Savings Analysis
What will your savings be?
Demonstrating that saving is important in various scenarios. Optimal Answers encourages you to conduct a savings analysis to assess the potential value of Optimal applications by comparing them with existing methods. Subsequently, you will likely have to defend recommendations based on model results that run counter to established practices. In either case, the approach is the same.
The purpose of a savings analysis is to determine whether the proposed approach yields better decisions that improve performance, reduce costs, and ultimately increase profit contribution. Comparing the cost of a unit of activity under the existing decision-making process with the Optimal produced solution provides a good measure of the expected savings. Existing practices have evolved under the guidance of knowledgeable people, so they are expected to be quite good in all respects; it is always interesting to see how the Optimal results compare.
The approach is to generate a Base-case solution using existing methods and an Optimized solution using Optimal, then produce Comparison Reports that demonstrate and document the savings. Select a unit of work for the comparison. To assure "a level playing field," Optimal is used to compute the cost of the existing approach using the same data used in the Optimal approach.
Savings Analysis Nutrition Bar Recipe Report Example
