Simulation and optimization

Lab-01:

Introduction to Excel Solver for Solving

Linear Programs

1 This document is intended for the internal use of recipients only

 Tool for Solving a Linear
Program:

Excel has the capability to solve linear (and often nonlinear)

programming problems. The SOLVER tool in Excel:
 May be used to solve linear and nonlinear optimization problems
 Allows integer or binary restrictions to be placed on decision
variables
 Can be used to solve problems with up to 200 decision variables

2
 How to Use SOLVER:

The key to solving an LP on a spreadsheet is:

 Set up a spreadsheet that tracks everything of
interest (e.g., costs, profits, resource usage)
 Identify the decision variables that can be varied. These
are called Changing Cells
 Identify the cell that contains your objective function
as the Target Cell
 Identify the constraints and tell SOLVER to solve the
problem
At this point, the optimal solution to our problem will be
placed on the spreadsheet

3
 LP Solutions with SOLVER, an
Example:
Consider the problem of diet optimization. There are four different types of food:
Brownies, Ice Cream, Cola, and Cheese Cake.The nutrition values and cost per unit
are as follows:
Brownies Ice Cream Cola Cheese Cake
Calories 400 200 150 500
Chocolate 3 2 0 0
Sugar 2 2 4 4
Fat 2 4 1 5
Cost $0.50 $0.20 $0.30 $0.80

The objective is to find a minimum-cost diet that contains at least 500 calories, at
least 6 grams of chocolate, at least 10 grams of sugar, and at least 8 grams of fat.

4
 LP Solutions with SOLVER, an
Example:

STEP 1: Decision Variables

To begin we enter heading for each type of food in B2:E2.
In the range B3:E3, we input trial values for the amount of each food eaten.
(Any values will work, but at least one should be positive.)
For example, here we indicate that we are considering eating three brownies, no
scoops of chocolate ice cream, one bottle of cola, and seven pieces of pineapple
cheesecake.
A B C D E
1 DECISION VARIABLES
2 Brownies Ice Cream Cola Cheese Cake
3 Eaten 3 0 1 7

5
 LP Solutions with SOLVER, an
Example:
STEP 2: Objective Function
To see if the diet is optimal, we must determine its cost as well as the
calories, chocolate, sugar, and fat it provides.
In the range B7:E7,we reference the number of units and in B8:E8 we input the per
unit cost for each available food.Then we compute the cost of the diet in cell B10
with the formula
= B7*B8 + C7*C8 +D7*D8+ E7*E8
But it is usually easier to enter the formula
= SUMPRODUCT (B7:E7, B8:E8)
And this is much easier to understand for anyone reading the spreadsheet. The
=SUMPRODUCT function requires two ranges as inputs.The first cell in the first
range is multiplied by the first cell in the second range, then the second cell in the
first range is multiplied by the second cell in the second range, and so on. All of
these products are then added.Thus, in cell B10 the =SUMPRODUCT function
computes total cost as (3)(50)+(0)(20)+(1)(30)+(7)(80) = 740 cents.
6
 LP Solutions with SOLVER, an
Example:

STEP 2: Objective Function

(cont.)
A B C D E
1 DECISION VARIABLES
2 Brownies Ice Cream Cola Cheese Cake
3 Eaten 3 0 1 7
4
5 OBJECTIVE FUNCTION
6 Brownies Ice Cream Cola Cheese Cake
7 Eaten =B3 =C3 =D3 =E3
8 Cost 50 20 30 80
9
10 Total 740 = SUMPRODUCT ( B7:E7, B8:E8)

7
 LP Solutions with SOLVER, an
Example:

STEP 3: Constraints
The final step required to set up our LP in Excel is to set up our constraints
for calories, chocolate, sugar, and fat.
To begin, we recreate the table in Excel that defines how many calories and units of
chocolate, sugar, and fat are in each type of dessert. We can use this information to
calculate the total amount based on the number of items from our decision
variables.
As an example, we can take the =SUMPRODUCT of the number of items and
the number of calories in each to calculate all the calories in our dessert
selection.
= SUMPRODUCT (B7:E7, B14:E14)
Finally, we want to indicate the limitations highlighted in the problem. We add a
> = or
< = to identify if it is a maximum or minimum constraint in Column G, and
use Column H to indicate those limits.
8
 LP Solutions with SOLVER, an
Example:

STEP 3: Constraints Formulas

(cont.)
A B C D E F G H
12 CONSTRAINTS
13 Brownies Ice Cream Cola Cheese Cake Totals Required
14 Calories 400 200 150 500 =SUMPRODUCT($B$7:$E$7,B14:E14) >= 500
15 Chocolate 3 2 0 0 =SUMPRODUCT($B$7:$E$7,B15:E15) >= 6
16 Sugar 2 2 4 4 =SUMPRODUCT($B$7:$E$7,B16:E16) >= 10
17 Fat 2 4 1 5 =SUMPRODUCT($B$7:$E$7,B17:E17) >= 8

9
 LP Solutions with SOLVER, an
Example:

STEP 3: Constraints Values Shown

(cont.)

A B C D E F G H
12 CONSTRAINTS
13 Brownies Ice Cream Cola Cheese Cake Totals Required
14 Calories 400 200 150 500 4850 >= 500
15 Chocolate 3 2 0 0 9 >= 6
16 Sugar 2 2 4 4 38 >= 10
17 Fat 2 4 1 5 42 >= 8

10
 LP Solutions with SOLVER, an
Example:
COMPLETE
A B C D E F G H
LP:
1 DECISION VARIABLES
2 Brownies Ice Cream Cola Cheese Cake
3 Eaten 3 0 1 7
4
5 OBJECTIVE FUNCTION
6 Brownies Ice Cream Cola Cheese Cake
7 Eaten 3 0 1 7
8 Cost 50 20 30 80
9
10 Total 740
11
12 CONSTRAINTS
13 Brownies Ice Cream Cola Cheese Cake Totals Required
14 Calories 400 200 150 500 4850 >= 500
15 Chocolate 3 2 0 0 9 >= 6
16 Sugar 2 2 4 4 38 >= 10
17 Fat 2 4 1 5 42 >= 8

11
 The SOLVER Parameters Dialog
Box

STEP 1:
The SOLVER Parameters
Dialog Box is used to
describe the optimization
problem to Excel.

Clicking on Data >

Solver, the following will
open:

12
 The SOLVER Parameters Dialog
Box
STEP 2:
The way we set up the problem in Excel will make it easy for us to fill in each of
the components of this Parameters Dialog Box so SOLVER can identify the
optimal solution.
First, we fill in the Set Objective box by clicking on the cell in our spreadsheet
that calculates our objective function. In this case, Cell B10.
Next, we use the radio buttons below to identify the type of problem we are solving,
a MAX or MIN. Here we want to minimize total cost and select Min.

13
 The SOLVER Parameters Dialog
Box
STEP 3:
Next, we need to identify the decision variables. SOLVER terms these as variable cells.
After clicking into the By Changing Variable Cells box, we can select the decision
variable cells in our LP, B3:E3.This tells SOLVER that it can change the number of
brownies, scoops of ice cream, sodas, and pieces of cheese cake to reach an optimal
solution.

14
 The SOLVER Parameters Dialog
Box
STEP 4:
We need to add our constraints to SOLVER to ensure our solution does not violate
any of them. On the right-hand side of the window, there is a button to Add a
constraint. After clicking on this, a box will appear that allows us to add our
constraints.
We can use the Cell Reference box to input the totals for each constraint that
we calculated. Using Calories as an example, we would click on Cell F14, which
computed the total calories from all our desserts.
There are several options for constraint type: <=, >=, =, int (integer), bin
(binary), or dif (all different, e.g., assignment,TSP). After adjusting the constraint
type to be greater than or equal to (>=) we can click on the cell referencing the
minimum quantity permitted, Cell H14. Instead of a reference, we can also enter a
specific number.The complete constraint looks as follows:

15
 The SOLVER Parameters Dialog
Box
STEP 4 (cont.):
The Add button will allow us to include all the other constraints to SOLVER.
When you have constraints structured in the same way (like these are), there is a
faster way to add them all to SOLVER. Instead of entering each constraint
individually, you can instead add them in one step.
In the Cell Reference box and Constraint box, you can also specify an array of cell
references. If both the Cell Reference and Constraint are specified using an array of
cell references, the length of the arrays must match and Solver treats this constraint as
n individual constraints, where n is the length of each array.

16
 The SOLVER Parameters Dialog
Box
STEP 4 (cont.):
We have now created four Constraints. SOLVER will ensure that the changing cells
are chosen so F14>=H14, F15>=H15, F16>=H16, and F17>=H17. In short, the
diet will be chosen to ensure that enough calories, chocolate, sugar, and fat are
eaten.

-
OR-

The Change button allows you to modify a constraint already entered and
Delete allows you to delete a previously entered constraint. If you need to add
more constraints, choose Add.

17
 The SOLVER Parameters Dialog
Box
STEP 5:
After adding all our constraints, here is the SOLVER Parameters Dialog Box:
Note the checked box titled Make
Unconstrained Variables Non-
Negative.This allows us to capture
non-negativity constraints. (Actually,
all variables will be constrained to
be
> = 0).
Additionally, you should change the
Select a Solving Method to
SIMPLEX LP when you are solving
a linear program. The other options
allow for solutions for nonlinear
programs.
Finally, click Solve for your
18 solution.
 The SOLVER Parameters Dialog
Box
SOLUTION: After you Solve, the Parameters Dialog Box will close and the
decision variables will change to the optimal solution. Because we referenced these
cells in all our calculations, the objective function and constraints will also change.
A B C D E F G H
1 DECISION VARIABLES
2 Brownies Ice Cream Cola Cheese Cake
3 Eaten 0 3 1 0
4
5 OBJECTIVE FUNCTION
6 Brownies Ice Cream Cola Cheese Cake
7 Eaten 0 3 1 0
8 Cost 50 20 30 80
9
10 Total 90
11
12 CONSTRAINTS
13 Brownies Ice Cream Cola Cheese Cake Totals Required
14 Calories 400 200 150 500 750 >= 500
15 Chocolate 3 2 0 0 6 >= 6
16 Sugar 2 2 4 4 10 >= 10
17 Fat 2 4 1 5 13 >= 8

19
 The SOLVER Parameters Dialog
Box
OPTIONS:
The Parameters Dialog Box also has a number of options on how to calculate
solutions.
Constraint Precision is the degree of accuracy of
the Solver algorithm (for example, how close does
the value of the LHS of a constraint have to be
before it is considered equal to the RHS).
Max Time allows you to set the number of
seconds before Solver will stop.
Iterations, similar to Max Time, allows you to
specify the maximum number of iterations (steps
of the Solver algorithm) before stopping.
If you want to learn about other options in
SOLVER, please reference the SOLVER website:
www.solver.com
20
 SOLVER Practice Problem-1
Now that we have gone through the basics of SOLVER, please try this practice problem to
check that you understand how to set up and solve a Linear Program:
You create your own start-up company that caters high-quality organic food directly to a number of customers.You receive
a number of tentative orders and you now have to tell your customers which orders you are going to take. Before
embarking on this journey, you first want to allocate your production capabilities in order to devise a feasible daily
production plan that maximizes your profit.
There are only three different kinds of food that you order at this early stage of the company: Hummus (H) with garlic
pitas, an excellent Moussaka (M), and a traditional Tabouleh (T) with parsley and mint.
Each meal has to be cooked, packaged and delivered. Each operation is run by yourself. You have to deliver between
12PM and 2PM everyday, and the food is made on the same day, therefore you estimate that the total number of
available cooking hours is 4, the total number of packaging hours is 2, and the total number of delivery hours is 2.
Cooking sufficient Hummus for 10 portions requires 1 hour of time, packaging is done at the rate of 20 portions per
hour, and delivery at the rate of 30 per hour.The cost of the ingredients for 1 portion is $1, and each packaged portion
can be sold for $7.
Moussaka takes more time to prepare: in one hour, the food cooking team can prepare 5 portions. Packaging is done at
the rate of 15 portions per hour. Since the Moussaka has to be delivered while still warm out of the oven, it is delivered
in smaller batches, therefore only 15 portions can be delivered in one hour.The cost of the ingredients for 1 portion is
$2, and it can be sold for $12.
Finally, Tabouleh can be prepared at the rate of 15 portions per hour, it can be packaged at the rate of 25 portions per
hour, and delivered at the rate of 30 per hour.Tabouleh is very inexpensive and one portion only costs $0.5 in raw
ingredients, and can be sold for $5. Customers expressed interest in having the following products delivered every day:
20 Hummus meals, 10 Moussaka meals, and 30 Tabouleh meals.

21
 SOLVER Practice Problem-2
Calories Fat Saturated Trans Cholesterol Sodium Carbs Fibre Sugar Protein Vitamin Vitamin Calcium Iron
(Kcal) (g) fat (g) fat (g) (mg) (mg) (g) (g) (g) (g) A (IU) C (mg) (mg) (mg)

Serving Cost per

Food Nutrition per portion
size Portion ($)

Donut 60g 239 11 3 0 18 232 30 1 12 4 13.8 0.7 27.6 2.2 0.85

Bagel, Oat Bran 57g 145 1 0 0 0 289 30 2 1 6 2.3 0.1 0.8 1.8 0.85
Yogurt,fruit,non fat 125g 119 0 0 0 2 72 24 0 24 6 15 0.9 190 0.1 1.25
Chili 216g 190 8 3 0 25 1040 17 5 5 14 1250 36 80 1.4 2.5
Brocolli,boiled,no salt 140g 49 1 0 0 0 57 10 5 2 3 2167 90.9 56 0.9 0.4
Apple 182g 95 0 0 0 0 2 25 4 19 0 98.3 8.4 10.9 0.2 0.4
Oats,instant,dry 328g 105 2 0 0 0 72 19 3 0 4 1000 0 98.5 8.2 0.5
Orange,raw,navel 140g 69 0 0 0 0 1 18 3 12 1 346 82.8 60.2 0.2 0.3
Lentils,cooked,no salt 100g 116 0 0 0 0 2 20 8 2 9 8 1.5 19 3.3 0.35
Carrots, baby raw 28g 10 0 0 0 0 22 2 1 1 0 3861 0.7 9 0.2 0.3
Brussel sprout, cooked 78g 28 0 0 0 0 16 6 2 1 2 604 48.4 28.1 0.9 0.5
Chicken, roast, no skin 140g 234 9 3 0 105 105 0 0 0 35 57.5 0 16.8 1.7 1.5
Blueberries, raw 28g 16 0 0 0 0 0 4 1 3 0 15.1 2.7 1.7 0.1 0.6
Spinach,boiled, no salt 180g 41 0 0 0 0 126 7 4 1 5 18870 17.6 245 6.4 0.3
Banana, raw 118g 105 0 0 0 0 1 27 3 14 1 75.5 10.3 5.9 0.3 0.3
Milk 1%, added vit A 244g 102 2 2 0 12 107 13 0 13 8 478 0 290 0.1 0.5

In what quantities should each of 16 foods be consumed on a daily basis in order to

fulfill the recommended constraints while keeping expense at a minimum.
Calories Fat Saturated Trans Cholesterol Sodium Carbs Fibre Sugar Protein Vitamin Vitamin Calcium Iron
(Kcal) (g) fat (g) fat (g) (mg) (mg) (g) (g) (g) (g) A (IU) C (mg) (mg) (mg) Constraints used in Solv
Nutritional bounds Min 1900 30 0 0 0 1500 150 20 0 50 3000 300 1000 18
on optimized diet Max 2200 75 25 2 300 2300 300 50 50 160 7000 40

22
 SOLVER Practice Problem-3

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?

23