PROJECT SELECTION
DECISION MAKING
-A GOAL PROGRAMMING APPROACH
Group 4
Aspi, Maria Mercedes
Barillo, Bernadette Joyce
Billones, Jesica
Dela Cruz, Mark Allan
Realizo, Regina Marie
Objectives
Define goal programming
Compare goal programming with linear
programming
Give an example of goal programming
Explain an application of goal programming
in insurance
Goal Programming
-an extension of linear programming, is a branch of multiobjective optimization, in which it deals with maximizing or
minimizing multiple objective functions subject to a set of
constraints.
Goal Programming
Linear Programming
Multiple Goals
One Goal
Deviation Variables are Minimized
Maximizing Profit / Minimizing Costs
The feasible region of the Goal
programming is approximately certain
Comparison:
They
are both are formulated under the requirements and assumptions of linear
programming which are linearity, non-negativity, and certainty.
It also uses graphical methods to illustrate linear programming concepts.
Definition of Terms:
Deviation Variables are variables that show
whether the goals are attained or otherwise.
oPositive Deviation Variables
oNegative Deviation Variables
Example:
10 L+ 15 E+ Y1- Y1+= 40
Goal Function
Example:
100 L+ 100 E+ Y2 Y2+= 1000
Achievement Function
Example:
Minimize
A = P1d1-+ P2d2-+ P3d3-+P2d4-+ P3d5-+ P4d6-+ P4d7-+
P5d4++ P6d6+ + P6d7
Example
A small paint company manufactures two types of paint,
latex and enamel. In production, the company uses 10 hours
of labor to produce 100 gallons of latex and 15 hours of
labor to produce 100 gallons of enamel. The company has
40 hours of daily labor and 30 hours of overtime labour
available each week. Furthermore, if enamel paint is
produced, latex paint must also be produced. Each paint
generates a profit at the rate of $1.00 per gallon.
The company has the following objectives listed in
decreasing priority:
Avoid the use of overtime
Achieve a weekly profit of $1000
Produce at least 700 gallons of enamel paint each week
Goal Programming Formulation
Step 1: State the Decision Variables
Latex
Enamel
Labor for 100 gallons (hours)
10
15
Profit for 1 gallon
$1
$1
Let
L = no. of 100 gallons of latex paint produced per week
E = no. of 100 gallons of enamel paint produced per week
Step 2: State the (Functional) Constraints
Labour 70 hours/ wk
Latex paint Enamel paint
Functional Constraints:
10 L + 15 E 70
LE 0 because, L E
Step 3a: Decide the priority level of each goal.
P1: Goal 1 - Labour has to be 40 hrs/wk
P2: Goal 2 - Profit $1000
P 3: Goal 3 - Enamel paint i.e. enamel paint 700 gallons/wk
Where P1, P2, P3 are the priorities of the goals, where P1 P2 P3
Step 3b: Rewrite the goal constraints using the decision
variables
P1: Goal 1 - 100L + 15 E 40 hrs/wk
P2: Goal 2 - 100 L + 100 E 1000
P 3: Goal 3 E 7
Where P1, P2, P3 are the priorities of the goals, where P1 P2 P3
Step 4: Add deviation variables to the goal constraints
Goal 1: 10 L+ 15 E+ Y1- Y1+= 40
Goal 2: 100 L+ 100 E+ Y2 Y2+= 1000
Goal 3: E+ Y3- Y3+= 1000
Step 5: Write the objective function with priorities
Minimize
+
Z =P1Y1 + P2Y2 + P3Y3
Goal Programming Model
Min Z = P1Y1++ P2Y2-+ P3Y3-
s.t.
10 L + 15 E 70
L E 0
(Labour)
(Production)
Goal 1: 10 L+ 15 E+ Y1- Y1+= 40
(Overtime)
Goal 2: 100 L+ 100 E+ Y2 -Y2+= 1000
Goal 3: E+ Y3- Y3+= 1000
(Profit)
(Profit)
PROJECT SELECTION
DECISION MAKING
-A GOAL PROGRAMMING APPROACH
V. Subbaiah, G. Ravindra Babu & S. D. Sahrma
Pacific-Asian Journal of Mathematics, Volume 5, No. 2, July-December 2011
Capital Budgeting
is a method for evaluating, comparing, and
selecting projects to achieve the best long-term
financial return of companies or businesses.
The data specifies for consideration nine mutually exclusive projects with given present
values of outlays for periods I&II and given present values of investment proposals of
large-scale industry in Hyderabad.
Objective Function
Minimize
A = P1d1 + P d + P3d3 +P d + P d +
-
2 2
2 4
P4d6 + P4d7 + P5d4 + P d + P6d7
3 5
+
6 6
REFERENCES:
Hoisen, A. (2005). Two Variable Goal Programming Model with Priorities. Retrieved
from http://prejudice.tripod.com/ME30B/two_gp.htm
Kumar, A. (2015). Goal programming approach for the study of industrial problems,
(Mcdm), 141. Retrieved from http://shodhganga.inflibnet.ac.in/handle/10603/46789
V. Subbaiah, G. Ravindra Babu & S. D. Sahrma(2011). Project Selection Decision
Making-a Goal Programming Approach, Pacific-Asian Journal of Mathematics, 5(2).
Workday, H., & Erp, L. (n.d.). Innovation in Financial Management Innovation in
Financial Management, 3, 211229.
Man is a goal seeking animal. His life only has meaning if he is reaching
out and striving for his goals.
Aristotle 384-322 BC
