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Overview
Excel Solver
Exercises
Goal Seek
Optimization: Basics
Basic Idea:
Find the values of the decision variables
that maximize (minimize) the objective
function value, while staying within the
constraints.
Real-World Examples
Product Mix
Scheduling/Allocation of workforce
Capital Budgeting
Financial Planning
etc.
Mathematical Background
Find x which
Minimizes or Maximizes f(x)
Subject to
di(x) ai
ei(x) = bi
i = 1,2,m
i=1,2,p
x can be a vector
Mathematical
Background(contd...)
An Example
A gas processing plant receives a fixed amount of raw gas each week
Data
Product
Resource
Raw Gas
Regular
7
Premium
11
Resource Availability
77
Production Time
(hr/tonne)
10
120
Storage
(tonne)
Profit (/tonne)
150
175
(m /tonne)
Regular
7
Premium
11
Resource Availability
77
Production Time
(hr/tonne)
10
120
Storage
(tonne)
Profit (/tonne)
150
175
(m /tonne)
Regular
7
Premium
11
Resource Availability
77
Production Time
(hr/tonne)
10
120
Storage
(tonne)
Profit (/tonne)
150
175
(m /tonne)
Total Profit
Z = 150 x1 + 175 x2
Maximize
Z = 150 x1 + 175 x2
Objective
function
Regular
7
Premium
11
Resource Availability
77
Production Time
(hr/tonne)
10
120
Storage
(tonne)
Profit (/tonne)
150
175
(m /tonne)
7x1 + 11x2 77
10x1 + 8x2 120
(material constraint)
(time constraint)
x1 9
(storage constraint)
x2 6
(storage constraint)
x1,x2 0
(positivity constraint)
We have an LP problem
Maximize
150 x1 + 175 x2
Subject to :
7x1 + 11x2 77
10x1 + 8x2 120
x1 9
x2 6
x1,x2 0
Graphical Solution
7x1 + 11x2 77
x2 -7/11 x1 +7
8
7
6
Constraint 1
x2
5
4
3
2
1
0
0
x1
10
Graphical Solution
(contd)
10x1 + 8x2 120
x2 -5/4x1 + 15
16
Constraint 1
14
Constraint 2
12
x2
10
8
6
4
2
0
0
10
x1
15
Graphical Solution
(contd)
x1 9
16
Constraint 1
14
Constraint 2
12
Constraint 3
x2
10
8
6
4
2
0
0
10
x1
15
Graphical Solution
(contd)
x2 6
Constraint 1
16
Constraint 2
14
Constraint 3
12
Constraint 4
x2
10
8
6
4
2
0
0
10
x1
15
Graphical Solution
(contd)
x1,x2 0
Constraint 1
16
Constraint 2
14
Constraint 3
12
x2
Convex Polytope
Constraint 4
10
8
6
4
2
0
0
10
x1
15
Graphical Solution
(contd)
Now we need to find the maximum value of the objective
function, while satisfying the constraints. Let us plot the
objective function for various values of Z and see:
Z=0
0=150x1 + 175x2
.
Z = 500
500=150x1 + 175x2
....
Z = 1200
1200=150x1 + 175x
Graphical Solution
(contd)
Z=0
Z=500
Z=1200
16
14
12
10
8
x2
6
4
2
0
-5
-2 0
-4
x1
10
15
Solver : Basics
Solver Settings
Concepts:
Feasibility
Feasible Solution: A solution is feasible if all constraints are
satisfied.
Infeasible Solution: A solution is infeasible if one or more
constraints is violated.
Spreadsheet Model
Development
Solution Reports
Solver Results:
Optimal Solution
Unbounded
Problem
Infeasible
Problem
Trial and error: possible for very small problems; virtually impossible
for large problems.
Thank YOU
Another Example
Minimize the amount of material used to make the can while
keeping the volume constant.
Solving Equations:
3x1 + 2x2 x3 4 = 0
2x1 x2 + x3 3 = 0
x1 + x2 2x3 + 3 = 0
Find the values of x1, x2, and x3 that will cause all three equations to equal zero.