We propose and analyze a set of variational quantum algorithms for solving quadratic unconstrained binary optimization problems where a problem consisting of nc classical variables can be implemented on O(lognc) number of qubits. The underlying encoding scheme allows for a systematic increase in correlations among the classical variables captured by a variational quantum state by progressively increasing the number of qubits involved. We first examine the simplest limit where all correlations are neglected, i.e. when the quantum state can only describe statistically independent classical variables. We apply this minimal encoding to find approximate solutions of a general problem instance comprised of 64 classical variables using 7 qubits. Next, we show how two-body correlations between the classical variables can be incorporated in the variational quantum state and how it can improve the quality of the approximate solutions. We give an example by solving a 42 -variable Max-Cut problem using only 8 qubits where we exploit the specific topology of the problem. We analyze whether these cases can be optimized efficiently given the limited resources available in state-of-the-art quantum platforms. Lastly, we present the general framework for extending the expressibility of the probability distribution to any multi-body correlations.
We propose and analyze a set of variational quantum algorithms for solving quadratic unconstrained binary optimization problems where a problem consisting of nc classical variables can be implemented on O(lognc) number of qubits. The underlying encoding scheme allows for a systematic increase in correlations among the classical variables captured by a variational quantum state by progressively increasing the number of qubits involved. We first examine the simplest limit where all correlations are neglected, i.e. when the quantum state can only describe statistically independent classical variables. We apply this minimal encoding to find approximate solutions of a general problem instance comprised of 64 classical variables using 7 qubits. Next, we show how two-body correlations between the classical variables can be incorporated in the variational quantum state and how it can improve the quality of the approximate solutions. We give an example by solving a 42 -variable Max-Cut problem using only 8 qubits where we exploit the specific topology of the problem. We analyze whether these cases can be optimized efficiently given the limited resources available in state-of-the-art quantum platforms. Lastly, we present the general framework for extending the expressibility of the probability distribution to any multi-body correlations.
Combinatorial optimization problems are typically formulated using Quadratic Unconstrained Binary Optimization (QUBO), where constraints are enforced through penalty terms that introduce auxiliary variables and rapidly increase Hamiltonian complexity, limiting scalability on near term quantum devices. In this work, we systematically study Quadratic Unconstrained D-ary Optimization (QUDO) as an alternative formulation in which decision variables are encoded directly in higher dimensional Hilbert spaces. We demonstrate that QUDO naturally captures structural constraints across a range of problem classes, including the Traveling Salesman Problem, two variants of the Vehicle Routing Problem, graph coloring, job scheduling, and Max-K-Cut, without the need for extensive penalty constructions. Using a qudit-level implementation of the Quantum Approximate Optimization Algorithm (qudit QAOA), we benchmark these formulations against their binary QUBO counterparts and exact classical solutions. Our study show consistently improved approximation ratios and substantially reduced computational overhead at comparable circuit depths, highlighting QUDO as a scalable and expressive representation for quantum combinatorial optimization.
Variational quantum algorithms offer a promising route to combinatorial optimization, but their applicability is limited by the challenge of encoding large-scale problems within restricted qubit resources. In this work, we introduce a qubit-efficient variational framework based on Pauli correlation encoding (PCE) and apply it to electric power demand portfolio optimization. Binary variables are represented through expectation values of Pauli correlation operators, which encode multi-body correlations of the quantum state and provide a continuous relaxation enabling compact representations with few qubits. We further propose a two-stage hybrid formulation, in which a time-averaged problem provides initialization for a time-resolved optimization. Numerical simulations demonstrate near-optimal performance across problem sizes ranging from m=18 to 10,296, with normalized cost gaps on the order of 10−4 relative to solutions with certified optimality. We show that the performance is governed by the interplay between continuous relaxation and discretization: the effective resolution of the correlator representation determines how reliably improvements in the continuous loss translate into better discrete solutions, with larger systems exhibiting more consistent behavior. Finally, we demonstrate robustness on a trapped-ion quantum processor, where high-quality solutions are obtained despite noise and finite sampling. These results establish PCE as a physically motivated and qubit-efficient framework for large-scale combinatorial optimization.
Qubit-efficient optimization studies how large combinatorial problems can be addressed with quantum circuits whose width is far smaller than the number of logical variables. In quadratic unconstrained binary optimization (QUBO), objective values depend only on one- and two-body statistics, yet standard variational algorithms explore exponentially large Hilbert spaces. We recast qubit-efficient optimization as a geometric question: what is the minimal representation the objective itself requires?
Focusing on QUBO problems, we show that enforcing mutual consistency among pairwise statistics defines a convex body -- the level-2 Sherali-Adams polytope -- that captures the information on which quadratic objectives depend. We operationalize this geometry in a minimal variational pipeline that separates representation, consistency, and decoding: a logarithmic-width circuit produces pairwise moments, a differentiable information projection enforces local feasibility, and a maximum-entropy ensemble provides a principled global decoder.
This information-minimal construction achieves near-optimal approximation ratios on large unweighted Max-Cut instances (up to N=2000) at shallow depth, indicating that pairwise polyhedral geometry already captures the relevant structure in this regime. By making the information-minimal geometry explicit, this work establishes a clean baseline for qubit-efficient optimization and sharpens the question of where genuinely quantum structure becomes necessary.
Loan portfolio optimization (LPO) seeks portfolios that minimize credit risk while satisfying practical selection constraints. Accounting for portfolio-level risk requires modeling not only expected losses but also loss variability and borrower-default correlations, leading to a large-scale combinatorial optimization problem whose complexity grows rapidly with portfolio size. In this work, we formulate LPO as a Quadratic Constrained Binary Optimization (QCBO) problem that jointly captures expected and unexpected losses and transform the resulting formulation into a Quadratic Unconstrained Binary Optimization (QUBO) model suitable for variational quantum optimization. To address the limited qubit resources of current quantum hardware, we employ Pauli Correlation Encoding (PCE), which enables a large number of portfolio-selection variables to be represented using comparatively few qubits. The proposed framework is evaluated on a real-world microfinance dataset comprising 2012 borrowers. For problem instances with up to 1000 portfolio-selection variables, we benchmark classical simulations of a variational quantum algorithm (VQA) against Google OR-Tools under matched time budgets, obtaining feasible portfolios with an objective-value gap of about 40% across all sizes. We further implement the framework on superconducting quantum hardware for instances containing up to 1500 variables. Across these instances, the experimentally obtained objective values are within 10% of the corresponding simulation results. These findings demonstrate the feasibility of applying PCE-based variational quantum optimization to large-scale loan portfolio optimization under current quantum hardware limitations.
Quadratic Unconstrained Binary Optimization (QUBO) is a broad class of optimization problems with many practical applications. To solve its hard instances in an exact way, known classical algorithms require exponential time and several approximate methods have been devised to reduce such cost. With the growing maturity of quantum computing, quantum algorithms have been proposed to speed up the solution by using either quantum annealers or universal quantum computers. Here we apply the divide-and-conquer approach to reduce the original problem to a collection of smaller problems whose solutions can be assembled to form a single Polynomial Binary Unconstrained Optimization instance with fewer variables. This technique can be applied to any QUBO instance and leads to either an all-classical or a hybrid quantum-classical approach. When quantum heuristics like the Quantum Approximate Optimization Algorithm (QAOA) are used, our proposal leads to a double advantage: a substantial reduction of quantum resources, specifically an average of ~42% fewer qubits to solve MaxCut on random 3-regular graphs, together with an improvement in the quality of the approximate solutions reached.
The continuous progress of quantum technologies has spurred the exploration of their potential applications across diverse fields, particularly in combinatorial optimisation. In this work, we study a quantum-classical optimisation framework based on Pauli Correlation Encoding, an encoding scheme that can represent m binary variables using a polynomial number of qubits. To evaluate the performance of the method, we use three classical optimisation problems against the instances of the QOPTLib benchmark. The study includes an analysis of the impact of the compression order of the encoding scheme, the problem structure, and hyperparameter selection on solution quality, as well as the role of post-processing in improving performance. Additionally, we study the effect of shot-based execution and hardware noise, showing how these factors influence both the accuracy of expected value estimation and the overall dynamics of the optimisation process. The results indicate that the proposed PCE-based framework achieves competitive performance against the benchmark and, in several cases, obtains equivalent or even superior solutions, highlighting its potential as an efficient encoding strategy for quantum optimisation in the NISQ and near fault-tolerant era.