ChatGPt query: Now forget the baseline model of last year’s results. now let’s enter the income statement data from next year’s budget. OIS will produce a NEW income statement for next year’s budget that is the most profitable possible, right?

ChatGPT reply: Exactly right. This is actually the more important application of OIS.

You no longer need last year’s results as the baseline. Instead:

1. Enter next year’s budgeted income statement as the starting model.
2. Identify fixed assumptions embedded in the budget, such as prices, volumes, product mix, marketing expenditures and resource allocations.
3. Relax the appropriate assumptions, turning them into decision variables.
4. Incorporate MMM response functions, linearized into piecewise-linear relationships.
5. Optimize operating income using the MILP.

The result is a new income statement for next year, with optimized revenue, expenses and operating income.

The mathematical guarantee is:

Provided the original budget remains a feasible solution.

The important distinction

The budget says what management plans to earn.

OIS determines what management could earn by making more profitable decisions.

And yes, the output is a complete, internally consistent, optimized income statement—not simply a recommendation to increase profit.

I would make this the central definition of OIS:

OIS transforms next year’s budget into the most profitable achievable income statement, using mathematical optimization and MMM-derived demand relationships.

ChatGPt query: Now forget the baseline model of last year’s results. now let’s enter the income statement data from next year’s budget. OIS will produce a NEW income statement for next year’s budget that is the most profitable possible, right?

ChatGPT reply: Exactly right. This is actually the more important application of OIS.

You no longer need last year’s results as the baseline. Instead:

1. Enter next year’s budgeted income statement as the starting model.
2. Identify fixed assumptions embedded in the budget, such as prices, volumes, product mix, marketing expenditures and resource allocations.
3. Relax the appropriate assumptions, turning them into decision variables.
4. Incorporate MMM response functions, linearized into piecewise-linear relationships.
5. Optimize operating income using the MILP.

The result is a new income statement for next year, with optimized revenue, expenses and operating income.

The mathematical guarantee is:

Provided the original budget remains a feasible solution.

The important distinction

The budget says what management plans to earn.

OIS determines what management could earn by making more profitable decisions.

And yes, the output is a complete, internally consistent, optimized income statement—not simply a recommendation to increase profit.

I would make this the central definition of OIS:

OIS transforms next year’s budget into the most profitable achievable income statement, using mathematical optimization and MMM-derived demand relationships.

ChatGPt query: Now forget the baseline model of last year’s results. now let’s enter the income statement data from next year’s budget. OIS will produce a NEW income statement for next year’s budget that is the most profitable possible, right?

ChatGPT reply: Exactly right. This is actually the more important application of OIS.

You no longer need last year’s results as the baseline. Instead:

1. Enter next year’s budgeted income statement as the starting model.
2. Identify fixed assumptions embedded in the budget, such as prices, volumes, product mix, marketing expenditures and resource allocations.
3. Relax the appropriate assumptions, turning them into decision variables.
4. Incorporate MMM response functions, linearized into piecewise-linear relationships.
5. Optimize operating income using the MILP.

The result is a new income statement for next year, with optimized revenue, expenses and operating income.

The mathematical guarantee is:

Provided the original budget remains a feasible solution.

The important distinction

The budget says what management plans to earn.

OIS determines what management could earn by making more profitable decisions.

And yes, the output is a complete, internally consistent, optimized income statement—not simply a recommendation to increase profit.

I would make this the central definition of OIS:

OIS transforms next year’s budget into the most profitable achievable income statement, using mathematical optimization and MMM-derived demand relationships.