SOPS: User friendly and advanced optimization
Stochastic Optimization in Policy Space (SOPS) is a user-friendly software for finding optimal policies in dynamic models with uncertainty.
SOPS tackles more complex problems than standard stochastic dynamic programming and it does not require linearization as in control engineering.
Add-on to Powersim Studio
Make use of all Studio’s facilities when developing and testing a model and preparing the model for policy analysis. One more mouse click, and you are transferred to the SOPS environment. There you specify uncertainty, choose initial policy parameters, and determine desired accuracy before you hit the Optimize button. With some practice it may take less than five minutes from the model is finished in Studio until you see the optimal policy in SOPS.
Three videos give a first introduction to SOPS; Introduction, Engineering and Resource management under uncertainty.
Challenges and benefits
What is required from you is to develop an intuitive understanding of why stochastic optimization can help you find more profitable and robust policies than simulation. Most technicalities of optimization are taken care of by the SOPS program itself.
SOPS allows for complex models and complex policies. This does not mean that any problem can be solved to full optimality. However, by simplifying policies rather than models, SOPS provides policy improvement where other methods give up. The program is particularly useful for infinite horizon problems like investment problems, inventory management, renewable resources management, and a host of engineering problems.
The User Manual explains the method. It also provides detailed descriptions of two examples that enable you to get hands-on experience with SOPS. An appendix explains how to download and install the needed software.
* SOPS works from Powersim Studio 9 versions or later. Powersim Studio 10 is compatible with Windows 10.