Section 1: summary of the economic concept of optimization
The economic concept of optimization refers to the situation where an individual experiences different alternatives where he or she is required to make a decision. In this case, the choices are of different values to the person which calls for a need of an economist to act rationally. Optimization suggests that rational beings choose the alternative they believe will be beneficial in their life. However, there are some factors that influence the choice that an individual makes meaning that economists do not always choose the optimal alternative. In an attempt of avoiding these challenges, economists have identified ways through which people may apply in making the optimal choice. For instance, cost-benefit analysis and opportunity cost concepts are essential approaches that aid people in making decisions.
Section 2: Real Life Example for Optimization Issue
The economic concept of optimization is applicable in real life situations as individuals tend to make choices that increase the level of benefits. For example, business people are always rational being and they focus on making choices that appear to be beneficial in their operations. An example of a real-life application of the economic concept of optimization is a situation where an industry that produces candy has been using three steps to come up with a complete candy (.Veyrat, 2015). The first step is where the chocolate is transformed into little balls through the use of machines. The second stage is where the covering layer is added then engaging in the first and final packing. Through research, the company realizes that there are other alternatives that can be applied in reducing the time and cost involved in the production process of candy. For example, the organization realizes that the first and final packaging stages could be combined such that they are done together thus reducing time spent in the packaging stage. Alternatively, the business realizes that the first step can also involve coloring reducing the number of machines used in the production of candy. These decisions represent examples of the application of the economic concept of optimization applied by economists.
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The choice made by the organization to combine the first and last two stages in the production process express an example of optimization concept. The economic concept of optimization consists of time and money value as fundamental aspects that can be used in analyzing the benefits that individual experiences after making a particular decision. These two elements are resent in the example above. The primary objective of deciding to combine any of the two stages is to reduce the time spent in moving the product from one stage to the other swell as reducing the number of machines and workers who perform these duties (Veyrat, 2015). For example, since the conversion of chocolate into small pieces can be combined with adding the covering layer, few machines will be needed to perform this duty thus minimizing the operation cost. The economic concept of optimization requires that the choice that an individual picks should be analyzed on the basis of cost-benefit analysis strategy and takes the alternative where benefits exceed the costs which are observed in the example.
References
Veyrat P., (2015). Business Process Optimization, Master the Concept with examples. Retrieved from: https://www.heflo.com/blog/process-optimization/business-process-optimization-example/
