibilities frontier, which specifies what combinations of various types of goods can be produced by a society with certain amounts of various resources. The frontier specifies the trade-offs that the society is faced with — if the society is fully utilizing its resources, more of one good can be produced only at the expense of producing less of another good. A society must then use some process to choose among the possibilities on the frontier.
Macroeconomic policy-making is a context requiring multi-objective optimization. Typically a
central bank must choose a stance for
monetary policy that balances competing objectives — low
inflation, low
unemployment, low
balance of trade deficit, etc. To do this, the central bank uses a
model of the economy that quantitatively describes the various causal linkages in the economy; it
simulates the model repeatedly under various possible stances of monetary policy, in order to obtain a menu of possible predicted outcomes for the various variables of interest. Then in principle it can use an aggregate objective function to rate the alternative sets of predicted outcomes, although in practice central banks use a non-quantitative, judgement-based, process for ranking the alternatives and making the policy choice.
Finance In
finance, a common problem is to choose a portfolio when there are two conflicting objectives — the desire to have the
expected value of portfolio returns be as high as possible, and the desire to have
risk, often measured by the
standard deviation of portfolio returns, be as low as possible. This problem is often represented by a graph in which the
efficient frontier shows the best combinations of risk and expected return that are available, and in which indifference curves show the investor's preferences for various risk-expected return combinations. The problem of optimizing a function of the expected value (first
moment) and the standard deviation (
square root of the second
central moment) of portfolio return is called a
two-moment decision model.
Optimal control In
engineering and
economics, many problems involve multiple objectives which are not describable as the-more-the-better or the-less-the-better; instead, there is an ideal target value for each objective, and the desire is to get as close as possible to the desired value of each objective. For example, energy systems typically have a trade-off between performance and cost or one might want to adjust a rocket's fuel usage and orientation so that it arrives both at a specified place and at a specified time; or one might want to conduct
open market operations so that both the
inflation rate and the
unemployment rate are as close as possible to their desired values. Often such problems are subject to linear equality constraints that prevent all objectives from being simultaneously perfectly met, especially when the number of controllable variables is less than the number of objectives and when the presence of random shocks generates uncertainty. Commonly a multi-objective
quadratic objective function is used, with the cost associated with an objective rising quadratically with the distance of the objective from its ideal value. Since these problems typically involve adjusting the controlled variables at various points in time and/or evaluating the objectives at various points in time,
intertemporal optimization techniques are employed.
Optimal design Product and process design can be largely improved using modern modeling, simulation, and optimization techniques. The key question in optimal design is measuring what is good or desirable about a design. Before looking for optimal designs, it is important to identify characteristics that contribute the most to the overall value of the design. A good design typically involves multiple criteria/objectives such as capital cost/investment, operating cost, profit, quality and/or product recovery, efficiency, process safety, operation time, etc. Therefore, in practical applications, the performance of process and product design is often measured with respect to multiple objectives. These objectives are typically conflicting, i.e., achieving the optimal value for one objective requires some compromise on one or more objectives. For example, when designing a paper mill, one can seek to decrease the amount of capital invested in a paper mill and enhance the quality of paper simultaneously. If the design of a paper mill is defined by large storage volumes and paper quality is defined by quality parameters, then the problem of optimal design of a paper mill can include objectives such as i) minimization of expected variation of those quality parameters from their nominal values, ii) minimization of the expected time of breaks and iii) minimization of the investment cost of storage volumes. Here, the maximum volume of towers is a design variable. This example of optimal design of a paper mill is a simplification of the model used in. Multi-objective design optimization has also been implemented in engineering systems in the circumstances such as control cabinet layout optimization, airfoil shape optimization using scientific workflows, design of nano-
CMOS,
system on chip design, design of solar-powered irrigation systems, optimization of sand mould systems, engine design, optimal sensor deployment and optimal controller design.
Process optimization Multi-objective optimization has been increasingly employed in
chemical engineering and
manufacturing. In 2009, Fiandaca and Fraga used the multi-objective
genetic algorithm (MOGA) to optimize the pressure swing adsorption process (cyclic separation process). The design problem involved the dual maximization of nitrogen recovery and nitrogen purity. The results approximated the Pareto frontier well with acceptable trade-offs between the objectives. In 2010, Sendín et al. solved a multi-objective problem for the thermal processing of food. They tackled two case studies (bi-objective and triple-objective problems) with nonlinear dynamic models. They used a hybrid approach consisting of the weighted Tchebycheff and the Normal Boundary Intersection approach. The novel hybrid approach was able to construct a Pareto optimal set for the thermal processing of foods. In 2013, Ganesan et al. carried out the multi-objective optimization of the combined carbon dioxide reforming and partial oxidation of methane. The objective functions were methane conversion, carbon monoxide selectivity, and hydrogen to carbon monoxide ratio. Ganesan used the Normal Boundary Intersection (NBI) method in conjunction with two swarm-based techniques (Gravitational Search Algorithm (GSA) and Particle Swarm Optimization (PSO)) to tackle the problem. Applications involving chemical extraction and bioethanol production processes have posed similar multi-objective problems. In 2013, Abakarov et al. proposed an alternative technique to solve multi-objective optimization problems arising in food engineering. The Aggregating Functions Approach, the Adaptive Random Search Algorithm, and the Penalty Functions Approach were used to compute the initial set of the non-dominated or Pareto-optimal solutions. The
Analytic Hierarchy Process and Tabular Method were used simultaneously for choosing the best alternative among the computed subset of non-dominated solutions for osmotic dehydration processes. In 2018, Pearce et al. formulated task allocation to human and robotic workers as a multi-objective optimization problem, considering production time and the ergonomic impact on the human worker as the two objectives considered in the formulation. Their approach used a
Mixed-Integer Linear Program to solve the optimization problem for a weighted sum of the two objectives to calculate a set of
Pareto optimal solutions. Applying the approach to several manufacturing tasks showed improvements in at least one objective in most tasks and in both objectives in some of the processes.
Radio resource management The purpose of
radio resource management is to satisfy the data rates that are requested by the users of a cellular network. The main resources are time intervals, frequency blocks, and transmit powers. Each user has its own objective function that, for example, can represent some combination of the data rate, latency, and energy efficiency. These objectives are conflicting since the frequency resources are very scarce, thus there is a need for tight spatial
frequency reuse which causes immense inter-user interference if not properly controlled.
Multi-user MIMO techniques are nowadays used to reduce the interference by adaptive
precoding. The network operator would like to both bring great coverage and high data rates, thus the operator would like to find a Pareto optimal solution that balance the total network data throughput and the user fairness in an appropriate subjective manner. Radio resource management is often solved by scalarization; that is, selection of a network utility function that tries to balance throughput and user fairness. The choice of utility function has a large impact on the computational complexity of the resulting single-objective optimization problem.
Electric power systems Reconfiguration, by exchanging the functional links between the elements of the system, represents one of the most important measures which can improve the operational performance of a distribution system. The problem of optimization through the reconfiguration of a power distribution system, in terms of its definition, is a historical single objective problem with constraints. Since 1975, when Merlin and Back introduced the idea of distribution system reconfiguration for active power loss reduction, until nowadays, a lot of researchers have proposed diverse methods and algorithms to solve the reconfiguration problem as a single objective problem. Some authors have proposed Pareto optimality based approaches (including active power losses and reliability indices as objectives). For this purpose, different artificial intelligence based methods have been used: microgenetic, branch exchange, particle swarm optimization and non-dominated sorting genetic algorithm.
Inspection of infrastructure Autonomous inspection of infrastructure has the potential to reduce costs, risks and environmental impacts, as well as ensuring better periodic maintenance of inspected assets. Typically, planning such missions has been viewed as a single-objective optimization problem, where one aims to minimize the energy or time spent in inspecting an entire target structure. For complex, real-world structures, however, covering 100% of an inspection target is not feasible, and generating an inspection plan may be better viewed as a multiobjective optimization problem, where one aims to both maximize inspection coverage and minimize time and costs. A recent study has indicated that multiobjective inspection planning indeed has the potential to outperform traditional methods on complex structures == Solution ==