[2022] Numerical Optimization - Group Assignment

Summary

The presentation explores the application of the Simplex method to minimize total costs, including goods and delivery fees, in an online grocery store setting amidst the COVID-19 pandemic. It provides an overview of the shift to e-commerce and focuses on optimizing consumer purchases across four major Malaysian grocery stores. The study formulates an objective function, applies the Simplex method to determine optimal store selections, and calculates the minimum total cost, concluding that a combination of items from selected stores yields significant savings compared to single-store purchases.

Takeaways

• 📈 The Simplex method is used to minimize the total cost of goods and delivery fees in an online grocery store setting.
• 🌐 The COVID-19 pandemic led to a significant increase in e-commerce sales, including a 14.8% rise for non-store retailers as reported by the OECD.
• 🛒 The Malaysian government initiated a movement control order (MCO) on March 18, 2020, which increased the preference for online grocery shopping among Malaysians.
• 🏪 The study focuses on four major online grocery stores in Malaysia: Lotus, Giant, Grocer Migosa, and Shopping Supermarket.
• 🔢 The Simplex method is chosen for its popularity and success in solving linear programming problems, including maximization and minimization with a set of linear constraints.
• 📚 A previous study by Angora et al. in 2019 applied the Simplex method for profit optimization in the home industry, demonstrating its applicability.
• 📊 The dataset used in this study is small, simplifying the computation process for the optimization problem.
• 🛍️ The study aims to help consumers find the best deals when purchasing multiple items from different online grocery stores based on price and delivery fees.
• 💰 The objectives of the study are to formulate a minimum objective function for total cost, apply the Simplex method to determine the best store for each item, and calculate the total minimum cost for consumers.
• 📈 The Simplex method was implemented using Octave, an open-source programming language, to solve the optimization problem.
• 📊 The results show that purchasing a combination of items from selected stores can lead to lower costs compared to buying from a single store, with a total minimum cost of 139.56 Ringgit.
• 🚀 The presentation suggests potential enhancements, such as building a robust recommendation system and incorporating delivery time, discounts, and minimum spend for free delivery into the model.

Q & A

What is the main focus of the presentation by Juan Amira Valkis?

The presentation focuses on the use of the Simplex method to minimize the total cost of goods and delivery fees in an online grocery store setting, particularly in the context of the shift to e-commerce during the COVID-19 pandemic.

What impact did the COVID-19 pandemic have on retail sales according to the OECD report mentioned in the script?

The OECD reported that sales increased for non-store retailers by 14.8 percent during the pandemic, indicating a significant shift in consumer behavior towards online shopping.

What was the government's response in Malaysia to slow down the transmission rate of COVID-19?

The Malaysian government initiated a movement control order (MCO) on March 18th, 2020, to control the spread of the virus.

How many online grocery delivery services are there in Malaysia according to the cloak report?

According to the cloak report, there are 14 online grocery delivery services in Malaysia.

Which four online grocery stores were selected for the study presented in the script?

The four online grocery stores selected for the study are Lotus, Giant, Grocer Migosa, and Shopping Supermarket.

What is the Simplex method and why was it chosen for this study?

The Simplex method is a popular and successful mathematical optimization technique used for solving linear programs, specifically for maximization and minimization problems with a set of linear equalities and inequalities. It was chosen for this study due to its effectiveness in handling such problems.

What are the two perspectives from which the problem statement is viewed in the script?

The problem statement is viewed from both the consumer's point of view, who wants the cheapest and highest quality goods with the lowest delivery fee, and the business owner's perspective, who aims to maximize revenue by encouraging more purchases, potentially through lowering prices and adjusting delivery fees.

What are the three objectives of the study as outlined in the script?

The three objectives are: 1) to formulate the minimum objective function for the total cost of goods and delivery fees, 2) to apply the optimization method to determine which store should be chosen for purchasing items, and 3) to calculate the total minimum cost for the best combination of goods and delivery fees for a consumer.

What assumptions were made regarding the stability of the cost of goods and delivery fees in the study?

The assumptions made were that the cost of goods and delivery fees are stable over time and that the uncertainty in these costs is low.

How was the data for the study collected and what does it include?

The data was collected through market research conducted on May 22nd, focusing on four famous online grocery stores and scoping out seven items with their respective prices and delivery fees.

What software was used to apply the Simplex method in the project, and how was the data inputted?

Octave was used to apply the Simplex method. The coefficients of the objective function were inputted into 'c', the coefficients of constraints into 'a', the right-hand side of constraints into 'b', and the lower and upper bounds of the variables into 'lb' and 'ub', respectively. The 'c-type' and 'v-type' were set according to the constraints and variable types, and 'sense' was set to one for minimization.

What was the outcome of applying the Simplex method to the optimization problem presented in the script?

The outcome showed that the total minimum cost for the consumer, based on the optimization, was 139.56 Ringgit, which was lower than purchasing all items from a single store. It also identified which items should be purchased from which stores to achieve this minimum cost.

What suggestions were made for future enhancements of the study?

Suggestions for future enhancements include building a robust recommendation system with more selection of items and stores, and factoring in delivery time, discount vouchers, and minimum spend for free delivery to reflect realistic logistical arrangements in stores.