Applications of simulated annealing in market research

Trevor Sharot

Simulated annealing (SA) is a statistical optimisation method with a wide variety of applications. The best known of these is the travelling salesman problem in operations research: a salesman has to visit a number of clients in different towns in a single trip – in which order should he make the calls to minimise the total distance travelled? With more than a small number of towns, the number of permutations is too large to permit an exhaustive search, so some method is required to find the optimum without excessive computation.

Applications of simulated annealing in market research

Trevor Sharot

Red Research

Introduction

Simulated annealing (SA) is an iterative heuristic method that can efficiently find the optimum or near-optimum solution to many combinatorial problems (i.e. problems where the best arrangement of a set of items is sought). When the number of items is large, an exhaustive evaluation of all possible arrangements is impractical.

For example, suppose that you, your brother and your sister inherit your uncle’s 12 precious stamp albums, of differing value, with instructions that each of you is to receive four albums of equal total value (or as nearly...

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