Computers & Industrial Engineering 62 (2012) 616–623

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Computers & Industrial Engineering

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Multi-coefficients goal programming q

Ching-Ter Chang a,⇑, Huang-Mu Chen b,1, Zheng-Yun Zhuang b,2
a
Department of Information Management, Chang Gung University, 259 Wen-Hwa 1st Road, Kwei-Shan, Tao-Yuan 333, Taiwan, ROC
b
Graduate Institute of Business and Management, Chang Gung University, 259 Wen-Hwa 1st Road, Kwei-Shan, Tao-Yuan 333, Taiwan, ROC

a r t i c l e i n f o a b s t r a c t

Article history: In today’s increasingly competitive business environment, maintaining profit margins or quantities of
Received 2 February 2011 goods sold is an important issue for businesses. Accordingly, more and more industries use group pricing
Received in revised form 11 September discrimination strategy to attract potential customers in order to increase competitive advantage. Hence,
2011
to find ways maximize profit and to minimize total cost, group pricing discrimination strategy has
Accepted 22 November 2011
Available online 1 December 2011
become an important issue for decision makers. Unfortunately, these types of problems cannot be solved
by any current goal programming models. The objective of this study is to deduce a new method, which
we call the multi-coefficients goal programming, for group pricing discrimination problems. In addition,
Keywords:
Group pricing
an example is given to illustrate the correctness and usefulness of the proposed model.
Goal programming Ó 2011 Elsevier Ltd. All rights reserved.
Multi-segment goal programming

1. Introduction allowing a firm to extract more consumer surplus/profits than it

In today’s increasingly competitive business environments, in
order to maximize profit or maximize quantities of products sold
and to attain or sustain competitive advantage, companies must
customize products or their prices to satisfy different customers’
needs. For example, Dell offers different prices for the same com-
puter to different types of customers, such as general customers,
enterprises, governmental institutions and small business; simi-
larly, a movie theater usually offers at least two kinds of ticket
prices (adult ticket and student ticket) for the same movie; hotels
or car rental agencies also offer special discounts to their loyal cus-
tomers (Schön, 2010). From the above examples, it can be seen that
price discrimination (PD) plays an important role in today’s busi-
ness environment; in fact, the strategy of ‘‘adjusting price’’ or
‘‘price discrimination’’ for profit is also the easiest and fastest
way to increase enterprises’ competitiveness (Dolgui, 2010; Liao,
2011). Therefore, more and more industries use PD strategy to en-
hance their competitiveness.
Group pricing is one type of PD. It refers to how to sell the same
product to different types of customer at different prices, thus,
q Jones, and Romero (1998), and Romero (2001), among others
This manuscript was processed by Area Editor Imed Kacem.
⇑ Corresponding author. Address: Department and Graduate Institute of Information
Management, Chang Gung University, 259 Wen-Hwa 1st Road, Kwei-Shan, Tao-Yuan
333, Taiwan, ROC.
E-mail addresses: chingter@mail.cgu.edu.tw (C.-T. Chang), jckychen@gmail.com
(H.-M. Chen), waynemcgwire@yahoo.com (Z.-Y. Zhuang).
1 Giannikos, 2009; Ku, Chang, & Ho, 2010; Oddoye, Jones, Tamiz, &
Mobile: +886 939567580.
2
Mobile: +886 910249241.
would be charging a single price. In order to implement PD strat-
egy, enterprises can hold some promotion activities that will di-
rectly or indirectly incur additional costs (e.g., the costs of how
to attract general customers to become member customers and
how to enhance the customer loyalty of those member customers,
etc.). In addition, a company may sell many products, and each
product is endowed with two or more different market prices.
Therefore, based on the combinations of these variables, it is hard
work for decision makers (DMs) to determine what are the exact
amounts of products which should be sold to different types of cus-
tomers. In consideration of the facts stated above, DMs would be
glad to have a method to balance the goals of controlling cost
and selling products. It would also be useful to have a method to
determine the proper quantities and to be sold to general and
member customers. Such a method would thereby contribute to
the total sales plan/forecast of an enterprise. In fact, the problem
on balancing multiple objectives can be grounded in the field of
goal programming (GP).
GP is a decision tool for DMs to solve multiple objective decision
making problems. It was first introduced by Charnes and Cooper
(1961), and further developed by Lee (1972), Ignizio (1985), Tamiz,
(Chang, 2007; Liao, 2009). GP has been applied to solve many
real-world decision making problems such as those of supply
chain, human resources, production planning, healthcare and so
on (Adeyeye, 2008; Amiri, 2009; Caballero, Gómez, & Ruiz, 2009;
Schmidt, 2009; Pati, 2008).

0360-8352/$ - see front matter Ó 2011 Elsevier Ltd. All rights reserved.
doi:10.1016/j.cie.2011.11.027
 C.-T. Chang et al. / Computers & Industrial Engineering 62 (2012) 616–623 617

A classical GP model can be expressed as follows:
(GP Model)
X
n Fig. 1. Assume that there is a large rectangle, S, representing the
min jfi ðXÞ  g i j
i¼1
s:t: X 2 F ðF is a feasible setÞ
where fi(X) is the function of the ith goal, and gi is the aspiration
level of the ith goal.
The purpose of GP is to minimize the deviations between the
achievement of goals and their aspiration levels. There are many
minimization processes that can be accomplished with various
types of methods, such as MINMAX GP, weighted GP and lexico-
graphic GP, integer GP, nonlinear GP, stochastic GP, fractional GP,
interactive GP, GP with intervals, extended interval GP, fuzzy GP,
fuzzy extended lexicographic GP (Aouni & Kettani, 2001; Arenas-
Parra, Bilbao-Terol, Pérez-Gladish, & Rodrı́guez-Urı´a, 2010; Daim,
Kayakutlu, & Cowan, 2010; Romero, 2001; Stoyan & Kwon, 2011;
Vitoriano & Romero, 1999). Unfortunately, all of these methods
allow only one aspiration level on the right-hand-side of each goal.
In some special situations, multiple aspiration levels on the right-
hand-side of each goal might exist in many real-world problems.
For example, an insurance company sets a policy stating that its
salespersons’ annual sales must exceed the previous year’s sales
by 10% in order to receive that year’s bonus. The result is that even
if a salesperson can reach a sale of 1 million, he/she may hold back
to only 500,000 in order not to create too much pressure in the fol-
lowing year. In turn, this prevents the company from maximizing
its overall performance. However, the aspiration level of the right-
hand-side in the GP model allows only one aspiration level. Hence,
in order to help the DM find the optimal aspiration level of each goal,
Chang (2007) has proposed multi-choice GP (MCGP) to solve this
problem. The MCGP model can be expressed as follows:
X
n MSGP model. Briefly speaking, this relationship can be regarded
min jfi ðXÞ  g i1 or g i2 or . . . or g im j
i¼1
s:t: X 2 F ðF is a feasible setÞ;
Recently, following the idea of MCGP, Liao (2009) proposed a
multi-segment goal programming (MSGP) model as follows:
  þ   þ   þ  
min g 1 d1 ; d1 ; g 2 d2 ; d2 ; . . . ::; g n dn ; dn
Xn
 þ
s:t: Sij xi þ di  di ¼ g i ; j ¼ 1; 2; . . . ; m
i¼1
Sij ¼ Si1 or Si2 or . . . or Sim ; i ¼ 1; 2; . . . ; n
X 2 F ðF is a feasible setÞ
where Sij are the coefficients attached to the decision variable xi of
þ 
the ith goal; di and di are the over-and under-achievement of the
ith goal, respectively.
Though the MSGP model allows DMs to set multiple coefficients
for mapping each decision variable in the left-hand-side of the con-
Rectangle S
{( p11 , p12 )x1} g1 {( p31 , p32 )x3} g2
{( p21 , p22 )x2} g1 {( p41 , p42 )x4} g2
straints, however, there are nonetheless some drawbacks, as
follows. Let us consider the decision-making problem depicted in
global market and four small rectangles, A, B, C and D, representing
the domain marketing corresponding to four different companies,
CA, CB, CC, CD, respectively. Each company sells two products and
each product can be sold to two types of customers (e.g., general
customer and member customer). Based on group pricing discrim-
ination strategy (GPDS), each product has two different prices (one
price is for general customers; the other is for member customers).
Let us take the small rectangle (A) in Fig. 1 as an example to illus-
trate this idea. Suppose that g1 represents the sale goal of CA, and
the DM of CA would like to find out the best quantities of products
sold to the two types of customers under goal g1.
To solve this problem, we can let the decision variable xi (i = 1, 2)
be the individual quantity for selling each of the two products.
Then, we can define the coefficients pij (i, j = 1, 2) as the two differ-
ent prices for the two types of customers for the ith product. That
is, every decision variable (x1 and x2) in rectangle (A) has two asso-
ciated coefficients. By referring to the MSGP model, this problem
can be expressed as follows:
½p11 b1 þ p12 ð1  b1 Þx1 þ ½p21 b2 þ p22 ð1  b2 Þx2 ¼ g 1 ð1Þ
where bi (i = 1, 2) are binary variables, pij (i, j = 1, 2) are two possible
coefficients for two products, x1 and x2 are the quantities of the two
products which are sold.
As seen in the Eq. (1), if b1 = 1 then the term [p11
b1 + p12(1  b1)]x1 becomes p11x1, and if b1 = 0 then the term
[p11b1 + p12(1  b1)]x1 becomes p12 x1. This implies the possible
coefficients for each decision variable is actually a mutually exclu-
sive relationship. That is, only one coefficient will be chosen and
other coefficients are excluded for each decision variable in the
as an exclusive-or (XOR) relationship (Hempel, 1966). Render the
result of Eq. (1) into Table 1 according to the behavior of the two
binary variables b1 and b2.
From above descriptions, if the DM would like to solve a prob-
lem in which double coefficients might co-exist and co-affect each
other at the same time, the solution of the MSGP model could not
fully meet the DM’s requirements. To the best of our knowledge, no
previous studies have been conducted to solve such a problem.
Thus, the purpose of this study is to solve the problems of multiple
coefficients existing in the GPDS and to establish a newly articu-
lated model.
In sum, the above discussion reveals that we need to develop a
new model to solve such problem where the relationship between
the multiple coefficients and decision variables can be an ‘‘AND’’
relationship not only a ‘‘XOR’’ relationship. This significant
improvement is the major contribution of this study. Throughout
this study, we are generalizing, proposing and deducting our brand
new model based on the above observation. Our hypothesis con-
tributes to the proposed model, in as much as it solves our target
problem in a practical way. The rest of this paper is organized as
follows: the problem description and proposed model are de-
scribed in Section 2, illustrative examples are given in Section 3,
and finally conclusions are made in Section 4.

Table 1
Rectangle (A) Rectangle (B)
The result of MSGP.

{( p51 , p52 )x5} g3 {( p71 , p72 )x7} g4 b2 b1

{( p61 , p62 )x6} g3 {( p81 , p82 )x8} g4 0 1

1 p12x1 + p21x2 = g1 p31x1 + p41x2 = g2
Fall in Rectangle (A) Fall in Rectangle (B)
Rectangle (C) Rectangle (D)
0 p52x1 + p62x2 = g3 p71x1 + p82x2 = g4
Fall in Rectangle (C) Fall in Rectangle (D)
Fig. 1. Example of MSGP coefficients.
618 C.-T. Chang et al. / Computers & Industrial Engineering 62 (2012) 616–623

2. Modeling multi-coefficients goal programming problem Table 2

The result of DCGP coefficients.

In the GPDS, a DM sets different prices for one single product in b2 b1

accordance with customers’ properties in order to maximize prof- 0 1
its or maximize the quantities of products sold (Schön, 2010). In
1 p12t11 + p11t12 + p21t21 + p22t22 = g1 p31t31 + p32t32 + p41t41 + p42t42 = g2
fact, many enterprises, such as airline companies, hotels, retailers Fall in Rectangle (A) Fall in Rectangle (B)
and car rental agencies, as well as companies in the travel, hospi- 0 p52t51 + p51t52 + p62t61 + p61t62 = g3 p71t71 + p72t72 + p82t81 + p81t82 = g4
tality and entrainment industries, often take this policy to enhance Fall in Rectangle (C) Fall in Rectangle (D)
their competitiveness (Belobaba, 1987, 1989; Bitran & Mondsch-
ein, 1995; Bitran & Gilbert, 1996; Belobaba & Wilson, 1997; Bern-
stein & Federgruen, 2003; Chen, Federgruen, & Zheng, 2001; Schön,
MSGP DCGP
2010). In order to implement the ‘‘AND’’ relationship for multiple
coefficients of GPDS, we try to derive a double-coefficients goal xi
xi
programming (DCGP) model as follows. t i1 ti2
Fig. 2 is revised from Fig. 1. We take the rectangle (A) in Fig. 2 as
an example to demonstrate the ‘‘AND’’ relationship and to repre-
sent the multiple coefficients of GPDS. First, we introduce an addi-
tional decision variable tij, which indicates the quantity of product i pi1 pi2 pi1 pi2 pi1 pi2
sold to the specified customer group j. Other notations are defined
as follows: Fig. 3. The difference between MSGP and DCGP model.

pij: Selling price of ith product sold to the jth type of customer
b2 = 0 then Eq. (2) becomes ‘‘p12t11 + p11t12 + p22t21 + p21t22 = g1’’.
(i = 1, 2; j = 1, 2)
As can be seen, though bi is changed, finally, each tij can easily be
tij: Quantity Sold of ith product to the jth type of customer
mapped to a proper coefficient (pij). That is, through this method,
(i = 1, 2; j = 1, 2)
we can reach the ‘‘AND’’ relationship for the DCGP problem.
xi: total amount of ith product sold (i = 1, 2)
From previous descriptions, we know that the relationship be-
tween all the possible coefficients of each decision variable can
Second, we show how to find out the proper coefficient of each
actually be an ‘‘AND’’ relationship, not only an ‘‘XOR’’ relationship.
decision variable in the DCGP model. Following the idea of Chang
Subsequently, the general DCGP model can be expressed as
(2007) and Liao (2009), we introduce two extra binary variables,
follows:
b1 and b2, into the DCGP model to deal with this problem; the
new model can be expressed as follows: X
n
þ 
min z ¼ di þ di
½p11 b1 þ p12 ð1  b1 Þt 11 þ ½p11 ð1  b1 Þ þ p12 b1 t12 i¼1
þ½p21 b2 þ p22 ð1  b2 Þt 21 s:t: ½pi1 bi þ pi2 ð1  bi Þti1 þ ½pi1 ð1  bi Þ þ pi2 bi t i2
þ½p21 ð1  b2 Þ þ p22 b2 t 22 ¼ g 1 ð2Þ þ 
 di þ di ¼ g i ; i ¼ 1; 2; . . . ; n
P
2
X
2
tij ¼ xi ði ¼ 1; 2Þ
j¼1
t ij ¼ xi ; i ¼ 1; 2; . . . ; n
j¼1
where bi (i = 1, 2) are binary variables; x1 and x2 are the quantities þ 
di ; di P 0; i ¼ 1; 2; 3 . . . ; n
sold of the two products, respectively.
X 2 F ðF is a feasible setÞ
Render the result of Eq. (2) into Table 2 according to the two
binary variables, b1 and b2. where bi is the binary variable; xi represents the total amount of the
Fig. 3 shows the difference between the MSGP and DCGP þ 
ith product sold; di and di are the over- and under-achievements of
models. As can be seen in Fig. 3, each decision variable (xi) in the the ith goal, respectively.
DCGP model can be decomposed into two ‘sub decision variables’ In general, if there are more than two prices mapping one prod-
(ti1 and ti2), which represent two different types of customers, uct, it becomes a multi-coefficient GP problem. Furthermore, based
and each sub decision variable maps two different prices. In order on the idea of the proposed DCGP model, we can add extra binary
to find the proper price of each sub decision variable, we can add variables for modeling multi-coefficient GP; thus, which can be ex-
binary variables (bi) to deal with this problem. Eq. (1) is then trans- pressed as follows:
formed to Eq. (2). For example, if b1 = 1 and b2 = 1 then Eq. (2)
becomes ‘‘p11t11 + p12t12 + p21t21 + p22 t22 = g1’’, and if b1 = 0 and X
n
þ 
min z ¼ di þ di
i¼1
X
n X
m
þ 
Rectangle S s:t: pik cik ðBÞtij  di þ di ¼ g i ; i ¼ 1; 2; . . . ; n;
j¼1 k¼1
{[( p11 , p12 )t11; ( p11 , p12 )t12]x1 } g1 {[( p31 , p32 )t31; ( p31 , p32 )t32]x3 } g2 X
m
{[( p21 , p22 )t21; ( p11 , p12 )t22]x2 } g1 {[( p41 , p42 )t41; ( p41 , p42 )t42]x4 } g2 t ij ¼ xi ; i ¼ 1; 2; . . . ; n;
j¼1
Rectangle (A) Rectangle (B) þ 
di ; di P 0; i ¼ 1; 2; . . . ; n;
{[( p51 , p52 )t51; ( p51 , p52 )t52]x5 } g3 {[( p71 , p72 )t31; ( p71 , p72 )t72]x7 } g4 cik ðBÞ 2 Ri ðxÞ; i ¼ 1; 2; . . . ; n;
{[( p61 , p62 )t21; ( p61 , p62 )t62]x6 } g3 {[( p81 , p82 )t41; ( p81 , p82 )t82]x8 } g4 X 2 F ðF is a feasible setÞ;

Rectangle (C) Rectangle (D) where cik(B) is a function of the binary serial number, referring to
Chang (2007); Ri(x) is the function of resource limitations; other
Fig. 2. Example of DCGP coefficients. variables are defined as in DCGP.
 C.-T. Chang et al. / Computers & Industrial Engineering 62 (2012) 616–623 619

By referring to Chang (2000), the binary terms cik(B) can be
linearized as follows. Let y = cik(B), where y must satisfy the follow-
ing inequalities
! !
X
m X
m
cik ðBÞ  m þ 1 6 y 6 m cik ðBÞ þ 1
k¼1 k¼1
y 6 cik ðBÞ; for all k
y P 0
The above inequalities can be checked as follows:
P
(i) if m c ðBÞ ¼ m then y = 1 (from Eq. (3)),
Q k¼1 ik
(ii) if m
k¼1 cik ðBÞ ¼ 0 then y = 0 (from Eqs. (4), (5)).
One may have a question concerning ‘‘whether the number of
group types impacts the efficiency of multi-coefficient GP model
or not’’. In fact, in real business cases as mentioned in Section 1,
there usually may not be too many group types. Hence, to solve
the moderate problem, efficiency of linearized method has been
provided in the study of Chang (2000).
3. An illustrative example
A wholesaler sells three products: TV, radio, and cellular phone.
Each product can be sold to two types of customers, namely gen-
eral customers and member customers. The DM of the wholesaler
company decided to deploy the GPDS for the three products. For
each product, the selling price and related costs are described in
Table 3.
The DM wants to find out the best combination of quantities of
the three products for general customers and member customers
and satisfy the following pre-defined goals.
 Goal 1 (sales goal): The DM wishes the revenue to be greater
than or equal to 4500.
 Goal 2 (purchasing cost goal): The DM wishes the total purchase
cost of acquiring the three products to be smaller than or equal
to 2800.
 Goal 3 (marketing cost goal): The DM wishes the total market-
ing cost of the three products to be smaller than or equal to 400.
x2: Total sales amount of Radios.
x3: Total sales amount of Cellular Phones.
t1j: Quantities sold of TVs to member customers or general cus-
tomers (j = 1, 2).
ð3Þ t2j: Quantities sold of Radios to member customers or general
customers (j = 1, 2).
ð4Þ t3j: Quantities sold of Cellular Phones to member customers or
general customers (j = 1, 2).
ð5Þ
p1j: Selling price of TVs sold to member customers or general
customers by referring to Table 3; the p11 = 8 and p12 = 10.
p2j: Selling price of Radios sold to member customers or general
customers by referring to Table 3; the p21 = 6 and p22 = 7.
p3j: Selling price of Cellular Phones sold to member customers
or general customers by referring to Table 3, the p31 = 5 and
p32 = 6.
u1j: Purchasing cost of TVs sold to member customers or general
customers by referring to Table 3; the u11 = 5 and u12 = 7.
u2j: Purchasing cost of Radios sold to member customers or gen-
eral customers by referring to Table 3; the u21 = 4 and u22 = 5.
u3j: Purchasing cost of Cellular Phones sold to member custom-
ers or general customers by referring to Table 3, the u31 = 3 and
u32 = 4.
c1j: Marketing cost of selling TVs to member customers or gen-
eral customers by referring to Table 3; the c11 = 0.5 and c12 = 0.3.
c2j: Marketing cost of selling Radios to member customers or
general customers by referring to Table 3; the c21 = 0.8 and
c22 = 0.3.
c3j: Marketing cost of selling Cellular Phones to member cus-
tomers or general customers by referring to Table 3; the
c31 = 0.6 and c32 = 0.1.
According to the above mentioned definitions, the problem can
be expressed as follows.
Goals:
ðg 1 Þf8; 10gx1 þ f6; 7gx2 þ f5; 6gx3 P 4500
ðg 2 Þf5; 7gx1 þ f4; 5gx2 þ f3; 4gx3 6 2800
ðg 3 Þf0:5; 0:3gx1 þ f0:8; 0:3gx2 þ f0:6; 0:1gx3 6 400
Constraints:

Except the abovementioned three major goals, the DM also x1 ¼ 0:3ðx1 þ x2 þ x3 Þ; ð6Þ
hopes that among the total sales, 30% is in TV sales, 40% is in Radio x2 ¼ 0:4ðx1 þ x2 þ x3 Þ; ð7Þ
sales, and 30% is in Cellular Phone sales for risk management. x3 ¼ 0:3ðx1 þ x2 þ x3 Þ; ð8Þ
In order to demonstrate how to use the proposed model to solve
the above problem, the following two cases are taken by using
DCGP and MSGP models. The correctness and usefulness of the t11 þ t 12 ¼ x1 ; ð9Þ
DCGP are also provided in the two cases. t21 þ t 22 ¼ x2 ; ð10Þ
t31 þ t 32 ¼ x3 ; ð11Þ
3.1. Case I. Using DCGP to solve this problem
where the {} braces enclose a set of some possible coefficients in an
To illustrate the modeling and solving of the problem by DCGP, OR relationship (each stated {} set includes two coefficients that ap-
the related notations are defined as follows: pear in a XOR relationship or in an AND relationship), as mentioned
in Section 1. For example, for g1, there is a possible coefficient set of
x1: Total sales amount of TVs. {8, 10} beneath x1 as stated. In this case, rather than taking 8 or 10

Table 3
Selling price, purchasing cost and marketing cost of each product.

Item Product name

TV Radio Cell phone
Member customer General customer Member customer General customer Member customer General customer
Selling price $8 $10 $6 $7 $5 $6
Purchasing cost $5 $7 $4 $5 $3 $4
Marketing cost $0.5 $0.3 $0.8 $0.3 $0.6 $0.1
620 C.-T. Chang et al. / Computers & Industrial Engineering 62 (2012) 616–623

individually, either 8, 10, or a mixture of both, are the possible Table 5

coefficients of x1 which are supposed to affect the result. The goal deviations of Case I.

Based on the proposed DCGP model, this problem can be formu- Deviation variable Goal
lated as the following program: g1 g2 g3
(P1) þ  þ  þ 
d1 d1 d2 d2 d3 d3
þ  þ  þ 
min z ¼ d1 þ d1 þ d2 þ d2 þ d3 þ d3 Deviation value 0 0 90 0 10 0
s:t: ð8b1 þ 10ð1  b1 ÞÞt11 þ ð10b1 þ 8ð1  b1 ÞÞt 12 Total deviation 0 0 90 0 10 0

þ ð6b2 þ 7ð1  b2 ÞÞt21 þ ð7b2 þ 6ð1  b2 ÞÞt22

þ  þ  þ  þ 
þ ð5b3 þ 6ð1  b3 ÞÞt31 þ ð6b3 þ 5ð1  b3 ÞÞt32  d1 þ d1 ¼ 4500; ð12Þ min z ¼ d1 þ d1 þ d2 þ d2 þ d3 þ d3
ð5b1 þ 7ð1  b1 ÞÞt11 þ ð7b1 þ 5ð1  b1 ÞÞt12 þ ð4b2 þ 5ð1  b2 ÞÞt21 s:t: ð8b1 þ 10ð1  b1 ÞÞx1 þ ð6b2 þ 7ð1  b2 ÞÞx2 þ ð5b3 þ 6ð1  b3 ÞÞ
þ ð5b2 þ 4ð1  b2 ÞÞt22 þ ð3b3 þ 4ð1  b3 ÞÞt31 þ 
þ 
 d1 þ d1 ¼ 4500; ð5b1 þ 7ð1  b1 ÞÞx1 þ ð4b2 þ 5ð1  b2 ÞÞx2
þ ð4b3 þ 3ð1  b3 ÞÞt32  d2 þ d2 ¼ 2800; ð13Þ
þ 
þ ð3b3 þ 4ð1  b3 ÞÞ  d2 þ d2 ¼ 2800;ð0:5b1 þ 0:3ð1  b1 ÞÞx1
ð0:5b1 þ 0:3ð1  b1 ÞÞt 11 þ ð0:3b1 þ 0:5ð1  b1 ÞÞt12
þ
þ ð0:8b2 þ 0:3ð1  b2 ÞÞt21 þ ð0:3b2 þ 0:8ð1  b2 ÞÞt22 þ ð0:8b2 þ 0:3ð1  b2 ÞÞx2 þ ð0:6b3 þ 0:1ð1  b3 ÞÞx3  d3
þ  
þ ð0:6b3 þ 0:1ð1  b3 ÞÞt31 þ ð0:1b3 þ 0:6ð1  b3 ÞÞt32  d3 þ d3 ¼ 400 þ d3 ¼ 400;
ð14Þ Eqs:ð6Þ  ð8Þ
Eqs: ð6Þ  ð11Þ þ 
di ; di P 0; i ¼ 1;2; 3
þ 
di ;di P 0; i ¼ 1;2;3
x1 ;x2 ;x3 P 0 and integer
t11 ;t12 ;t21 ;t22 ;t31 ;t32 ;x1 ;x2 ;x3 P 0 and integer

where b1, b2 and b3 are binary variables; x1, x2 and x3 are the total
sales quantities of TVs, Radios and Cellular Phones, respectively;
{t11, t12}, {t21, t22}, {t31, t32} denote the actual quantities of products
sold to general customers OR member customers for TVs (x1),
þ 
Radios (x2) and Cellular Phones (x3); di and di are the positive
and negative deviation variables, respectively.
Solving the above DCGP modeled problem using LINGO
(Scharge, 2002) on a PC 586 with 2 GHz CPU, we obtain the optimal
solutions (x1,x2,x3,t11, t12,t21,t22,t31,t32,b1,b2,b3,g1,g2,g3) = (210,280,
210,0,210,45,235,45,165,0, 0,0) as shown in Table 4. The goal devia-
tions are shown in Table 5.
þ 
As can be seen in Table 5, the deviations (d1 and d1 ) of g1 are
zero, which means we reach the sales goal of 4500 exactly; g2
þ
has a value ðd2 ¼ 90Þ over the purchase cost goal of 2800, while
þ
g3 has a value ðd3 ¼ 10Þ over the marketing cost goal of 400. The
total deviation of the objective function z is 100.
Although it is not proper to apply any current goal program-
ming models to the problem that we have pointed out above, we
still use the MSGP model to solve this problem again as follows.
3.2. Case II. Using MSGP to solve the same problem
Goals:
ðg 1 Þf8 XOR 10gx1 þ f6 XOR 7gx2 þ f5 XOR 6gx3 P 4500
ðg 2 Þf5 XOR 7gx1 þ f4 XOR 5gx2 þ f3 XOR 4gx3 6 2800
ðg 3 Þf0:5 XOR 0:3gx1 þ f0:8 XOR 0:3gx2 þ f0:6 XOR 0:1gx3 6 400
Constraints: Eqs. (6)–(8)
Based on the MSGP method proposed by Liao (2009), this prob-
lem can be formulated as the following program:
(P2)
where all variables are defined as in P1.
Similarly, we solve the program using LINGO (Scharge, 2002) on
a PC586 with 2 GHz CPU to obtain the optimal solutions
(x1, x2, x3, b1, b2, b3) = (213, 284, 213, 1, 1, 1) as shown in Table 6. The
goal deviations are shown in Table 7.

From Table 7, the g1 has a value ðd1 ¼ 27Þ below the sales goal
þ
of 4500; g2 has a value ðd2 ¼ 40Þ over the purchase cost goal of
þ
2800, while g3 has a value ðd3 ¼ 61:5Þ over the marketing cost goal
of 400. The total deviation of the objective function z is 128.5. In
addition, we can also observe that the relationship of coefficients
of the decision variables in this model (P2) is ‘‘XOR’’.
Based on the results obtained from both Cases I and II, Table 8
compares the details derived from the DCGP and MSGP models.
As seen in Table 8, DCGP has the total deviation value of 100
that is better than MSGP has the total deviation value of 128.5.
Moreover, DCGP can obtain the quantities of each product sold to
both member customers and general customers. However, MSGP
can only obtain the quantities of product sold to either member
customers or general customers. Obviously, the utilization of MSGP
has been improved by the proposed DCGP.
To illustrate the superiority of the DCGP model, we made a mar-
ginal benefit analysis diagram, as shown in Fig. 4. In Fig. 4, the prof-
it of DCGP and MSGP are 4500 and 4473, respectively. That is,
against MSGP, the profit increased by 27 (see mark A in Fig. 4) in
DCGP model. Moreover, purchasing cost and marketing cost be-
came (2890, 410) and (2840, 461.5), respectively. Notably, the pur-
chasing cost increased by 50 (see mark B in Fig. 4), but the
marketing cost had dropped 51.5 (see mark C in Fig. 4) in the DCGP
model. Consequently, by adopting the proposed DCGP model, the
marginal benefit earned by the company became 28.5 (mark
A + mark C-mark B), which would be more than that obtained by
MSGP.

Table 4
Solutions of Case I.

Item Product name

TV Radio Cell phone
Member customer General customer Member customer General customer Member customer General customer
Quantities sold 210 0 235 45 165 45
Total selling amount 210 280 210
 C.-T. Chang et al. / Computers & Industrial Engineering 62 (2012) 616–623 621

Table 6
Solutions of Case II.

Item Product name

TV Radio Cell phone
Member customer General customer Member customer General customer Member customer General customer
Quantities sold 213 0 284 0 213 0
Total selling amount 213 284 213

Table 7 Table 8
The goal deviations of Case II. Comparisons of DCGP model and MSGP model.

Deviation variable Goal Observations Percentage Observations Percentage

value of goal value of goal
g1 g2 g3
(DCGP) achievement (MSGP) achievement
þ  þ  þ 
d1 d1 d2 d2 d3 d3 (%) (%)

Deviation value 0 27 40 0 61.5 0 Quantities sold 210 213

Total deviation 0 27 40 0 61.5 0 (x1)
Member 210 213
customers
General 0 0
3.3. Case III. Using DCGP to solve the same problem with fixed ‘‘ratio of customers
selling’’ Quantities sold 280 284
(x2)
In order to suit the real case, the DM might wish that a fixed ra- Member 235 284
customers
tio of selling 60% (40%) can be kept to the member customers (the General 45 0
general customers). According to this condition, the constraints of customers
Case I can be reformulated as follows. Quantities sold 210 213
Constraints: (x3)
Member 165 213
x1 ¼ 0:3ðx1 þ x2 þ x3 Þ; customers
General 45 0
x2 ¼ 0:4ðx1 þ x2 þ x3 Þ; customers
x3 ¼ 0:3ðx1 þ x2 þ x3 Þ; Goal g1 4500 100 4473 99.4
t11 þ t 12 ¼ x1 ; Goal g2 2890 97 2840 98.57
Goal g3 410 97.5 461.5 84.6
t21 þ t 22 ¼ x2 ;
Total deviation 100 128.5
t31 þ t 32 ¼ x3


0:6x1 if b1 ¼ 1
t 11 ¼ value
1  0:6x1 if b1 ¼ 0

0:6x2 if b2 ¼ 1
t 21 ¼
1  0:6x2 if b2 ¼ 0
 4500
0:6x3 if b3 ¼ 1 A 27 (Revenue difference)
t 31 ¼ 4473
1  0:6x3 if b3 ¼ 0
To solve this problem, we can add the ‘‘ratio of selling con-
DCGP model
straints (RoS)’’ to the DCGP model, which can be expressed as
follows: 2890
50 (Purchasing
MSGP model B
þ  þ  þ  Cost difference)
min z ¼ d1 þ d1 þ d2 þ d2 þ d3 þ d3 2840
s:t Eqs: ð6Þ  ð14Þ
b1 t11 þ ð1  b1 Þt 12 ¼ ð0:6b1 x1 Þ þ ð0:6ð1  b1 Þx1 Þ
461.5
b2 t21 þ ð1  b2 Þt 22 ¼ ð0:6b2 x2 Þ þ ð0:6ð1  b2 Þx2 Þ 51.5 (Marketing
C
410 Cost difference)
b3 t31 þ ð1  b3 Þt 32 ¼ ð0:6b3 x3 Þ þ ð0:6ð1  b3 Þx3 Þ
þ 
di ; di P 0; i ¼ 1; 2; 3
t 11 ; t12 ; t21 ; t 22 ; t 31 ; t 32 ; x1 ; x2 ; x3 P 0 and integer g1 g2 g3 goal
Revenue Purchasing Marketing
where all variables are defined as in P1. Cost Cost
Again, solve the above problem by using LINGO (Scharge, 2002)
on a PC 586 with 2 GHz CPU, we obtain the optimal solutions Fig. 4. Marginal benefit analysis of two models.
(x1, x2, x3, t11, t12, t21, t22, t31,t32, b1, b2, b3) = (195, 260, 195, 78, 117, 104,

156, 78, 117, 0, 0, 0) as shown in Table 9. The goal deviations are 2800, while g3 has a value ðd3 ¼ 84:1Þ below the marketing cost
shown in Table 10. goal of 400. The total deviation of the objective function z is 289.1.

From Table 10, the g1 has a value ðd1 ¼ 67Þ below the sales goal Notably, as seen in Table 9, each product can be sold to both
þ
of 4500; g2 has a value ðd2 ¼ 138Þ over the purchase cost goal of member customers and general customers at the same time. How-
622 C.-T. Chang et al. / Computers & Industrial Engineering 62 (2012) 616–623

Table 9
Solutions of Case III.

Item Product name

TV Radio Cell phone
Member customer General customer Member customer General customer Member customer General customer
Quantities sold 117 78 156 104 117 78
Total selling amount 195 260 195

Table 10 Table 12
The goal deviations of Case III. The goal deviations of Case IV.

Deviation variable Goal Deviation variable Goal

g1 g2 g3 g1 g2 g3
þ  þ  þ  þ  þ  þ 
d1 d1 d2 d2 d3 d3 d1 d1 d2 d2 d3 d3

Deviation value 0 67 138 0 0 84.1 Deviation value 0 67 138 0 0 84.1

Total deviation 0 67 138 0 0 84.1 Total deviation 0 67 138 0 0 84.1

ever, the RoS constraints cannot be added to the MSGP model. This Table 13
can also imply the possibly potential advantage and superiority of Comparisons of DCGP model and MINMAX-DCGP model.
the proposed DCGP model. Observations Percentage Observations Percentage
value of goal value of goal
(DCGP) achievement (MINMAX- achievement
3.4. Case IV. Using MINMAX-DCGP to solve the same problem with (%) DCGP) (%)
fixed RoS
Quantities sold 195 195
(x1)
Since there are many minimization processes that can be Member 117 117
accomplished with various types of extension models in the field customers
of GP. MINMAX is a common technique among them. Thus, we will General 78 78
customers
demonstrate how to adopt MINMAX-DCGP to solve the GPDS prob-
Quantities sold 260 260
lem. A MINMAX-GP can be modeled as follows (Yaghoobi & Tamiz,
(x2)
2007). Member 156 156
(MINMAX-GP) customers
General 104 104
min z ¼ D customers
þ 
fi ðXÞ  di þ di ¼ g i i ¼ 1; 2; 3; . . . ; n Quantities sold 195 195
þ  (x3)
D P di þ di i ¼ 1; 2; 3; . . . ; n Member 117 117
s:t: X 2 F ðF is a feasible setÞ customers
General 78 78
customers
By referring to the MINMAX-GP and DCGP models, the problem of
Goal g1 4433 98.5 4433 98.5
Case III can be transformed as the following MINMAX-DCGP model.
Goal g2 2938 95 2938 95
(MINMAX-DCGP) Goal g3 315.9 121 315.9 121

min z ¼ D Total deviation 289.1 289.1

s:t: Eqs: ð6Þ  ð14Þ

þ 
D P di þ di i ¼ 1; 2; 3
Again solving the above problem using LINGO (Scharge, 2002)
b1 t11 þ ð1  b1 Þt 12 ¼ ð0:6b1 x1 Þ þ ð0:6ð1  b1 Þx1 Þ on a PC 586 with 2 GHz CPU, we obtain the optimal solutions
b2 t21 þ ð1  b2 Þt 22 ¼ ð0:6b2 x2 Þ þ ð0:6ð1  b2 Þx2 Þ (x1, x2, x3, t11, t12, t21, t22, t31, t32, b1, b2, b3) = (195, 260, 195, 117, 78,104,
b3 t31 þ ð1  b3 Þt 32 ¼ ð0:6b3 x3 Þ þ ð0:6ð1  b3 Þx3 Þ 156, 117, 78, 1, 0, 1) as shown in Table 11. The goal deviations are
þ  shown in Table 12.Based on the results obtained from Cases III
di ; di P 0; i ¼ 1; 2; 3
and IV, we can compare the details for the DCGP and MINMAX-
t 11 ; t12 ; t21 ; t 22 ; t 31 ; t 32 ; x1 ; x2 ; x3 P 0 and integer DCGP models in Table 13. As seen in Table 13, DCGP and
MINMAX-DCGP obtain the same optimal solutions.
where all variables are defined in P1.

Table 11
Solutions of Case IV.

Item Product name

TV Radio Cell phone
Member customer General customer Member customer General customer Member customer General customer
Quantities sold 117 78 156 104 117 78
Total selling amount 195 260 195
 C.-T. Chang et al. / Computers & Industrial Engineering 62 (2012) 616–623
4. Conclusions
The traditional GP model allows each decision variable on the
left-hand-side of each goal mapping to have only one coefficient.
Practically, in some cases, one decision variable mapping multiple
coefficients may exist in the real world, such as in cases with GPDS
problems. Previous studies have proposed the MSGP model, in
which each decision variable can map multiple coefficients. How-
ever, the relationship among these coefficients is an ‘‘XOR’’ rela-
tionship, not an ‘‘AND’’ relationship. Therefore, the MSGP model
cannot solve problems with multiple coefficients.
In this study, we propose a new DCGP model to solve the ‘‘AND’’
relationship among multiple coefficients. In addition, we take a
simple group pricing problem as an example to show the correct-
ness and usefulness of the proposed model. In this example, the
proposed model not only allows a DM to set different prices for
one single product, but also it obtains a properly satisfactory solu-
tion by finding a balance for all goal targets. Finally, the superiority
of the proposed approach is observed from the proposed illustra-
tive example, whereas, the result also reveals that the solution of
the DCGP model is much better than that of MSGP model.
The model proposed in this study is driven by the operational
facts which render better results in comparison to the previous
MSGP method. Thus, our study might connote a more complete
range of problem-solving and decision-making capability. We hope
the promising results can advise us and spur further research in the
field of multi-coefficient GP.
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