GOAL PROGRAMMING

Introduction
◦ Goal programming is an approach used for solving a multi-objective optimization problem that
balances a trade-off in conflicting objectives.
◦ It is an approach of deriving a best possible ‘satisfactory’ level of goal attainment.
◦ A problem is modelled into a goal programming model in a manner similar to that of a linear
programming model. However, the goal programming model accommodates multiple and often
conflicting incommensurable (dimension of goals and units of measurements may not be same)
goals, in a particular priority order (hierarchy).
◦ A particular priority order is established by ranking or weighing various goals in accordance with
their importance.
◦ 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.
Concept
◦ Goal Programming can be thought of as an extension or generalization of linear programming to
handle multiple, normally conflicting objective measures.
◦ Each of these measures is given a goal or target value to be achieved.
◦ Unwanted deviations from this set of target values are then minimized in an achievement
function. This can be a vector or a weighted sum dependent on the goal programming variant used.
◦ As satisfaction of the target is deemed to satisfy the decision maker(s), an underlying satisficing
philosophy is assumed.
◦ Goal programming is used to perform three types of analysis:
• Determine the required resources to achieve a desired set of objectives.
• Determine the degree of attainment of the goals with the available resources.
• Providing the best satisfying solution under a varying amount of resources and priorities
of the goals.
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. The set of decision variables fully describe the problem and form the decision to be made.
The purpose of the goal programming model can be viewed as a search of all the possible
combinations of decision variable values (known as decision space) in order to determine the point
which best satisfies the decision maker’s goals and constraints.
◦ 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
◦ 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 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
◦ Goal Deviation: The difference between what we actually achieve and what we desire to achieve.
There are two types of goal deviations:
◦ Positive deviation or overachievement
◦ Negative deviation or underachievement
◦ In general goals can be defined in three ways:
◦ Positive deviation:
 𝑓( 𝑥) ≤ 𝑎
𝑓 (𝑥 )− 𝑑+ = 𝑎
◦ Negative deviation:
𝑓( 𝑥) ≥ 𝑎
𝑓( 𝑥) + 𝑑- = 𝑎
◦ Both deviations:
𝑓 (𝑥) = 𝑎 𝑓( 𝑥) − 𝑑 + + 𝑑 − = 𝑎
◦ Remark: In general, for goal programming irrespective of the type of the goal we can use both
the deviations for each case. However, for the first two cases it is required to minimize just one of
the deviation only.
Formulation
◦ Desirable vs. Undesirable Deviations: (depend on the objectives)
◦ Max goals (≥) - the more the better - 𝑑𝑖 +or 𝑝𝑖 desirable.
◦ Min goals (≤) - the less the better - 𝑑𝑖 −or 𝑛𝑖 desirable.
◦ Exact goals (=) - exactly equal - both 𝑑𝑖 + (or 𝑝𝑖 ) and 𝑑𝑖 − (or 𝑛𝑖 ) 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
𝑑𝑖 + (or 𝑝𝑖 ) and 𝑑𝑖 − (or 𝑛𝑖 )→→ 0).
◦ For each goal, at least, one of 𝑑𝑖 + (or 𝑝𝑖 ) and 𝑑𝑖 − (or 𝑛𝑖 ) 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.
Types
There are two types of goal programming formulations:
◦ Non Pre-emptive Goal Programming:
In this type of problem we try to minimize the weighted sum of all the undesirable deviations. That
is in this type no goal is said to dominate any other goal. However, it is possible to have different
importance for the deviations by the decision makers. For example, Let us consider the following
multiobjective linear programming problem (𝑀𝑂𝑃1):
𝑀𝑎𝑥 𝑃𝑟𝑜𝑓𝑖𝑡 𝑧1 = 2𝑥1 + 3𝑥2
𝑀𝑖𝑛 𝐶𝑜𝑠𝑡 𝑧2 = 𝑥1 + 5𝑥2
𝑠𝑢𝑏𝑗𝑒𝑐𝑡 𝑡𝑜, 𝑥1 + 𝑥2 ≤ 10
𝑥1 − 𝑥2 ≤ 4
𝑥1, 𝑥2 ≥ 0.
◦ The above problem can be converted into a goal programming problem assuming that the
decision maker wishes to have at-least 40,000 profit and the cost should not exceed the limit of
20,000 represented as follows (𝐺𝑃1):
𝑀𝑖𝑛 𝑑1 − + 𝑑2 +
𝑠𝑢𝑏𝑗𝑒𝑐𝑡 𝑡𝑜,
2𝑥1 + 3𝑥2 + 𝑑1 − = 40,000
𝑥1 + 5𝑥2 − 𝑑2 + = 20,000
𝑥1 + 𝑥2 ≤ 10
𝑥1 − 𝑥2 ≤ 4
𝑥1, 𝑥2 ≥ 0 𝑑1 −, 𝑑2 + ≥ 0
◦ The above is the representation of non pre-emptive goal programming problem.
◦ Pre-emptive Goal Programming:
Suppose in the above problem after knowing the fact that the multi-objective scenario restrict to
have any such solution which satisfies both the goals simultaneously, then the decision makers
specifies the priorities for both the goals. Suppose in problem 𝐺𝑃1 the first goal is having the
higher priority, say 𝑃1, and the second goal is having lower priority, say 𝑃2, that is 𝑃1 > 𝑃2. In
this situation, the problem 𝐺𝑃1 is written as follows (𝐺𝑃2):
𝑀𝑖𝑛 {𝑃1𝑑1 −, 𝑃2𝑑2 +}
𝑠𝑢𝑏𝑗𝑒𝑐𝑡 𝑡𝑜,
2𝑥1 + 3𝑥2 + 𝑑1 − = 40,000
𝑥1 + 5𝑥2 − 𝑑2 + = 20,000
𝑥1 + 𝑥2 ≤ 10
𝑥1 − 𝑥2 ≤ 4
𝑥1, 𝑥2 ≥ 0 𝑑1 −, 𝑑2 + ≥ 0 𝑃1 > 𝑃2
◦ The above is the representation of pre-emptive goal programming problem.
Note
◦ There are two types of constraints in a goal programming problem: soft constraints and hard (or
rigid) constraints.
◦ The soft constraints are the constraints corresponding to the goals which has been obtained by
using the aspirations for the objective functions. For example the first two constraints in the above
problems (𝐺𝑃1, 𝐺𝑃2) are soft constraints.
◦ Hard constraints are the constraints corresponding to the feasible region or the original constraints
in which no violation is acceptable. For example the constraints in problem 𝑀𝑂𝑃1 are hard
constraints in the above problems 𝐺𝑃1, 𝐺𝑃2 .
Example 8.1 A manufacturing firm produces two types of products: A and B. The unit profit
from product A is Rs 100 and that of product B is Rs 50. The goal of the firm is to earn a total
profit of exactly Rs 700 in the next week.

Example 8.2 Suppose, in addition to earn a target profit of Rs 700 per week as stated in Example
8.1, a decision-maker also wants to achieve a sales volume for products A and B close to 5 and 4,
respectively. Then formulate this problem as a goal programming model.
Example 8.3 An office equipment manufacturer produces two types of products: chairs and
lamps. The production of either a chair or a lamp, requires one hour of production capacity in the
plant. The plant has a maximum production capacity of 50 hours per week. Because of the limited
sales capacity, the maximum number of chairs and lamps that can be sold are 6 and 8 per week,
respectively. The gross margin from the sale of a chair is Rs 90 and from the sale of a lamp is Rs
60. The plant manager desires to determine the number of units of each product that should be
produced per week in consideration of the following set of goals:
Goal 1: Available production capacity should be utilized as much as possible but should not exceed
50 hours per week.
Goal 2: Sales of two products should be as much as possible.
Goal 3: Overtime should not exceed 20 per cent of available production time.
Formulate and solve this problem as a GP model so that the plant manager may achieve his goals
as closely as possible.
Example 8.4 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.
Example 8.5 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.
Pb- An electronics company produces two types of television sets, color and black-and-
white. The production of a color set requires 10 hours of skilled and 100 hours of unskilled
labor. The production of a black-and-white set requires 5 hours of skilled and 150 hours of
unskilled labor. The company has 100 hours of skilled labor and 1,500 hours of unskilled labor
normally available per month for the production of television sets. The maximum number black-
and-white and color sets that can be sold each month are 45 and 70, respectively. The profit
margin from the sale of a color set is $20, whereas it is $15 from a black-and-white set. The
company has set the following goals:
1. Avoid the over utilization of skilled labor since it is hard to obtain in the labor market.
2. Minimize the under utilization of unskilled labor.
3. Meet the demand as much as possible.
4. Limit over utilization of unskilled labor to 100 hours.
Formulate the above as a goal programming problem and solve using modified Simplex method.
Assignment Questions:
Question 1
Alpha company produces two kinds of fancy products, pen holder and paper tray. Production of
either of them requires 1 hr production capacity in the plant. The plant has a maximum production
capacity of 12 hrs per week. The maximum number of pen holders and paper trays that can be sold
are 7 and 10 respectively. The gross margin from the sales of pen holder is Rs 90 and Rs 45 for a
paper tray. The overtime hours should not exceed 3 hrs per week if required. The plant manager
has set the following goals in order of importance:
◦ 𝑃1: He wants to avoid any under-utilization of production capacity
◦ 𝑃2: He wants to limit the overtime hours to 3 hrs
◦ 𝑃3: He wants to sell as many pen holders and paper trays as possible. Since the gross margin
from the sale of a pen holder is set at twice the amount of the profit from a paper tray, the manager
has twice as much desire to achieve the sales goal for pen holders as for paper trays.
◦ 𝑃4: The manager wishes to minimize the overtime operation of the plant as much as possible.
Formulate this problem as a GP model and then solve it by using the graphical method and simplex
method.
Question 2
Harrison Electric produces two products popular with home renovators, old fashioned chandeliers
and ceiling fans. Both chandeliers and fans require a two-step production process involving wiring
and assembly. It takes about 2 hrs to wire a chandelier and 3 hrs to wire a fan. Final assembly of
the chandelier and fan require 6 and 5 hrs respectively. The production capability is such that only
12 hrs of wiring and 30 hrs of assembly time are available. Each chandelier produced nets the firm
$7 and each fan $6. The Harrison’s management wants to achieve the following goals with the
given priorities:
◦ 𝑃1: Reach a profit as much above $30 as possible.
◦ 𝑃2: Fully use wiring department hours available.
◦ 𝑃3: Avoid assembly department overtime.
◦ 𝑃4: Produce at-least 7 ceiling fans.
Formulate and solve the above goal programming problem using graphical method and simplex
method.
Question 3:
A textile company produces two types of materials A and B. Material A is produced according to
direct orders from furniture manufacturers. The material B is distributed to retail fabric stores. The
average production rates for material A and B are identical at 1000 metres/hour. By running two
shifts the operational capacity of the plant is 80 hours per week. The marketing department reports
that the maximum estimated sales for the following week is 70000 metres of material A and 45000
metres of material B. According to the accounting department the profit from a metre of material
A is Rs. 2.50 and from a metre of material B is Rs. 1.50. The management of the company decides
that a stable employment level is the primary goal for the firm. Therefore, whenever there is
demand exceeding normal production capacity, management simply expands production capacity
by providing overtime. However, management feels that overtime operation of the plant of more
than 10 hours per week should be avoided because of the accelerating costs. The management has
the following goals in the order of importance:
◦ The first goal is to avoid any under-utilization of production capacity.
◦ The second goal is to limit the overtime operation of the plant to 10 hours.
◦ The third goal is to achieve the sales goals of 70000 and 45000 respectively for both the materials.
◦ The last goal is to minimize the overtime operation of the plant as much as possible.
Formulate this as a goal programming problem to help the management for the best decision and
solve the problem using simplex method.
Question 4:
A client has $80,000 to invest and, as an initial strategy, would like the investment portfolio
restricted to two stocks:
Stock Price/Share Estimated Annual Risk Index / Share
Return / Share
U. S. Oil $25 $3 0.50
Hub Properties $50 $5 0.25

U. S. Oil, which has a return of $3 on a $25 share price, provides an annual rate of return of 12%,
whereas Hub Properties provides an annual rate of return of 10%. The risk index per share, 0.50
for U. S. Oil and 0.25 for Hub Properties, is a rating Nicolo assigned to measure the relative risk
of the two investments. Higher risk index values imply greater risk; hence, Nicolo judged U. S.
Oil to be the riskier investment. By specifying a maximum portfolio risk index, Nicolo will avoid
placing too much of the portfolio in high risk investments.
To illustrate how to use the risk index per share to measure the total portfolio risk, suppose that
Nicolo chooses a portfolio that invests all $80,000 in U. S. Oil, the higher risk but higher return,
investment. Nicolo could purchase $80,000/$25 = 3200 shares of U. S. Oil, and the portfolio would
have a risk index of 3200(0.50) = 1600. Conversely, if Nicolo purchases no shares of either stock,
the portfolio will have no risk, but also no return. Thus, the portfolio risk index would vary from
0 (least risk) to 1600 (most risk).
Nicolo’s client would like to avoid a high risk portfolio; thus, investing all funds in U. S. Oil would
not be desirable. However, the client agreed that an acceptable level of risk would correspond to
portfolios with a maximum total risk index of 700 or less.
Another goal of the client is to obtain an annual return of at least $9000. This goal can be achieved
with a portfolio consisting of 2000 shares of U. S. Oil [at a cost of 2000($25) = $50,000] and 600
shares of Hub Properties [at a cost of 600($50) = $30,000]; the annual return in this case would be
2000($3) + 600($5) = $9,000. Note, however, that the portfolio risk index for this investment
strategy would be 2000(0.50) + 600(0.25) = 1150; thus, this portfolio achieves the annual return
goal but does not satisfy the portfolio risk index goal.
Suppose that the client’s top – priority goal is to restrict the risk; that is, keeping the portfolio risk
index at 700 or less is so important that the client is not willing to trade the achievement of this
goal for any amount of an increase in annual return. As long as the portfolio risk index does not
exceed 700, the client seeks the best possible return. Based on this statement of priorities, the goals
for the problem are as follows:
Primary Goal (Priority Level 1) Goal 1: Find a portfolio that has a risk index of 700 or less.
Secondary Goal (Priority Level 2) Goal 2: Find a portfolio that will provide an annual return of at
least $9,000.
Formulate and solve the above goal programming problem using graphical method.

Question 5:
Fairville is a small city with a population of about 20,000 residents. The city council is in the
process of developing an equitable city tax rate table. The annual taxation base for real estate
property is $550 million. The annual taxation bases for food and drugs and for general sales
are $35 million and $55 million, respectively. Annual local gasoline consumption is estimated
at 7.5 million gallons. The city council wants to develop the tax rates based on four main goals.
Goal 1: Tax revenues must be at least $16 million to meet the city’s financial commitments.
Goal 2: Food and drugs taxes cannot exceed 10% of all taxes collected.
Goal 3: General sales taxes cannot exceed 20% of all taxes collected.
Goal 4: Gasoline tax cannot exceed 2 cents per gallon.
Formulate the Fairville tax problem as a goal programming problem.