Some Aspects of Piecewise Linear $L_1$ Approximations in Business Optimization


Polona Tominc, Karin Jurše




An approximation of the function relationship between decision variables (in the form of statistical data) of the optimization model with the piecewise linear function is used, for which the sum of absolute deviations is minimal. The problem can be transformed to the linear mixed integer optimization model. The piecewise linear function itself can be included in the linear mixed integer optimization model of the multiphase production process. The piecewise linear function is also used in order to include the quality costs in the linear mixed integer optimization model. Total quality costs can be classified into prevention, appraisal and internal and external failure costs. They can be included in the mixed integer optimization model of the business process by the piecewise linear function.