Linear Optimization

The Art of Modelling With Spreadsheet

Submitted By:
Anish Kumar
Mentor : Mr. Parag jain & Mr. Sagar Sharma
 Optimization
• The action of making the best or most effective use of a situation or resource.

• Goal of optimization is to find values of the decision variables that maximize or

minimize an objective function, possibly with constraints on the design
variables.
• "companies interested in the optimization of the business"
Use Solver to find the best solution
• Excel has an add-in program called Solver.
• Check the Tools menu to see if Solver is installed and
activated on your system.
• If it is, the word Solver will appear on the tools menu.
• You can activate it by clicking Add-Ins on the Tools
menu.
– This will bring up a list of the add-in programs
available to activate
• Find Solver on the list, check its box, and then click OK
The Excel Solver
• The Excel Solver is a powerful analysis tool used for
solving linear and nonlinear optimization of business and
engineering models.
• For linear optimization problems: Simplex method
• For nonlinear optimization problems: Generalized
reduced gradient method.
Formulation
• Objective function
– What measure compares decision variables?
– Use only one measure put in target cell
• Decision variables
– What must be decided? Be explicit with units
• Constraints
– What restrictions limit our choice of decision
variables?
The Solver Parameters dialog box
View the Results
 Example

• VOYLLA makes jewellery of different varieties. VOYLLA wants to maximise

shipment of their product from Source to Destination while not exceeding the
sell and availability from each Source to Destination
• Solution: Here Objective is to maximise the quantity of shipment.
• Decision variables are the assigned quantity from each Source to Destination.
• Constraint is (1) Sell.
(2) Availability.
(3) WOC
(4) STN size
Grid Model of Dummy Data
Screenshot of Column based model
 Modeling Tricks

• For Either/Or Constraints

• Introduce a new variable y ∈ {0, 1} and a large number M
• Binary integer programming allows to model alternative choices. For example,
we can model the case of tow disjoint feasible regions, ie, disjunctive
constraints, which are not possible in LP. We introduce an auxiliary binary
variable y and M
• Ax ≤ b + My if y = 0 then this is active
• A’x ≤ b’+ M(1 − y) if y = 1 then this is active
 A jump in the bound

• An example of a simple situation that cannot be formulated as a linear programming

model. The value of a variable must be either zero or between particular positive
bounds. In algebraic notation:
x =0 or l ≤ x ≤ u
• In LP only simultaneous constraints can be modeled.
• This situation occurs when a supplier of some item requires that if an item
• is ordered, then its batch size must be between a particular minimum and
• maximum value.
Modeling discontinuous variables
• To model discontinuous variables, introduce a binary variable (0
or 1) that indicates a certain state in a model.
• Y= {o for x=0
• 1 for l <= x <=y
• The following set of constraints is used to create the desired
properties:
• x ≤ uy
• x ≥ ly
• y binary
• It is clear that y = 0 implies x = 0, and that y = 1 implies l ≤ x ≤ u.
 Summary

• Optimization: Answers “What values of the decision variables lead to the best
possible value of the objective?”
• Excel Solver: Collection of optimization procedures
– Nonlinear Solver is Solver’s default choice
• Steps: 1) formulating
2) solving, and
3) interpreting optimization problems.
References:
• https://www.solver.com/
• https://imada.sdu.dk/~marco/Teaching/AY2014-
2015/DM554/Notes/dm554-main.pdf
• www.aimms.com
• https://www.ablebits.com/office-addins-
blog/2016/06/22/how-to-use-solver-in-excel-with-
examples/
Thank You