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Linear Goal Programming

Form of Multi-Objective optimization

Terminology
Objective - general statement of the desire of the
decision maker
- Minimize Cost
- Maximize Profit
- Maximize Effectiveness
- Minimize Loss
Aspiration Level - Specific value associated with the
desired or acceptable level of the objective
- Used to measure achievement of the objective
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Goal an objective in conjunction with an


aspiration level
- Achieve at least $20,000 in profit
- Reduce emissions by 50%
Goal Deviation - difference between what we aspire
to and what
we accomplish with
respect to objective
- Can be high or low

Goals act as constraints in the GP


Advantages
Allows multiple objectives
Allows slack in the constraint
Disadvantages
Complexity of the overall objective
Must elicit goal values from Decision Maker
Often must elicit weights as well
Must find a way to homogenize these values

Overall Objective called the Achievement Function


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Achievement Function
This is the objective of the LP we finally solve
Forms
(1) Minimize weighted sum of goal deviations
(2) Minimize some function of the goal deviations
Often sum of weighted percent of goal levels
(3) Minimize the worst deviation

Goal Programming Formulation

A company produces two products. Relevant information for each


product is shown below:
Product 1
Product 2
Labor required
4 hours
2 hours
Contribution to profit
$4
$2
The company has a goal of $48 in profits and incurs a $1 penalty
for each dollar it falls short of this goal. A total of 32 hours of labor
are available. A $2 penalty is incurred for each hour of overtime
(labor over 32 hours) used, and a $1 penalty is incurred for each
hour of available labor that is unused. Marketing considerations
require that at least 7 units of product 1 be produced and at least
10 units of product 2 be produced. For each unit (of either
product) by which production falls short of demand, a penalty of
$5 is assessed.
Formulate an LP that can be used to minimize the total penalty
incurred by the company.
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A company manufactures two products, A and B


which must be processed through assembly and
finishing departments. Assembly department has
90 hours available, finishing department can
handle up to 72 hours of work. Manufacturing A
require 6 hours in assembly and 3 hours in
finishing department. Each B requires 3 hours in
assembly and 6 hours in finishing department. If
profit is Rs. 120 per product A and Rs 90 per
product B, determine the best combination of A
and B to realize a profit of Rs. 2100.
If the company sets two equally ranked goals, one
to reach a profit of Rs. 1500 and the other to meet
a product A goal of 10. Find the optimal solution.
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The manufacturing plants of an firm produces two products A


and B. According to the past experience, production of either A
or B requires an average of one hour in the plant. The plant has
a normal production capacity of 40 hours a week. The
marketing department reports that, because of limited sales
opportunity, the maximum no. of A and B that can be sold are
24 and 30 respectively for the week. The gross margin from the
sale of A is Rs. 80 whereas it is Rs. 40 from B.
The chairman of the company has set the following goals as
arranged in order of their importance to the organization:
1) First, he wants to avoid any underutilization of normal
production capacity (no layoffs of production workers).
2) Second, he wants to sell as many products as possible. Since
the gross margin from the sale of A is twice the amount from B,
he has twice as much desire to achieve sales for A as for B.
3) Third, the chairman wants to minimize the overtime operation
of the plants much as possible.
Formulate this as a goal programming problem.
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Application Example

A textile company produces two types of materials A and B.


The material A is produced according to direct orders from
furniture manufacturers. The material B, is distributed to
retail stores. The average rate of production for material A
and B are identical at 1000 metres/hour. By running two
shifts the operational capacity of the plant is 80 hours per
week.
The marketing department reports that the maximum
estimated sales for the following week is 70000 metres of
material A and 45000 metres of material B. According to the
accounting department the profit from a metre of material A
is Rs. 2.50 and from a metre of material B is Rs. 1.50.
The management of the company decides that a stable
employment level is a primary goal for the firm. Therefore,
whenever there is a demand exceeding normal production
capacity, the management simply expands production
capacity by providing overtime. However, management feels
that overtime operation of the plant of more than 10 hours
per week should be avoided because of the accelerating
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costs.

The management has the following goals in the


order of importance:
1. The first goal is to avoid any underutilization of
production capacity (i. e. to maintain stable
employment at normal capacity).
2. The second goal is to limit the overtime
operation of the plant to 10 hours.
3. The third goal is to achieve the sales goals of
70000 metres of material A and 45000 metres of
material B.

Formulate this as a goal programming problem to


help the management for the best solution.

The ABC advertising agency is trying to determine a TV advertising


schedule for Priceler Auto Company. Priceler has three goals:
Goal 1: Its ads should be seen by at least 40 million high income
men (HIM).
Goal 2: Its ads should be seen by at least 60 million low income
people (LIP).
Goal 3: Its ads should be seen by at least 35 million high income
women (HIW).
ABC can purchase two types of ads: those shown during cricket
games and those during soap operas. At most, $ 600,000 can be
spent on ads. The advertising costs and potential audiences of a one
minute ad for each type are shown below. ABC must determine how
many cricket ads and soap opera ads to purchase for Priceler.

Millions of Viewers
Ad
Cricket
Soap

HIM

LIP

HIW

Cost
($)

10

10000
0

60000

10

Each million exposure by which Priceler falls


short of the HIM goal costs Priceler a
$200,000 penalty because of lost sales.
Each million exposure by which Priceler falls
short of the LIP goal costs Priceler a
$100,000 penalty because of lost sales.
Each million exposure by which Priceler falls
short of the HIM goal costs Priceler a
$50,000 penalty because of lost sales.

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Suppose
we
modify
the
Priceler
example by deciding that the budget
restriction of $600,000 is a goal. If we
decide that a penalty is assessed for
each dollar by which this goal is unmet,
then formulate the goal programming
problem.

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