Linear Programming: The Gateway to Analytics

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Reporting, BI, and the lack of Mathematics

I have done reporting, data warehousing, and overall BI development for a while now and the one thing I always struggled with is how easy and common it was to be presenting numbers and yet not be very mathematical at all. What I mean is the most complicated math was dividing two numbers to get a ratio like  ‘weeks of sales’ or ‘close out units per total units’.  With me being one of those who believe almost everything in this world is mathematical, I couldn’t understand why we wouldn’t use things like statistics, algebra, and calculus in trying to understand things that inherently in my mind are mathematical in nature. Now exploring this question can probably lead you to a bunch of places but the one area it lead me to was the topic of Analytics. I started talking to a lot of people who were analytics pros or statisticians and found that they saw the world basically in the same way. They offered tons of good advice in how to dive deeper in the idea of using math more in capturing data, managing data, and even visualizing data. The one thing though that I struggled with though is this idea of looking at business problems mathematically, looking at the business in terms of x’s and y’s . It was as if these stats and analytical gurus always thought in terms of mathematical concepts and had no need for translation (most of this was my inexperience of not knowing what they did). What I needed was some method or technique that would allow me to translate a business question “The business unit has 10 products that have 5 colors each and each of the 50 combinations all have different profit margins, what combination and quantities is going to make the most profit?” to a mathematical form that could be solved. Enter – Linear Programming.

What is Linear Programming?

 

Linear programming (LP, or linear optimization) is a method to achieve the best outcome (such as maximum profit or lowest cost) in a mathematical model whose requirements are represented by linear relationships. (wikipedia)

To me if looking at a business problem mathematically is the promised land, linear programming is the front gate. Linear programming is all about taking a business problem and translating that into a math equation that can be optimized. There is a lot to do in Linear Programming but if you are able to get to a sufficient level of understanding and practice, you will find that those same skills of translation apply far wider than just Linear Programming. If I look at the pending doom that industry analysts say exists around the lack of us data and information professionals in the market and the corresponding demand for us as well, I don’t see a lack of analytical skill in its entirety. I see really good mathematicians and really good business people but hardly any ‘translators’, there are few people that are able to take a business problem and turn it into a mathematical equation. That’s what we should be focusing on specifically. Now if I have hopefully piqued your interest in looking into Linear Programming here are a few resources you could check out:

  1. Linear and Integer Programming | Coursera

    https://www.coursera.org/course/linearprogramming

  2. Book: Applied Mathematical Programming Using Algebraic Systems (Chapter 2)

    http://agecon2.tamu.edu/people/faculty/mccarl-bruce/mccspr/thebook.pdf

Hope you enjoy and please leave any comments/questions you may have!