Multi-objective

Decision Making
DR MRINALINI SHAH
PROFESSOR
IMT GHAZIABAD

Multiple Objective programming

When there are multiple objectives, you can proceed in several fundamental
ways.

First, you can prioritize your objectives. This is done in goal programming,
where the highest priority objective is optimized first, then the second, and so
on.
Second, you can optimize one objective while constraining the others to be
no worse than specified values. This approach is used to find trade-off curves
between the objectives.
Finally, you can attempt to weight the objectives to measure their importance
relative to one another. This is the approach taken by the Analytic Hierarchy
Process.

Goal
Programming

Goal Programming
Firms usually have more than one goal. For example,
maximizing total profit,
maximizing market share,
maintaining full employment,
providing quality ecological management,
minimizing noise level in the neighborhood, and
meeting numerous other non-economic goals.

It is not possible for LP to have multiple goals unless they are all measured in
the same units (such as dollars),
a highly unusual situation.

An important technique that has been developed to supplement LP is called

goal programming.

Goal Programming
Goal programming satisfies,

as opposed to LP, which tries to optimize.

Satisfice means coming as close as possible to reaching goals.

The objective function is the main difference between

goal programming and LP.

In goal programming, the purpose is to minimize

deviational variables,
which are the only terms in the objective function.

Media Planning of Ad agency

The Uncommon sense Ad Agency is trying to determine a TV advertising schedule for a
client. The client has three goals (listed here in descending order of importance)
concerning
whom it wants its ads to be seen by:
Goal 1: at least 65 million high-income men (HIM)
Goal 2: at least 72 million high-income women (HIW)
Goal 3: at least 70 million low-income people (LIP)
Uncommon sense can purchase several types of TV ads: ads shown on live sports shows,
on game shows, on news shows, on sitcoms, on dramas, and on soap operas. At most INR
700,000 total can be spent on ads. The advertising costs and potential audiences (in
millions of viewers) of a one-minute ad of each type are shown in Table. As a matter of
policy, the client requires that at least two ads each be placed on sports shows, news
shows, and dramas. Also, it requires that no more than 10 ads be placed on any single type
of show. Uncommon sense wants to find the advertising plan that best meets its clients
goals.

sports
show
HIM
HIW
LIP
cost

game sow news

7
3
4
5
8
6

120000

40000

sitcom

soap
opera

drama

6
5
3

4
5
7

6
8
6

3
4
5

50000

40000

60000

40000

Number of ads are 2, 1, 2, 1, 5, 1 respectively and cost is 760000 INR.

Methods to solve Goal programming

Weighted Goal method
Ranked or Priority Goal Method

Weighted Goal method

Different Goal are given different weight.
Minimize total weighted underachievement of goals
Drawback of the method:
Is appropriate only if all the goals are measured in same unit
It is not always easy to assign suitable weights for the different
deviation variables.

Ranked Goal Method

Rank the goals rather then weight the goal
Minimize the ranked deviations as objective function.
Solve the model for Rank 1 goal first.
Use the result , to solve the model for Rank 2 goal .
Repeat the process.

GOAL programming: algorithm

1.

Identify the decision variable in the problem

2.

Identify any hard constraints in the problem

Do It Yourself
Lucys Music Store at present employs five full-time employees and three parttime employees. The normal workload is 40 hours per week for full-time
employees and 20 hours per week for part-time employees. Each full-time
employee is paid $6 per hour for work up to 40 hours per week and can sell five
recordings per hour. A full-time employee who works overtime is paid $10 per
hour. Each part-time employee is paid $3 per hour and can sell three recordings
per hour. It costs Lucy $6 to buy a recording, and each recording sells for $9. Lucy
has weekly fixed expenses of $500. She has established the following weekly
goals, in order of priority:
Goal 1: Sell at least 1600 recordings per week.
Goal 2: Earn a profit of at least $2200 per week.
Goal 3: Full-time employees should work at most 100 hours of overtime.
Goal 4: To promote a sense of job security, the number of hours by which each
full-time employee fails to work 40 hours should be minimized.

Use a goal programming model to determine how many hours per week each
employee should work?

XYZ Electric Company

The Company produces two products popular with home renovators: oldfashioned chandeliers and ceiling fans. Both the chandeliers and fans require a
two-step production process involving wiring and assembly. It takes about 2 hours
to wire each chandelier and 3 hours to wire a ceiling fan. Final assembly of the
chandeliers and fans requires 6 and 5 hours, respectively. The production
capability is such that only 12 hours of wiring time and 30 hours of assembly time
are available. The profit is Rs 6 for Chandeliers and Rs 7 for Fans.
Goals Harrisons management wants to achieve, each equal in priority:

Goal 1: to produce as much profit above $30 as possible during the production
period.
Goal 2: to fully utilize the available wiring department hours.
Goal 3: limit overtime in the assembly department to 10 hours.

Goal 4: to meet a contract requirement to produce at least seven ceiling fans.

XYZ Electric company:

If each chandelier produced nets the firm $7 and each fan $6, Harrisons
production mix decision can be formulated using LP as follows:

maximize profit = $7X1 + $6X2

2X1 + 3X2 12 (wiring hours)
6X1 + 5X2 30 (assembly hours)
X1, X2 0 (nonnegative)
X1 = number of chandeliers produced
X2 = number of ceiling fans produced

subject to:

Harrison Electric Revisited

Need a clear definition of deviational variables,
such as :
d1 = underachievement of the profit target
d1+ = overachievement of the profit target
d2 = idle time in the wiring dept. (underused)
d2+ = overtime in the wiring dept. (overused)
d3 = idle time in the assembly dept. (underused)
d3+ = overtime in the wiring dept. (overused)
d4 = underachievement of the ceiling fan goal
d4+ = overachievement of the ceiling fan goal

Stockco
Stockco produces two products. Product 1 requires 4 labour hours and
product 2, requires 2 hours . revenue contribution of product 1 and 2 is $4
and $2 respectively. Stcokco has a goal of $48 as weekly revenue and incur
$1 penalty for each dollar it falls short of this goal. A total of 32 hours of
labor available. A $2 penalty incurred for each hour of overtime and a $1
penalty incurs for each hour of labour unused. Marketing consideration
requires at least 7 units of product 1, and at least 10 units of product 2 to
be produced. For each unit by which production falls short of demand $5
penalty is assessed. Determine how to minimize total penalty.

Goal 1: do not use any overtime .

Goal 2: meet demand for product1
Goal 3: Meet demand for product 2
Goal 4: Avoid underuse of labour.

Analytic Hierarchy
Process (AHP)

The Analytic Hierarchy Process (AHP), developed originally by Thomas

Saaty, is a powerful tool that can be used to make decisions in situations
where multiple objectives are present.

You will graduate in few months time. You are planning to choose
among the offers by determining how well each job offer meets the
following four objectives:
Objective 1: High starting salary
Objective 2: Quality of life in city where job is located
Objective 3: Interest of work

Objective 4: Nearness of job to family

Applications of AHP
AHP in Saudi Arabia
Bahurmoz (2003) designed and implemented a system based on AHP to
select the best candidates to send overseas to do graduate studies and
eventually become teachers at the Dar Al-Hekma womens college in
Saudi Arabia.
AHP has been used by companies in many areas, including accounting,
finance, marketing, energy resource planning, microcomputer selection,
sociology, architecture, and political science. See Zahedi (1986), Golden
et al. (1989), and Saaty (1988) for a discussion of applications of AHP.

How to build AHP Model

Form a pairwise comparison matrix ( Lets call A). The entry in row i and column j
of A, aij, indicates how much more (or less) important objective i is than
objective j to the decision maker. Importance is measured on an integer-valued
scale from 1 to 9, with each number having the interpretation:
Value of ai j

1
3
5
7
9

Interpretation
Objectives i and j are equally important.
Objective i is slightly more important than j.
Objective i is strongly more important than j.
Objective i is very strongly more important than j.
Objective i is absolutely more important than j.

For consistency, it is necessary to set aji = 1/ aij.

How to build AHP Model

Obtains a vector of weights that summarizes the relative importance of
the objectives. Determine weights of each objective as:
1.

a). Create Normalised matrix. Divide each element of matrix by sum of

the corresponding column.
b). Find weight by averaging the corresponding row of Norm Matrix.
( By convention, the weights are always chosen so that they sum to 1.)
2.
This matrix measures how well each job compares to other jobs with
regard to this objective. For each matrix Ai, obtain a vector of scores Si that
summarizes how the jobs compare in terms of achieving objective i Determine
the score of each decision alternative on each objective using step 2 a & b.
3.
The final step is to combine the scores in the Si vectors with the weights
in the w vector. If you form a matrix S of these score vectors and multiply this
matrix by w, you obtain a vector of overall scores for each job. Determine the
best alternative. assesses a pairwise comparison matrix Ai for each objective i.
.

MODELING ISSUES
1.

AHP can handle a hierarchy of objectives and sub-objectiveshence

the term hierarchy in the name of the procedure.

2.

Other than spreadsheet, you can use special-purpose software such

as Expert Choice, for AHP in more complicated situation.

Pareto Optimality
and Trade off
curves

Maximize profit and minimize

pollution
Product

Labour h/unit

3.5

3.5

Raw material/unit
Pollution/unit

Profit/unit
Min production
Max production

3
25
$53
0
190

4.5
29
$69
30
110

5
35
$73
0
140

5
26
$69
10
140

4.5
17
$51
20
190

2
25
$49
50
190

3.5
28
$71
30
110

Currently 1300 labour hours and 1000 units of raw material is

available.
Two objective of company is to maximize profit and minimize
pollution. Graph the trade-off curve.

3
6
$40
0
150

Thank You
DR MRINALINI SHAH