The Use of Optimization Models in Public-Sector Planning

When applied to public-sector planning, traditional least-cost optimization models and their offspring, contemporary multiobjective models, have often been developed under the optimistic philosophy of obtaining “the answer.” Frequently, such models are not very useful because there is a multitude of local optima, which result from wavy indifference functions, and because important planning elements are not captured in the formulations. Omitted elements, in fact, may imply that an optimal planning solution lies within the inferior region of a multiobjective analysis instead of along the noninferior frontier. The role of optimization methods should be re-thought in full recognition of these limitations and of the relevant planning process. They should be used to generate planning alternatives and to facilitate their evaluation and elaboration; they should also be used to provide insights and serve as catalysts for human creativity. As illustrated by recent examples, these roles may require the use of several models as well as new types of optimization formulations and modified algorithms and computer codes.