Today’s competition in many manufacturing industries is leading companies to expand their product portfolio, which combined with the advanced technology present in modern production sites, raises the need for efficient production planning. Often times, purchasing new production machinery is not an option because of the increase in fixed costs. Hence, efforts are being directed towards technology and efficiency improvement.
Stochastic Optimization seeks the best decision in a scenario involving random events, those that depend on chance, whether those events are product prices, task durations, the number of people queueing at an ATM, the number of breakdowns in a fleet of trucks, or even the adoption of regulations.
After reading Puget’s post, I decided to write this one, where I will try to explain the difference between Predictive and Prescriptive Analytics and, within the latter, the difference between a System based on Business Rules and one based on Optimisation.