LAND USE PLANNING II (SBP 3173)

OPTIMISING MODELS AS A
PLANNING TOOL

DEWAN KULIAH A
12 MARCH 2008

Chau Loon Wai © 2008

Mathematical Models in Planning
(following Lowry (see Lee 1973, pp.10-14)):

Descriptive models – representing an existing situation

Predictive models – simulating future instead of current

situations

Planning / Optimising models – describing and/or predicting

situations as well as presenting a possible range of performance
in relation to defined objectives in search of an optimal solution
(meeting certain goals subject to some constraints)

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What are the general goals of any planning
projects or initiatives?
Maximising benefits (social welfare, aesthetics, comfort,
accessibility to facilities, sales profit, rental income etc.)

Minimising costs (pollution, environmental degradation, travel

time and costs, development costs, infrastructure costs etc.)

Satisfying various constraints (land and resources availability,

budgetary constraints, site physical constraints, planning policy
requirements (e.g. density limits, zoning control))

Ideally, all three are to be achieved simultaneously

In other words, the general problem in planning is essentially an

optimisation problem, of producing the “best-possible” plan that
satisfies stated objectives subject to availability of resources and
various constraints that have been specified

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Key Concepts in Optimising Models:

Optimal solution

Objective function equation that has to be optimised

(maximised or minimised subject to constraints), and its variables

Constraint equations that express a set of constraints which

restrict the range of feasible solutions

Non-negativity constraints that make an explicit condition

that no variable should be negative

Linear programming – mathematical optimisation techniques

developed for the allocation of limited resources among competing
activities in an optimal manner

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Key Concepts in Optimising Models (continued):
The optimising procedure – formulating an objective function
equation that has to be optimised subject to a series of constraints,
e.g. to find the allocation of new activities in order to:
• Minimise overall cost of development in a region;
• Minimise overall cost of travel to work; or
• Maximise the social benefit which could be measured in several ways

The constraint equations – show the restrictions to development in

the zones in a region, e.g.:
• The maximum & minimum levels of development allowed in each
zone for the different activities;
• Environmental constraints on development;
• Constraints on the provision of public utilities;
• Constraints on the mix of different activities (e.g. industrial &
residential development) allowed in each zone
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Example 1: optimising the allocation of activities

Aim: to optimally allocate new development in a region of n zones

through minimising the development cost

A general objective function equation may be proposed:

m n
Minimise Z = Σ Σ vkj Xkj
k=1 j=1

k refers to the activity when there are a total of m activities

j refers to the zone number where there are a total of n zones
vkj is therefore the cost of developing one unit of activity type k in zone j
Xkj is the number of units of activity type k to be developed in zone j

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Situation:

A district council decides to expand its residential area by providing new

residential development on the east of the district to cater for
projected population growth in the next five years. A total of 2,400
new houses needs to be built in two potential zones, zone 1 and zone 2,
which have a maximum capacity for 1,000 houses and 2,000 houses
respectively. The cost of developing housing in zone 1 is RM60,000 per
house and in zone 2 RM70,000 per house (land and infrastructure costs
are higher in zone 2). The council wishes to minimise the cost of
development while providing the 2,400 new houses. How should the
council allocate the new houses in the two zones?

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Solution: There is one type of activity, residential development
(m=1), to be allocated in two zones (n=2). Let:
v11 = cost of new housing in zone 1 = RM60,000 per house
v12 = cost of new housing in zone 2 = RM70,000 per house
X11 = amount of housing in zone 1
X12 = amount of housing in zone 2

The object of linear programming is to determine the amount of new

housing in zone 1 (X11) and the amount of housing in zone 2 (X12) in
order to minimise the total development cost

Therefore, the objective function equation may be expressed as:

minimise Z = v11X11 + v12X12
⇒ minimise Z = 60,000X11 + 70,000X12

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Several restrictions have also been set out in the situation above,
which can be formulated in a set of constraint equations:

A maximum of 1,000 new houses can be developed in zone 1,

⇒ X11 ≤ 1,000

A maximum of 2,000 new houses can be developed in zone 2,

⇒ X12 ≤ 2,000

A total of 2,400 new houses needs to be built in zone 1 and zone 2,

⇒ X11 + X12 = 2,400

Two additional constraints also apply, which condition that negative

values for Xkj are not allowed (non-negativity constraints):

⇒ X11 ≥ 0
X12 ≥ 0

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A graphical solution: all the constraints equations may now be
plotted in a graph, where the amount of new housing in zone 1 is
plotted along the horizontal axis and the amount of new housing in
zone 2 along the vertical axis

X11 = 1,000 Any point to the left of this line

is a feasible solution, X11 ≤ 1,000

2,400
New Housing in Zone 2, X12

2,000 X12 = 2,000

A
Any point below this line is a
B feasible solution, X12 ≤ 2,000

The optimal solution must lie

X1
1

on this line, X11 + X12 = 2,400,

+
X1

that is on line segment AB

2
=
2,
40
0

0
1,000 2,400 New Housing in Zone 1, X11

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The problem now is to determine which point on line segment AB will
optimise the objective function equation Z = 60,000X11 + 70,000X12
and minimise the total development cost

Assume some total development cost, say

X11 = 1,000 RM70,000,000 which is substituted into the
objective function equation to produce:
60,000X11 + 70,000X12 = 70,000,000 and
2,400 then draw the line in the graph
New Housing in Zone 2, X12

2,000
A X12 = 2,000

B Shift the line away from the graph origin

(0,0) until it first touches line segment
1,000 AB, the point of which (point B in this
X1

case) gives the optimal feasible solution

1
+
X1
2
=
2,
40
0

0
1,000 1,167 2,400 New Housing in Zone 1, X11
60,000X11+70,000X12 = 70,000,000

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 At point B, X11 = 1,000 and X12 = 1,400
Substituting these values into the objective function equation,
Z = (60,000)(1,000) + (70,000)(1,400) = 158,000,000

Therefore, to achieve the lowest

X11 = 1,000
development cost of RM158,000,000
1,000 houses should be built in zone 1
2,400 and 1,400 houses in zone 2
New Housing in Zone 2, X12

2,000
A X12 = 2,000

At point A, X11 = 400, X12 = 2,000

B
1,400 Z = (60,000)(400)+(70,000)(2,000)
= 164,000,000
X1
1
+

60,000X11+70,000X12 = 158,000,000
X1
2
=
2,
40
0

0
1,000 2,400 New Housing in Zone 1, X11

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Example 2: optimising mixture of development

Aim: to optimally control the mixture of different development

types in an area so as to maximise sales profit

Situation:

An investor intends to carry out a light industry development on a 50-

hectare plot. Two types of factory buildings will be constructed,
type A and type B. The maximum development intensity for type A is
10 factories to a hectare of land while type B is 5 factories to a
hectare. Each type A factory costs RM150,000 to build and generates
a sales profit of RM60,000 while each type B factory costs RM450,000
to build and generates a sales profit of RM150,000. The investor has
a total development fund of RM90 million available. How many type
A and type B factories should be built to provide the maximum sales
profit for the investor?

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Solution: Let: A = the number of type A factories to be built
B = the number of type B factories to be built

The object of optimisation will be to maximise the total sales profit, Z

Therefore the objective function equation can be expressed as:

⇒ maximise Z = 60,000A + 150,000B

Two constraints, or limitations on the use of resources, have been

specified which can be formulated in a set of constraint equations:

The maximum area of land to be developed = 50 hectares,

⇒ 1/10(A) + 1/5(B) ≤ 50

The maximum development fund available = RM90 million,

⇒ 150,000A + 450,000B ≤ 90,000,000

Non-negativity constraints: A ≥ 0 and B ≥ 0

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A graphical solution: all the constraints equations may now be
plotted in a graph, where the number of type A factories is plotted
along the horizontal axis and the number of type B factories along the
vertical axis
Total development
cost ≥ RM90,000,000 Any point below this line is a feasible
solution, land area ≤ 50 hectares
Number of Type B Factories

250 1/1
0(A
)+1
/5( Any point below this line is a feasible
200 B)=
5 0 solution, budget ≤ RM90,000,000

Budgetary 150,
Constraint 000A
+45
0, 000B
=90
Land Constraint ,0 00,0
00
0
500 600
Number of Type A Factories
Feasible Area Total land area ≥ 50 hectares

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 The problem now is to determine which point along the budgetary
and land constraints will optimise the objective function equation
Z = 60,000A + 150,000B and maximise the total sales profit

Assume some total sales profit, say RM15,000,000 which

is substituted into the objective function equation to
produce: 60,000A + 150,000B = 15,000,000 and then
draw the line in the graph
Number of Type B Factories

250 1/1
0(A
)+1 Shift the line away from the
/5( graph origin until it last
200 B)=
5 0 touches the feasible area,
the point of which gives the
100
C 150, optimal solution (point C)
000A
+45
0, 000B
=90
,0 00,0
00
0
250 500 600

60,000A+150,000B=15,000,000 Number of Type A Factories

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 At point C, A = 300 and B = 100
Substituting these values into the objective function equation,
Z = (60,000)(300) + (150,000)(100) = 33,000,000

RM99 million Therefore, the investor should build

needed 300 type A factories and 100 type B
factories to generate the maximum
Number of Type B Factories

250 1/1 sales profit of RM33 million

0(A
)+1
/5(
200 B)=
5 0
60,000A+150,000B=33,000,000

100
C 150,
000A 55 hectares of
+45 land needed
0, 000B
=90
,0 00,0
00
0
300 500 600
Number of Type A Factories

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Issues relating to Optimising Models
Defining problem that needs optimising (welfare maximisation, cost
minimisation, economic return maximisation)
Subjectivity in formulating the objective function and deciding
objective variables (difficulty in quantifying social objectives, costs
variables are mainly used)
Greater requirement for data as number of variables increases and
availability of reliable data
Assumptions that the objective function and constraint equations are
linear (but development costs may fall as development size increases
due to economies-of-scale)
The use of continuous variables vs. discrete development variables
(number of houses, factories etc.)
As with other kinds of models, planning decisions do not necessarily
follow the result of the optimising model because there are many
other factors that have not been included in the model

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Basic Readings:
Foot, D. 1981 Operational Urban Models: An Introduction. London:
Methuen & Co., Chapter 7, pp.174-204

Lee, C. 1973 Models in Planning: An introduction to the use of

quantitative models in planning. Oxford: Pergamon Press, Chapter 7,
pp.113-129

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Exercise: optimising mixture of house types

Situation:

A State Authority needs to provide 1,800 units of affordable houses

under a state-wide squatter relocation project. A piece of State
land measuring 150 acres has been set aside for developing a mix of
cluster houses (type C) up to 15 units/acre at the cost of RM30,000
per unit and link houses (type L) up to 10 units/acre at a unit cost
of RM25,000. The State Authority wishes to minimise the cost of
construction through optimising the mix of type C and type L
houses. Advise the State Authority on the optimal mix of house
types and the corresponding minimum development cost.

Chau Loon Wai © 2008