MCDM-Goal Programming

MCDM: Goal Programming

 Goal programming is an approach used for solving any multi-objective optimization problem
that balances trade-off in multiple and often conflicting incomparable goals at different priority
levels.

 The method of formulating a mathematical model of GP is same as that of LP problem.

However, while formulating multiple, and often conflicting, incomparable (dimension of goals
and unit of measurement may not be same) goals, in a particular priority order (hierarchy) are
taken into consideration.

 A particular priority level (or order) is decided in accordance with the importance of each goal
and sub-goals given in a problem.

 The priority structure helps to deal with all goals that cannot be completely and/or
simultaneously achieved, in such a manner that more important goals are achieved first, at the
expense of the less important ones.
 Goal Programming

Multiple-Objectives Problem: In most practical cases, decision makers are

faced a situation where they must achieve more than two objectives (those
may even be in conflict) at same time.

Or more than two criteria must be used to evaluate a decision.

Examples:

Production Planning - Maximize Profit/Maximize Market Share

Location Selection - Maximize Sales/Minimize Delivery Cost

Personal Schedule - Maximize GPA / Maximize Income

 Concept of Goal Programming
 Goals are prioritized in some sense, and their level of aspiration is stated.
 An important feature of GP is that the goals (a specific numerical target values that the
decision maker would ideally like to achieve) are satisfied in ordinal sequence. Then achieve
each goal sequentially rather than simultaneously, up to a satisfactory level rather than an
optimal level.
 All goals are in linear relationship; such as type of problem can be solved by goal
programming.
 In GP, there is no single objective function as in LP, the deviation between the goals and what
can be achieved within the given set of constraints are minimized.
 The objective function primarily contains deviational variables that represented in two
dimensions in objective function – both positive and negative deviations from each goal and
subgoal. These deviational variables represent the extent to which the target goals are not
achieved.
 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.
 Goal Programming vs Linear Programming

 The LP model has a single objective function to be optimized such as profit maximization,
cost minimization, etc. However, in actual practice, the decision-maker may not be
satisfied with a single objective. That is, he may desire to get simultaneous solution to a
complex system of competing objectives.

 The solution of any LP model is based on the cardinal value (the number that expresses
exact amount such as, 1, 2, 3, . . .) such as profit or cost. whereas a GP Model allows
ordinal ranking of goals in terms of their contribution or importance to the organization.
Usually, desired goals are assigned priorities and then these priorities are ranked in an
ordinal sequence.
 Terminology
 Decision Maker: The decision maker(s) refer to the person(s), organization(s), or stakeholder(s) to whom
the decision problem under consideration belongs.

 Decision Variable: A decision variable is defined as a factor over which the decision maker has control.

 Criterion: A criterion is a single measure by which the goodness of any solution to a decision problem can
be measured. There are many possible criteria arising from different fields of application but some of the
most commonly arising relate at the highest level to

 Cost
 Profit
 Time
 Distance
 Performance of a system
 Company or organizational strategy
 Personal preferences of the decision maker(s)
 Safety considerations

 A decision problem which has more than one criterion is therefore referred to as a multi-criteria decision
making (MCDM) or multi-criteria decision aid (MCDA) problem. The space formed by the set of criteria is
known as criteria space.
 Terminology
 Aspiration Level: The numerical value specified by the decision maker that reflects his/her desire or
satisfactory level with regard to the objective function under consideration.

 For example, suppose the company wishes to maximize the profit which is formulated as

𝑀𝑎𝑥 𝑧 = 2𝑥1 + 3𝑥2 … (1)

 Further suppose the management wishes to have at-least 40,000 as profit, then the above stated objective
is required to be re-written as:
2𝑥1 + 3𝑥2 ≥ 40,000 … (2)

 Here, 40,000 is the aspiration level/satisfactory level /optimal level with respect to profit.

 Goal: An objective function along with its aspiration level is called a goal. For example, the relation (1) is an
objective function whereas relation (2) is a goal.

 A ‘goal’ is the acceptable or target value to be achieved in terms of performance level, whereas an
‘objective’, implies optimization (maximization, minimization) of the measure of performance in terms of
profit or cost.
 Formulation of GP

Deviations: the amount away from the desired standards or objectives:

Overachievement (d+i ≥ 0) vs. Underachievement (d-i ≤ 0)

 Desirable vs. Undesirable Deviations: (depend on the objectives)

 Max goals (≥) - the more the better - d+i desirable.
 Min goals (≤) - the less the better - d-i desirable.
 Exact goals (=) - exactly equal - both d+i and d-i undesirable

 In all the situations, we first identify the undesirable deviation of the expression
in the goal and then attempt to minimize the same.

 In GP, the objective is to minimize the (weighted) sum of undesirable deviations

(all undesirable d+i and d-i →→ 0 ).

 For each goal, at least, one of d+i and d-i must be equal to "0“.
 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.
 Formulation of GP
With m goals, the general goal linear programming model may be stated as:

where

Z = Sum of the deviations from all desired goals.

aij = co-effiecient for the jth decision variable in the ith constraints.

Xj= Decision variables

wi = Relative weight for each goal

d+ = deviational variable, represents amount of overachievement [also called Surplus Variable in LP]

d-- = deviational variable, represents amount of underachievement [also called Slack Variable in LP].

Pi = Priority level assigned to each relevant goal in rank order (i.e. P1 > P2, . . ., > Pn).

bi are the right-hand side values (i.e. goals) of each constraint

 Steps to Formulate the GP
The procedure (algorithm) to formulate a GP model is summarized below:

1. Identify the goals and constraints based on the availability of resources (or constraints)
that may restrict achievement of the goals (targets).

2. Determine the priority to be associated with each goal in such a way that goals with
priority level P1 are most important, those with priority level P2 are next most important,
and so on.

3. Define the decision variables.

4. Formulate the constraints in the same manner as in LP model.

5. For each constraint, develop a equation by adding deviational variables and .

These variables indicate the possible deviations below or above the target value (right-
hand side of each constraint).

6. Write the objective function in terms of minimizing a prioritized function of the

deviational variables.
 Graphical Solution Method For Goal Programming

 The graphical solution method for goal programming model is similar to the graphical
solution method for LP model.
 In this case the feasible solution space (region) is indicated by goal priorities in such a
way that the deviation from the goal with the highest priority is minimized to the fullest
extent possible, before the deviation from the next priority goal is minimized.

The Procedure
1. Graph all system constraints (those not involving deviational variables) and identify the feasible

solutions space. If no system constraints exists, then the feasible solutions space (or region) is the first

quadrant.

2. Graph the straight lines corresponding to the goal constraints marking the deviational variables.

3. Within the feasible solutions space identified in Step 1, determine the point (or points) that best satisfy

the highest priority goal.

4. Sequentially consider the remaining goals and the level that satisfy them to the largest extent. While

doing so any lower priority goal is not achieved by compromising the level of achievement of higher

priority goal.
 Graphical Method of GP Examples
Exmaple-1
A manufacturing firm produces two types of products, A and B. According to the process plan, production of
either product A or product B requires an average of one hour in plant. The plant has a normal production
capacity of 400 hours per month. Due to limited market demand, the marketing department of the firm reports
that the maximum number of product A and product B that can be sold in a month are 240 units and 300 units
respectively. The net profit from the sales of product A and product B are Rs. 800 and Rs. 400 respectively.
The manager of the firm has set the following goals to be achieved, which are arranged in the order of
importance.
P1 : Wants to avoid any underutilization of normal production capacity.
P2 : Wants to sell the maximum number of product A and product B. Since the net profit from the sales
of product A is twice the amount from the sales of product B, the manager has twice as much desire to
achieve the sales for product A as for product B.
P3 : Wants to minimize the overtime production of the plant as much as possible.
Formulate this problem as a GP model and then Solve the model and determine the monthly production
quantities of product A and product B that best meet the goals by using the graphical method.
 Graphical Method of GP Examples
Exmaple-2
A company produces motorcycle seats. The company has two production lines. The production rate for line 1
is 50 seats per hour and for line 2 it is 60 seats per hour. The company has entered into a contract to daily
supply 1,200 seats daily to another company. Currently, the normal operation period for each line is 8 hours.
The production manager of the company is trying to determine the best daily operation hours for the two
lines. He has set the priorities to achieve his goals, as given below:
P1 : Produce and deliver 1,200 seats daily
P2 : Limit the daily overtime operation hours of line 2 to 3 hours.
P3 : Minimize the underutilization of the regular daily operation hours of each line. Assign differential
weights based on the relative productivity rate.
P4 : Minimize the daily overtime operation hours of each line as much as possible. Assign differential
weights based on the relative cost of overtime. It is assumed that the cost of operation is identical
for the two production lines

Formulate this problem as a GP model and then solve it by using the graphical method.
 Graphical Method of GP Examples
Exmaple-3
A firm produces two products A and B. Each product must be processed through two departments namely 1
and 2. Department 1 has 30 hours of production capacity per day, and department 2 has 60 hours. Each unit
of product A requires 2 hours in department 1 and 6 hours in department 2. Each unit of product B requires 3
hours in department 1 and 4 hours in department 2. Management has rank ordered the following goals it
would like to achieve in determining the daily product mix:
P1 : Minimize the underachievement of joint total production of 10 units.
P2 : Minimize the underachievement of producing 7 units of product B.
P3 : Minimize the underachievement of producing 8 units of product A
Formulate this problem as a GP model and then solve it by using the graphical method.
 Simplex Method of GP

The simplex method for solving a GP problem is similar to that of an LP problem. The features of
the simplex method for the GP problem are:

1. The zj and cj–zj values are computed separately for each of the ranked goals, P1, P2, . . . .
This is because different goals are measured in different units. These are shown from
bottom to top, i.e. first priority goal (P1) is shown at the bottom and least priority goal at
the top.
The optimality criterion zj or cj–zj becomes a matrix of k × n size, where k represents the
number of pre-emptive priority levels and n is the number of variables including both
decision and deviational variables.

2. First examine cj – zj values in the P1-row. If all cj–zj ≤ 0 at the highest priority levels in the
same column, then the optimal solution been obtained.
If cj – zj > 0, at a certain priority level, and there is no negative entry at higher unachieved
priority levels, in the same column, the current solution is not optimal.
 Simplex Method of GP

3. If the target value of each goal in xB-column is zero, the solution is optimal.

4. To determine the variable to be entered into the new solution mix, start examining (cj–zj) row
of highest priority (P1) and select the largest negative value. Otherwise, move to the next
higher priority (P2) and select the largest negative value.

5. Apply the usual procedure for calculating the ‘minimum ratio’ to choose a variable that needs
to leave the current solution mix (basis).

6. Any negative value in the (cj–zj) row that has positive (cj–zj) value under any lower priority
rows are ignored. This is because that deviations from the highest priority goal would be
increased with the entry of this variable in the solution mix.
 Some Important Points: Simplex Method of GP

1. “A key idea in goal programming is that one goal is more important than another priorities are
assigned to each deviational”.
2. Priority 1, is infinitely more important than Priority 2, which is infinitely more importance that
the next goal and soon.
3. Deviational variables represent overachieving or underachieving the desired level of each
goal.
d+ represents overachieving level of the goal.
d- represents underachieving level of the goal.