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 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.

Comparison between Linear and Goal Programming

Goal programming is also formulated under the requirements and
assumptions of linear programming which are linearity, nonnegativity, and certainty.
It also uses graphical methods to illustrate linear programming
concepts.

Comparison between Linear and Goal Programming

The main difference of the two programming is that the solution of the linear
programming requires an attainment of constraints while maximizing
(or minimizing) an objective function.
The feasible solution of the goal programming, unlike the linear
programming, is approximately certain, since the important goals are
incorporated into the objective function.

Goal Programming Approach

Step 1: Decide the priority level of each goal.
Step 2: Decide the weight on each goal.
If a priority level has more than one goal, for each goal i decide
the weight, wi , to be placed on the deviation(s), di+ and/or di- ,
from the goal.
Step 3: Set up a linear program.
Consider new objectives (minimize deviations) subject to all
Functional Constraints, and Goal, Constraints
Step 4: Solve the current linear program.

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.

Example
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

Latex

Ename
l

10

15

$1

$1

Laborfor100gallons
(hours)
Constraints
Profitfor1gallon
Labour 70 hours/ wk
Latex paint Enamel paint

P1: Goal 1 - Labour has to be 40 hrs/wk

P2: Goal 2 - Profit $1000;
P3: 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

L = no. of 100 gallons of latex paint produced per week

E = no. of 100 gallons of enamel paint produced per week
Constraints:
10 L + 15 E 70
LE 0 because, L E

Goal 1: 10 L + 15 E 40

(Avoid Overtime)

Goal 2: 100 L + 100 E 1000

(Profit)

Goal 3: E 7

(Enamel Paint Production)

Goal Programming Model

Min a=P1Y1++ P2Y2-+ P3Y3s.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

(Profit)

Goal 3: E+ Y3- Y3+= 1000

(Profit)

PROJECT SELECTION
DECISION MAKING
-A GOAL PROGRAMMING APPROACH
V.Subbaiah,G.RavindraBabu&S.D.Sahrma

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:
Min a=P1d1 + P2d2 + P3d3 +P2d4 + 4P3d5 + P4d6 +
-

P4d7-+ P5d4++ P6d6+ + P6d7+

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