Professional Documents
Culture Documents
All problems studied in the previous chapters share one common characteristic: a single
objective function that express the overall measure of performance
It is not always possible to put all managements objectives into one overall measure of
performance
Management might instead set numeric goals for the various objectives and seek a
solution that make as much progress as possible toward all these goals
The Dewright Company is one of the largest producers of power tools in the
United States.
The company is preparing to replace its current product line with the next
generation of productsthree new power tools.
Management needs to determine the mix of the companys three new products
to best meet the following three goals:
1. Achieve a total profit (net present value) of at least $125 million.
2. Maintain the current employment level of 4,000 employees.
3. Hold the capital investment down to no more than $55 million.
All are important but by small margins their order of importance is:
Goal 1, part of Goal 2 (avoid decreasing the employment level), Goal 3,
part of Goal 2 (avoid increasing the employment level),
It is not always possible to fit all managerial objectives into a single objective
function. Managerial objectives might include:
Maintain stable profits.
Increase market share.
Diversify the product line.
Maintain stable prices.
Improve worker morale.
Maintain family control of the business.
Increase company prestige.
Introduce new changing cells, Amount Over and Amount Under, that
will measure how much the current solution is over or under each goal.
The Amount Over and Amount Under changing cells are forced to
maintain the correct value with the following constraints:
Level Achieved Amount Over + Amount Under = Goal
and
Pi 0, Under Goal i 0, Over Goal i 0 (i = 1, 2, 3)
B C D E F G H I J K L M N O
3 Goals Deviations Constraints
4 Contribution per Unit Produced Level Amount Amount Balance
5 Product 1 Product 2 Product 3 Achieved Goal Over Under (Level - Over + Under) Goal
6 Goal 1 (Profit) 12 9 15 125 >= 125 0 0 125 = 125
7 Goal 2 (Employment) 5 3 4 48.333333 = 40 8.333333 0 40 = 40
8 Goal 3 (Investment) 5 7 8 55 <= 55 0 0 55 = 55
9
10
11 Product 1 Product 2 Product 3 Penalty Over Under Weighted Sum
12 Units Produced 8.33333333 0 1.66666667 Weights Goal Goal of Deviations
13 Profit 5 16.66666667
14 Employment 2 4
15 Investment 3
Weighted goal programming is designed for problems where all the goals are
quite important, with only modest differences in importance that can be
measured by assigning weights to the goals.
Introduce new changing cells, Amount Over and Amount Under, that will
measure how much the current solution is over or under each goal.
The Amount Over and Amount Under changing cells are forced to maintain
the correct value with the following constraints:
Level Achieved Amount Over + Amount Under = Goal
Start with the objective of achieving the first goal (or coming as close as
possible):
Minimize (Amount Over/Under Goal 1)
Continue with the next goal, but constrain the previous goals to not get any
worse:
Minimize (Amount Over/Under Goal 2)
subject to
Amount Over/Under Goal 1 = (amount achieved in previous step)
Then, if for example goal 1 is achieved (i.e., Under Goal 1 = 0), then
Minimize (Under Goal 2)
subject to
(Under Goal 1) = 0
and
Pi 0, Under Goal i 0, Over Goal i 0 (i = 1, 2, 3)
A B C D E F G H I J K L M N O
1 Dewright Co. Goal Programming (Preemptive Priority 1: Minimize Under Goal 1)
2
3 Goals Deviations Constraints
4 Contribution per Unit Produced Level Amount Amount Balance
5 Product 1 Product 2 Product 3 Achieved Goal Over Under (Level - Over + Under) Goal
6 Goal 1 (Profit) 12 9 15 125 >= 125 0 0 125 = 125
7 Goal 2 (Employment) 5 3 4 40 = 40 0 0 40 = 40
8 Goal 3 (Investment) 5 7 8 61.481 <= 55 6.481 0 55 = 55
9
10 Minimize (Under Goal 1)
11 Product 1 Product 2 Product 3
12 Units Produced 3.7037 0 5.3704
A B C D E F G H I J K L M N O
1 Dewright Co. Goal Programming (Preemptive Priority 3: Minimize Over Goal 3)
2
3 Goals Deviations Constraints
4 Contribution per Unit Produced Level Amount Amount Balance
5 Product 1 Product 2 Product 3 Achieved Goal Over Under (Level - Over + Under) Goal
6 Goal 1 (Profit) 12 9 15 125 >= 125 0 0 125 = 125
7 Goal 2 (Employment) 5 3 4 48.333 = 40 8.333333 0 40 = 40
8 Goal 3 (Investment) 5 7 8 55 <= 55 0 0 55 = 55
9
10 Minimize (Over Goal 3)
11 Product 1 Product 2 Product 3 (Under Goal 1) = 0
12 Units Produced 8.333 0 1.667 (Under Goal 2) = 0
A B C D E F G H I J K L M N O
1 Dewright Co. Goal Programming (Preemptive Priority 4: Minimize Over Goal 2)
2
3 Goals Deviations Constraints
4 Contribution per Unit Produced Level Amount Amount Balance
5 Product 1 Product 2 Product 3 Achieved Goal Over Under (Level - Over + Under) Goal
6 Goal 1 (Profit) 12 9 15 125 >= 125 0 0 125 = 125
7 Goal 2 (Employment) 5 3 4 48.333 = 40 8.333 0 40 = 40
8 Goal 3 (Investment) 5 7 8 55 <= 55 0 0 55 = 55
9
10 Minimize (Over Goal 2)
11 Product 1 Product 2 Product 3 (Under Goal 1) = 0
12 Units Produced 8.333 0 1.667 (Under Goal 2) = 0
13 (Over Goal 3) = 0
Techniques
Preemptive goal programming
Weighted goal programming