Thursday, May 6, 2010

Large optimization models in Excel?

I was asked to give my opinion on implementing a fairly large and complex optimization model in Excel. Excel is an extremely popular tool in business environments, and often there are people available with skills and experience that can do amazing things with Excel. Even in some academic circles the notion of doing serious optimization modeling in Excel is put forward:

In my experience it is often a good idea to use Excel where it really excels: data-entry and reporting. Lots of the more complicated data manipulation and the implementation of model equations can often better be delegated to specialized modeling software.

I often use Excel Excel as front-end for optimization models. But I try to move data as quickly to the modeling system where we can do data preparation (and checks) in a more systematic way. Similarly, I try to prepare output data in the modeling system and pass it back as late as possible to Excel for reporting (display and graphing).

Of course where to put the boundary between Excel and the modeling system can depend on different criteria. Sometimes this is dictated by technology (a modeling system that does not allow you to do data manipulation forces you to do more in Excel; but more capable systems don’t have this restriction).

An interesting book about Excel is: Professional Excel Development. It has a somewhat different approach than traditional programming books.