Goal programming practice questions

1. Maya, a certified financial planner (CFP) has been asked by a client to invest Rs.25,000,000.
This money may be placed in stocks or a mutual fund (MF) in real estate. The expected return on
investment is 13% for stocks and 10% for real estate MF. While the client would like a very high
expected return, she would be satisfied with a 11% expected return on her money.
Due to risk considerations, several goals have been established to keep the risk at an acceptable
level. One goal is to put at least 30% of the money in real estate MF. Another goal is that the
amount of money in real estate should not exceed 50% of the money invested in stocks. In addition
to these goals, there is one absolute restriction. Under no circumstances should more than
Rs.20,000,000 be invested in any one area.
Formulate and solve this as a goal programming problem. Assume that return is more important
to the investor than risk.

2. XYZ Warehouse is a large discount store that operates seven days per week. The store needs the
following number of full-time employees working each day of the week.
___________________________________________________________

Number of
Employees
___________________________________________________________

Sunday 47
Monday 22
Tuesday 28
Wednesday 35
Thursday 34
Friday 43
Saturday 53
___________________________________________________________

Each employee must work five consecutive days each week and then has two days off. For example, an
employee who works Sunday through Thursday has Friday and Saturday off. The store currently has a total
of 60 employees available to work. XYZ has developed the following set of prioritized goals for employee
scheduling.

The store would like to avoid hiring any additional employees.

The most important days for the store to be fully staffed are Saturday and Sunday.
The next most important day to fully staff is Friday.
The store would like to fully staff the remaining four days in the week.

Formulate a goal programming model to determine the number of employees who should begin their five-
day work week each day of the week in order to achieve the store’s objectives.
3. The Super-Star Company produces three models of microcomputers – SS100, SS150 and SS250. Most
of the components are imported from the Far East, and the company only assembles the microcomputers.
The operations hours required to produce one unit of the microcomputers are 2 hours for SS100, 3 hours
for SS150 and 4 hours for SS250. The normal capacity of the assembly line is 400 hours per month. The
profits per unit are Rs.10,000 for SS100, Rs.15,000 for SS150 and Rs.25,000 for SS250. The CEO of the
company has set the following goals, according to their order of importance:
(i) Avoid the underutilization of production capacity.
(ii) Meet the outstanding orders – 30 units for SS100, 20 units for SS150 and 50 units for SS250.
(iii) Avoid the over utilization of the production capacity.
(iv) Maximize total profit as much as possible.
Formulate a goal linear programming model for the problem and solve it (up to three iterations only).