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Using Excel To Solve Linear Programming Problems: Example

Using Excel's Solver add-in, linear programming problems involving constraints and an objective function can be solved. The document provides an example of using both tables and direct constraints in Excel to solve a problem about maximizing revenue from building different store types with constraints on budget, staffing needs, and number of stores. The optimal solution is to build two convenience stores and nine standard stores.

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181 views3 pages

Using Excel To Solve Linear Programming Problems: Example

Using Excel's Solver add-in, linear programming problems involving constraints and an objective function can be solved. The document provides an example of using both tables and direct constraints in Excel to solve a problem about maximizing revenue from building different store types with constraints on budget, staffing needs, and number of stores. The optimal solution is to build two convenience stores and nine standard stores.

Uploaded by

Ggv
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Using Excel to solve linear programming problems

Technology can be used to solve a system of equations once the constraints and
objective function have been defined. Excel has an add-in called the Solver which can
be used to solve systems of equations or inequalities.

Consider this problem:

Example: A corporation plans on building a maximum of 11 new stores in a large city.


They will build these stores in one of three sizes for each location – a
convenience store (open 24 hours), standard store, and an expanded-
services store. The convenience store requires $4.125 million to build and
30 employees to operate. The standard store requires $8.25 million to build
and 15 employees to operate. The expanded-services store requires
$12.375 million to build and 45 employees to operate. The corporation can
dedicate $82.5 million in construction capital, and 300 employees to staff
the stores. On the average, the convenience store nets $1.2 million
annually, the standard store nets $2 million annually, and the expanded-
services store nets $2.6 million annually. How many of each should they
build to maximize revenue?

Assign the variables:


x1 = number of convenience stores
x2 = number of standard stores
x3 = number of expanded services stores
Write the constraints:
a. x1 + x2 + x3 ≤ 11
b. 4.125 x1 + 8.25x2 + 12.375x3 ≤ 82.5
c. 30x1 + 15x2 + 45x3 ≤ 300
x1 ≥ 0, x2 ≥ 0, and x3 ≥ 0
Write the objective function: N(x1, x2, x3 ) = 1.2x1 + 2x2 + 2.6x3
(in millions)
We first need to open Excel and enter the data.

There are two methods – one uses tables within the worksheet while the other uses only
the constraints. The second method is preferred when we know the constraints since it
is much faster!!!

Method One: Using Tables

Type in variable assignments


at the top of the spreadsheet.

Assign decision variable cells.


Decision variable cells:
D6, F6, and H6

Construct table from data in


problem. How you set up the
table is a matter of personal
preference.
Not in table: the constraint
which shows the sum is less
than or equal to eleven.

B. Pollington
Formulas in cells:
Cell Formula
constraint a D15 = D6 + F6 + H6
constraint b D16 = 4.125*D6 + 8.25*F6 + 12.375*H6
constraint c D17 =30* D6 + 15*F6 + 45*H6
Maximize D19 =1.2* D6 + 2*F6 + 2.6*H6

Now that the table is set up, we can access the solver. Click on Tools. If you do not see
Solver then click on Add-Ins and select Solver. Now click on Tools again and select
Solver.

Target cell: Maximize cell. To enter it, just click on that cell.
Equal to Max
Changing Cells: Decision variable cells D6, F6, H6.
Subject to the constraints: Click on Add. Click on Cell Reference and then click in
D15, then click on Constraint and then click in F15. Be sure
the test listed between them is <=.
Now click on Options
Make sure Assume Linear Model and
Assume Non-Negative boxes are checked,
then click OK.

Back at the Solver, click Solve. It should yield


the solution. Click on Keep solution.

B. Pollington
The solutions are as shown:
two convenience stores
nine standard stores,
and
no expanded-services
stores.

Method Two: Using Constraints

Using a table to set up the problem makes the organization of data organized, but it has
one problem. All of this is time consuming! We can get the same results by just typing
in the constraints! The alternate format looks like this…

The first of the spreadsheet is done the same – typing in the variable assignments and
assigning decision variable cells. Next, we type the constraints which will be used as a
guide to type in the formulas in F9, F10, F11. They are the same formulas as in the
earlier spreadsheet – with different cell references. Finally, we type in the maximize
formula for reference and its formula in F13. We are now ready to access the Solver like
we did before. We should get the same results…

B. Pollington

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