The optimization feature in StrategyBUILDER allows organizations to find and assign optimal treatments that maximize or minimize objective functions across specific segments identified by Strategy Trees.
For example, the Optimizer can help you find optimal credit limit increases for different groups of customers to maximize revenue from those groups. Similarly, it can be used to assign actions that minimize risk across selected segments under user-defined constraints. Internally, the Optimizer solves a linear programming problem, maximizing or minimizing a metric while meeting constraints on other metrics.
The optimal amounts found by the optimizer are automatically assigned as treatments to the Strategy Tree nodes representing eligible groups of customers. The strategy with optimal treatments can then be deployed using the List Generation feature of StrategyBUILDER. Alternatively, the user can generate SQL, SAS or PMML code for the optimal strategy to be deployed in other analytics environments.
Strategy Tree features such as node calculations provide a convenient framework to formulate an optimization problem. The optimization workflow in StrategyBUILDER is as follows:
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Build a Strategy Tree to identify and mark groups—tree nodes— eligible for your treatments.
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Express the objective quantity in terms of the treatments to be assigned. Specify whether it is to be minimized or maximized.
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Specify constraints for treatments. For example, each treatment value must be within a certain range.
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Run the optimization, after which optimal treatment values are assigned to the selected segments—the Strategy Tree nodes representing the eligible groups. These values provide the maximum (or minimum) of your objective quantity.