Goal Programming

What is Goal Programming?

• Mathematical model similar to Linear Programming,
however it allows to develop models with multiple
objectives or goals.
• Example:
A company produces two types of products A and B and they are
processed in two departments P-I and P-II. P-I has 30 hours of production
capacity per day and P-II has 60 hours per day. Each unit of A requires 2
hours in P-I and 6 hours in P-II, whereas, Product B requires 3 hours of P-
I and 4 hours of P-II. Management wants to find the product mix so as to
achieve the following goals.
Goal 1: The total production should be at least 10 units
Goal 2: At least 7 units of B to be produced per day
Goal 3: At least 8 units of A to be produced per day
 GP formulation
• Let x1 and x2 be the number of A and B to be produced.

• Rigid Constraints
Availability of P-I : 2x1 + 3x2 ≤ 30
Availability of P-II : 6x1 + 4x2 ≤ 60

• Objectives: Called as GOALS (targets values are mentioned)

o Multiple goals
o Incommensurable goals : Goals with different units.
o Conflicting goals: All goals may not be satisfied, so GP provides an
acceptable solution or good solution.
• Slacks and Surplus are treated as deviational variables
• 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

• Goal 1: The total production should be at least 10 units

x1 + x2 ≥ 10
x1 + x2 + d-1 – d+1 = 10 Minimize d-1
• Goal 2: At least 7 units of B to be produced per day
x2 ≥ 7
x2 + d-2 – d+2 = 7 Minimize d-2
• Goal 3: At least 8 units of A to be produced per day
x1 ≥ 8
x1 + d-3 – d+3 = 8 Minimize d-3
• Allows for the multiple goals to be prioritized and weighted
to account for the DM’s utility for meeting the various
goals.
• Minimizes the sum of the weighted deviations from the
target values – this is ALWAYS the objective for Goal
Programming

Minimize , z = P1 d-1 + P2 d-2 + P3 d-3

- +
Such that x1 + x2 + d 1 – d 1 = 10
x2 + d-2 – d+2 = 7
x1 + d-3 – d+3 = 8
2x1 + 3x2 ≤ 30
6x1 + 4x2 ≤ 60
xi , d-j and d+j ≥ 0
 Goal Programming Steps
• Define decision variables
• Define Deviational Variable for each goal
• Formulate Constraint Equations
Rigid/Fixed constraints
Goal constraints
• Formulate Objective Function (Minimization)
 Solution Method
• Graphical Method
• Modified Simplex Method (using MS Solver)
 Example 1:
 The ABC Garment store sales staff consists of a sales manager and 6 sales
persons. In addition, it hires 4 part times sales persons.
 The manager is paid by a fixed salary plus a bonus, which is 4% on the sales
the store achieves above the sales quota for the month.
 The manager sets the sales quota for the salespersons.
 The full time persons are paid at a fixed salary plus a bonus, which is 10% on
the sales he/she achieves above the quota for him/her for the month.
 The part time sales person is paid on hourly wage, with a 12% bonus on the
sales he/she achieves above the sales quota set for him/her.
 The regular working schedules for the sales manager and full time sales
persons are 168 hours per month. The part time sales persons are required to
50 hours per month.
 The sales quota is set by the top management. For the current time it is Rs
25,000. The sales manager sets a quota of Rs18,000 for the group of full time
sales persons and a quota of Rs3600 for the group of part time sales persons.
 The full time sales persons sell Rs 17 per hour on the average, while the part
time sales person sells an average Rs 15 per hour. The sales manager sells an
average of Rs 19 per hour.
 The following goals are listed below:
1. Achieve the Rs 25000 quota for the month.
2. The sales manger desires to achieve a sales amount of Rs 3400 for
the month.
3. The group of full time sales persons should meet the sales quota
of Rs18000 for the month.
4. The group of part time sales persons should meet the sales quota
of Rs 3600 for the month.
5. The overtimes work for the manger and the full times sales
persons should be limited to 32 hours, if possible.
6. Each part time sales person should work at least 50 hours for the
month.
7. The manager desires to earn a bonus of Rs 150 for the month. It
is also desired that each full time and part time staff earns Rs 50
bonus
 Solution
 The mathematical formulation of the problem is discussed as
follows. Let
x1 = number of hours the manager works during the month.
x2 = number of hours each full time sales person works during the
month.
x3 = number of hours each part time sales person works during the
month.
 Goal Constraint 1: To achieve the sales quota of Rs25,000. Since on
average the sales manager sells Rs19 per hour, each full time sales
person sells Rs17 and each part time sells Rs 15, the constraint is
 Goal Constraint 2: The manager desires to achieve his own quota. The
constraint is

 Goal Constraint 3: the full time staff should achieve their quota. The
constraint is:

 Goal Constraint 4: the part time staff should achieve their quota.
 Goal Constraint 5: Overtime hours for the manager and each full time staff
limited to 32 hours. Two goal constraints are needed for the overtime limits:
one for the regular time and the other for the overtime.

 Goal constraint 6: it is required that each part time staff work 50 hours for
the month. The constraint is:

 Goal constraint 7:
 The mathematical formulation:

Subject to

All variables>=0
X1 = 178.9 X2 = 200.0 X3 = 87.8

d1- = 0 d1+ =4, 066.7 d2- = 0 d2+ =0

d3- = 0 d3+ = 2,400.0 d4- = 0 d4+ = 1,666.7

d5- = 21.1 d5+ =32. 0 d6- = 0 d6+ = 32.0

d7- = 0 d7+ = 0 d8- = 0 d8+ =0

d9- = 0 d9+ = 160.7 d10- = 0 d10+ = 12.7

d11- =60.0 d11+ = 0 d12- = 0 d12+ = 0

 Example 2
Hiland Appliance must determine how many TVs and Blu-Ray disc players
to stock. It costs Hiland $1000 to purchase a TV and $400 to purchase a
Blu-Ray player. A TV requires three square yards of storage space, and a
Blu-ray disc player requires one square yard. The sale of a TV earns
Hiland a profit of $150, and each Blu-ray disc player sale earns a profit of
$100. Hiland has set the following goals (listed in order of importance):
■ Goal 1: A maximum of $60,000 can be spent on purchasing TVs and
Blu-ray disc players.
■ Goal 2: Highland should earn at least $7,000 profit from the sale of
TVs and Blu-ray disc players.
■ Goal 3: TVs and Blu-ray disc players should not use up more than
200 square yards of storage space.
Use a goal programming model to determine how many TVs and Blu-ray
disc players Hiland should order. How can you modify the model if
Hiland’s second goal is to have a profit of exactly $7,000?
 Example 3
Fruit Computer Company is ready to make its annual purchase of
computer chips. Fruit can purchase chips (in lots of 100) from
three suppliers. Each chip’s quality is rated as excellent, good, or
mediocre. During the coming year, Fruit needs 5000 excellent
chips, 3000 good chips, and 1000 mediocre chips. The
characteristics of the chips purchased from each supplier are
shown below
Number of chips per lot of 100
Supplier Excellent Good Mediocre Price per 100
1 60 20 20 $400
2 50 35 15 $300
3 40 20 40 $250
 Example 3 (cont…)
Each year, Fruit has budgeted $28,000 to spend on chips. If Fruit
does not obtain enough chips of a given quality, it can special
order additional chips at $10 per excellent chip, $6 per good
chip, and $4 per mediocre chip. Fruit assesses a penalty of $1 for
each dollar it goes over the annual budget (in payments to
suppliers). Determine how Fruit can minimize the penalty
associated with meeting the annual chip requirements. Also use
goal programming to determine a purchasing strategy. Let the
budget constraint have the highest priority, followed in order by
the restrictions on excellent, good, and mediocre chips.
 Example 4
Lucy’s Music Store at present employs five full-time employees and three part-
time employees. The normal workload is 40 hours per week for full-time
employees and 20 hours per week for part-time employees. Each full-time
employee is paid $6 per hour for work up to 40 hours per week and can sell five
recordings per hour. A full-time employee who works overtime is paid $10 per
hour. Each part-time employee is paid $3 per hour and can sell three recordings
per hour. It costs Lucy $6 to buy a recording, and each recording sells for $9.
Lucy has weekly fixed expenses of $500. She has established the following
weekly goals, in order of priority:
■ Goal 1: Sell at least 1600 recordings per week.
■ Goal 2: Earn a profit of at least $2200 per week.
■ Goal 3: Full-time employees should work at most 100 hours of overtime.
■ Goal 4: To promote a sense of job security, the number of hours by which
each full-time employee fails to work 40 hours should be minimized.
Use a goal programming model to determine how many hours per week each
employee should work.