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Tutorial 2 - Using Excel Solver LP

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4 views

Tutorial 2 - Using Excel Solver LP

Uploaded by

h00278785
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Using Excel Solver to resolve LP problems

Technology can be used to solve a system of equations once the constraints and objective function have
been defined. Excel has an add-in called the Solver which can be used to solve systems of equations or
inequalities.

Consider this problem:

Example: A corporation plans on building a maximum of 11 new stores in a large city. They will build
these stores in one of three sizes for each location – a convenience store (open 24 hours),
standard store, and an expanded-services store. The convenience store requires $4.125
million to build and 30 employees to operate. The standard store requires $8.25 million to
build and 15 employees to operate. The expanded-services store requires $12.375 million
to build and 45 employees to operate. The corporation can dedicate $82.5 million in
construction capital, and 300 employees to staff the stores. On the average, the
convenience store nets $1.2 million annually, the standard store nets $2 million annually,
and the expanded-services store nets $2.6 million annually. How many of each should they
build to maximize revenue?

Assign the variables: x1 = number of convenience stores


x2 = number of standard stores
x3 = number of expanded services stores

Write the constraints: a. X1 + X2 + X3 ≤ 11


b. 4.125 X1 + 8.25 X2 + 12.375 X3 ≤ 82.5
c. 30X1 + 15X2 + 45X3 ≤ 300

X1 ≥ 0, X2 ≥ 0, and X3 ≥ 0
Write the objective function: N(x1, x2, x3 ) = 1.2X1 + 2X2 + 2.6X3 (in millions)

We first need to open Excel and enter the data. There are two methods – one uses tables within the
worksheet while the other uses only the constraints. The second method is preferred when we know the
constraints since it is much faster!!!

Method 1: Using Tables

Type in variable
assignments at the top of
the spreadsheet. Assign
decision variable cells.
Decision variable cells: D6,
F6, and H6 Construct table
from data in problem.
How you set up the table is
a matter of personal
preference. Not in table:
the constraint which
shows the sum is less than
or equal to eleven.
Formulas in cells:

Now that the table is set up, we can access the solver. Click on Tools. If you do not see Solver, then click
on Add-Ins and select Solver. Now click on Tools again and select Solver.

Target cell: Maximize cell. To enter it, just click on that cell.
Equal to Max
Changing Cells: Decision variable cells D6, F6, H6.
Subject to the constraints: Click on Add. Click on Cell Reference and then click in D15, then click on
Constraint and then click in F15. Be sure the test listed between them is <=.

Now click on Options


Make sure Assume Linear Model and
Assume Non-Negative boxes are
checked,
then click OK.

Back at the Solver, click Solve.


It should yield the solution. Click on Keep
solution.
The solutions are
as shown:
two convenience
stores nine
standard stores,
and no expanded-
services stores.

Method 2: Using Constraints


Using a table to set up the problem makes the organization of data organized, but it has one problem. All
of this is time consuming! We can get the same results by just typing in the constraints! the alternate
format looks like this …

The first of the spreadsheet is done the same – typing in the variable assignments and assigning decision
variable cells. Next, we type the constraints which will be used as a guide to type in the formulas in F9,
F10, F11. They are the same formulas as in the earlier spreadsheet – with different cell references. Finally,
we type in the maximize formula for reference and its formula in F13. We are now ready to access the
Solver like we did before. We should get the same results

Other Tutorials:

1. https://youtu.be/6xa1x_Iqjzg (YouTube Video)


2. https://www.ablebits.com/office-addins-blog/excel-solver-examples/
3. https://www.simplilearn.com/tutorials/excel-tutorial/solver-in-excel

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