Suncoast Office, a Goal Programming Problem,

Solution, Analysis, Sensitivity Analysis, and Report

Source book: Anderson, Sweeney, Williams An Introduction to Management Science
Prepared by: Parisay with some changes
Problem Statement:
Management of Suncoast Office Supplies establishes monthly goals, or quotas, for the
types of customers contacted. For the next 4 weeks, Suncoast's customer contact strategy
calls for the sales force, which consists of four salespeople, to make 200 contacts with
customers who have previously purchased supplies from the firm. In addition, the
strategy calls for 120 contacts of new customers. The purpose of this latter goal is to
ensure that the sales force is continuing to investigate new sources of sales.
Making allowances for travel and waiting time, as well as for demonstration and direct
sales time, Suncoast has allocated 2 hours of sales force effort to each contact of a
previous customer. New customer contacts tend to take longer and require 3 hours per
contact. Normally, each salesperson works 40 hours per week, or 160 hours over the 4week planning horizon; under a normal work schedule, the four salespeople will have
4(160)=640 hours of sales force time available for customer contacts.
Management is willing to use some overtime, if needed, but is also willing to accept a
solution that uses less than the scheduled 640 hours available. However, management
wants overtime of at most 40 hours and underutilization of the work force limited to at
most 30 hours over the 4-week period. Thus, from an overtime perspective,
managements goal is to use no more than 640+40=680 hours of sales force time, and
from a labor utilization perspective, managements goal is to use at least 640-30=610
hours of sales force time.
In addition to the customer contact goals, Suncoast has established a goal regarding sales
volume. Based on past experience, Suncoast estimates that each previous customer
contacted will generate $250 of sales and each new customer contacted will generate
$125 of sales. Management would like to generate sales of at least $70,000 for the next
month.
Given Suncoasts small sales force and the short time frame involved, management has
decided that the overtime goal and the labor utilization goal are both priority level 1
goals. Management also concluded that the $70,000 sales goal should be a priority level
2 goal and that the two customer contact goals should be priority level 3 goals.

Problem Summary:
Customer
Previous
New

Min number of
contacts required
200
120

Contact hr /
customer
2
3
At most 680
hours
At least 610 hours

Sales $ /
customer
250
125
At least $70,000
per month

Priority level 1 goals:

Goal 1: Do not use any more than 680 hours of sales force time.
Goal 2: Do not use any less than 610 hours of sales force time.
Priority level 2 goal:
Goal 3: Generate sales revenues of at least $70,000.
Priority level 3 goals:
Goal 4: Call on at least 200 previous customers.
Goal 5: Call on at least 120 new customers.
Formulation:
X1: the number of previous customers contacted in 4-weeks
X2: the number of new customers contacted in 4-weeks
ST:
Over time
Under utilization
Sales goal
Pervious contacts
New contacts
OF:
Over time and under utilization
Sales
Number of contacts

Z 1 P1 ( S1 ) P1 ( S 2 )
Z 2 P2 ( S 3 )
Z 3 P3 ( S 4 ) P3 ( S 5 )

Input to WinQSB software:

Output from WinQSB:

Summary of solution:
X1 = 250, X2 = 60
Z1 = 0, Z2 = 0, Z3 = 60
Analysis of output:

X1 = 250 >>> It means that we will contact 250 previous customers. That is the
minimum of 200 previous customers is fulfilled and exceeded by 50, which is
desirable. It results in S-4 = 0.
X2 = 60 >>> It means that we will contact 60 new customers. That is the
minimum of 120 new customers is not fulfilled and it is behind by 60, which is
not desirable. It resulted in S-5 = 60. Because of this value we ended up having
Z3 = 60.
Z1 = 0 >>> This is related to total time and indicates there is no undesirable
situation. Plug in the values of X1 and X2 into the time constraint we will have:
2X1 + 3X2 = 2(250) + 3(60) = 680. This results in using all 40 hours of possible
overtime, which is no problem. As well as being above under utilization, this is
no problem either.
Z2 = 0 >>> This is related to total sales and indicates there is no undesirable
situation. Plug in the values of X1 and X2 into sales constraint we will have:
250X1 + 125X2 = 250(250) + 125(60) = 70000.
Report

Based on the given information we need to contact 250 previous customers and 60 new
customers. It will result in total sales of $70,000. We need 680 hours of agents, this
mean we will use 40 hours of overtime.

Sensitivity analysis
Input for reordered goals scenario 1:

Partial output for reordered goals scenario 1:

Input for reordered goals scenario 2:

Partial output for reordered goals scenario 2:

Sensitivity Analysis Summary for a Goal Programming Problem

(Details are in file called Suncoast Example on Goal Programming Sensitivity Analysis
on Class Notes web page.)

Priorities
Second
Highest
Highest
S1+, S2S3S3S1+, S2S4-, S5S1+, S2-

.
Lowest
S4-, S5S4-, S5S3-

Optimal Solution
Deviation
X1 X2
Z1
Z2
250
60
0
0
250
60
0
0
200
120
0
80

.
Z3
60
60
5000

Prepared: April 2005, updated September 2009