Decision Management
While there has been tremendous worldwide focus on AI, one of the most powerful analytics technologies gets much less attention. Mathematical optimization, also known as prescriptive analytics, is uncovering solutions for huge challenges in multiple industries, helping optimize everything from farmland allocation to supply chain networks to airline scheduling. Now a team of four researchers including FICO’s Selene Silvestri has been awarded the SEIO-BBVA prize for the best applied contribution in operations research. The team won for its article on using the power of optimization to improve access to drinking water in the remote areas of Nepal.
The award-winning team — Gilbert Laporte, Marie-Ève Rancourt, Jessica Rodríguez-Pereira and Selene Silvestri, all associated with HEC Montréal — used the power of mathematical optimization to design a water distribution system with an example application in Nepal, which suffered drinking water supply problems following earthquakes in 2015.
Why Use Optimization?
The problem this team addressed is critical in a world where droughts and other catastrophes damage water supply systems. This problem, with its complex variables and dynamics, can really only be solved through power optimization, as the sheer number of factors means the possible solutions run into the millions. The content of this research illustrates the meaningful applications of optimization technology and its power to solve some of our most pressing global systems challenges.
As the abstract for their paper in the journal Computers and Operations Research states:
“This study is motivated by the need to restore part of the Nepal water distribution network that was destroyed by the Gorkha and Dolakha earthquakes in April and May 2015. The problem consists of two hierarchical subproblems: locating water taps to ensure a good coverage of the population, and connecting these water taps to water sources by means of a pipe distribution network.
“Both subproblems are subject to a variety of accessibility and technical constraints that make the problem unique and highly complex. Namely, because Nepal is highly mountainous, elevations must be taken into account in the distance calculations, and the distribution network is gravity-fed, meaning that pumps are not used.”
The method to finding the best solution to this problem, given the constraints and objectives, requires serious number-crunching power:
- How many water taps do you need to provide access across this remote region?
- Where should they be located to meet demand, while recognizing challenges posed by the terrain?
- How can all these taps be connected to drinking water sources?
- How much piping do you need and where is the best place for it?
- How do you meet demand at the lowest cost?
A Complex Application of Optimization
To solve the two sub-problems, the team applied multiple technologies:
“The problem is solved by means of a two-phase matheuristic: the first subproblem is a constrained location–allocation problem which is solved exactly by integer linear programming, while the second subproblem is tackled by means of a cluster-first, tree-second heuristic. Several variants of the heuristic are developed and compared. The network design problem is of very large scale, being solved on a graph with as many as 29,900 vertices and 75,200 arcs. Tests are performed on real-world data, obtained by satellite imagery, from the Suspa Kshemawati and Lapilang communities in the Dolakha district. Extensive computational results confirm the effectiveness of the proposed methodology and enable an identification of the best parameter settings and algorithmic tactical choices.”
“Access to clean drinking water is a global problem,” Silvestri said. “Our team chose to tackle it as it is highly relevant to how remote communities rebuild and restore access after a disaster such as the Nepal earthquake. The work we did to solve the complex water network structure can benefit other regions as well.”
Optimization has multiple applications in financial services as well. Using decision optimization you can find solutions to challenges using a systematic method:
- Define scenarios using objectives and constraints
- Solve for the optimal strategy within those given constraints -
- Analyze expected effects on KPIs and drill into trade-offs, including portfolio profit
- Choose the scenario you want for your portfolio, convert into decision strategies and implement in your decision management system, putting your new strategy ‘life’
FICO’s consultants, like Selene, apply the power of optimization to a wide range of challenge. It is the combination of domain knowledge, technology, and analytical talent that makes solutions like this possible.
Congratulations to Selene and the rest of the team on this important award!
How FICO Can Help You Apply the Power of Optimization
- Read more about this project
- Explore our optimization tools
- Learn more about decision optimization
- See how loan pricing optimization adds value
- Review 2022 winners of FICO Decisions Awards using decision optimization:
