13.

5 Goal Programming
Goals are prioritized in some sense, and their level of aspiration is stated.
An optimal solution is attained when all the goals are reached as close as possible to their aspiration level, while satisfying a set of constraints. There are two types of goal programming models:
Nonpreemtive goal programming - no goal is pre-determined to dominate any other goal. Preemtive goal programming - goals are assigned different priority levels. Level 1 goal dominates level 2 goal, and so on.

NONPREEMTIVE GOAL PROGRAMMING An Advertisement Example

A company is considering three forms of advertising.
Cost per Ad Customers Television Radio Newspaper 3000 800 250 1000 500 200

Goals

Goal 1: Spend no more $25,000 on advertising. Goal 2: Reach at least 30,000 new potential customers. Goal 3: Run at least 10 television spots.

An Advertisement Example

If these were constraints rather than goals we would have:

3000X1 + 800X2 + 250X3 25,000 1000X1 + 500X2 + 200X3 30,000 X1 10

No feasible solution exists that satisfies all the constraints. When these constraints are simply goals they are to be reached as close as possible.

An Advertisement Example
Detrimental variables
Ui = the amount by which the left hand side falls short of (under) its right had side value. Ei = the amount by which the left side exceeds its right had side value.

The goal equations

3000X1 + 800X2 + 250X3 + U1 E1 = 25,000 1000X1 + 500X2 + 200X3 + U2 E2 = 30,000 X1 + U3 E3 = 10

An Advertisement Example The objective is to minimize the penalty of not meeting the goals, represented by the detrimental variables E1, U2, U3. 25,000 30,000 10

An Advertisement Example
The penalties are estimated to be as follows:
Each extra dollar spent on advertisement above $25,000 cost the company $1. There is a loss of $5 to the company for each customer not being reached, below the goal of 30,000. Each television spot below 10 is worth 100 times each dollar over budget.

An Advertisement Example The goal programming model

It is assumed that no advantage is gained by overachieving a goal. Minimize 1E1 + 5U2 + 100U3 s.t. 3000X1 + 800X2 + 250X3 + U1 E1 = 25,000 1000X1 + 500X2 + 200X3 + U2 E2 = 30,000 X1 + U3 E3 = 10 All variables are non-negative.

PREEMTIVE GOAL PROGRAMMING New England Cycle Company

The NECC is planning next month production of its two bicycles B2 and S10. Data
Both models use the same seats and tires. 2000 seats are available; 2400 tires are available. 1000 gear assembly are available (used only in the S10 model). Production time per unit: 2 hours for B2; 3 hours for S10. Profit: $40 for each B2; 10$ for each S10.

NECC Prioritized Goals

Priority 1: Fulfill a contract for 400 B2 bicycles to be delivered next month.

Priority 2: Produce at least 1000 total bicycles during the month. Priority 3: Achieve at least $100,000 profit for the month. Use no more than 1600 labor-hours during the month.

Priority 4: At least 200 tires left over at the end of the month. At least 100 gear assemblies left over at the end of the month.

New England Cycle Company Example

Management wants to determine the production schedule that best meets its prioritized schedule.

NECC - SOLUTION
Decision variables
X1 = The number of B2s to be produced next month X2 = The number of S10s to be produced next month

Functional / nonnegativity constraints

2X 1 X 2 2000 X 2 1000 2X 1 2X 2 2400 X 1 ,X 2 0 Seats Gear assemblies Tires

NECC - SOLUTION
Goal constraints
Priority 1 (goal 1): Production of at least 400 B2s X1 + U1 - E1 = 400 Priority 2 (goal 2): Production of at least 1000 total cycles X 1 + X2 + U2 - E2 = 1000 Priority 3 (goal 3) Profit of at least $100,000 .04X1 + .10X2 + U3 - E3 = 100 (in $1000) Priority 3 (goal 4) Use a maximum of 1600 labor hours 2X1 + 3X2 + U4 - E4 = 1600 Priority 4 (goal 5) At least 200 leftover tires 2X1 + 2X2 + U5 - E5 = 2200 Priority 4 (goal 6) At least 100 leftover gear assembly X2 + U6 - E6 = 900

NECC - SOLUTION
Priority level objectives
Priority 1: Underachieving a production of 400 B2s: Minimize U1 Priority 2: Underachieving a total production of 1000: Minimize U2

NECC - SOLUTION
Priority level objectives
Priority 3: Underachieving a $100,000 profit Using more than 1600 labor-hours Minimize 30U3 + E4 Each $1,000 short of the $100,000 goal is considered 30 times as important as utilizing an extra labor-hour.

NECC - SOLUTION
Priority level objectives
Priority 4: Using more than 2200 tires Using more than 900 gear assemblies Minimize E5 + 2E6 Each leftover gear assembly is deemed twice as important as leftover tire.

NECC - The solution procedure

Solve the linear goal programming for priority 1 objective, under the set of regular constraints and goal constraint as shown below
X1 = 400, thus U1 = 0, and priority 1 goal is fully achieved.

Minimize U1
ST 2X 1 X 2 2000 Seats X 2 1000 Gear 2X 1 2X 2 2400 Tires X1 + U1 - E1 = 400

NECC - The solution procedure

Solve the linear goal programming for priority 2 level objective, under the set of original constraints plus the constraint X1 400 (maintain the level of achievement of the priority 1 goal). Minimize U2 ST Every point that 2X 1 X 2 2000 Seats satisfies X1 + X2 X 2 1000 Gear 1000 yields U2 = 0, and therefore, 2X 1 2X 2 2400 Tires priority 2 goal is fully achieved.

X1 400 X1 + X2 + U2 - E2 = 1000

NECC - The solution procedure

Solve the linear goal programming for priority 3 level objective, under the set of original constraints plus the constraint X1 400 (maintain the level of achievement of the priority 1 goal), plus the constraint X1 + X2 1000 (maintain the level of achievement of the priority 2 goal).
Every point in the range X1 = 400 and 600 X2 800 is optimal for this model; 30U3 + E4 = 1720 is the level of achievement for the priority 3 goal.

NECC - The solution procedure

Solve the linear goal programming for priority 4 level objective, and notice that after the previous step the feasible region is reduced to a segment of a straight line between the points (400,600) and (400,800). X1 =400; 600 X2 700 and E5 + 2E6 = 0

NECC - Solution Summary In summary NECC should produce

400 B2 model Between 600 and 700 S10 model