You can proceed to define the problem as − The number of units sold, indirectly determining the amount of sales revenue.The level of advertising in each quarter affects the following −

You are asked to find the amount that can be spent on advertising in the next two quarters subject to a maximum of 20,000. Suppose you are analyzing the profits made by a company that manufactures and sells a certain product. Solver uses the chosen Solving Method to result in the optimal value in the objective cell. The calculation of the value in the objective cell includes the values in the decision variable cells. The values in the decision variable cells are restricted by the values in the constraint cells. Solver evaluation is based on the following − The Solver requires the following parameters − If your target cell, any of your constraints, or both contain references to changing cells that are not of the (changing cell)*(constant) form, you have a nonlinear model. Generalized Reduced Gradient (GRG) Nonlinear This means that each constraint is evaluated by adding together the terms of the (changing cell)*(constant) form and comparing the sums to a constant. The target cell is computed by adding together the terms of the (changing cell)*(constant) form.Įach constraint satisfies the linear model requirement. A Solver model is linear under the following conditions − You can choose one of the following three solving methods that Excel Solver supports, based on the type of problem − LP Simplex Now, you should be able to find the Solver command on the Ribbon under the DATA tab. Select Excel Add-Ins in the Manage box and click Go.In case you do not find the Solver command, activate it as follows − The Solver command should appear in the Analysis group as shown below. You can use Solver to find optimal solutions for diverse problems such as −ĭetermining the monthly product mix for a drug manufacturing unit that maximizes the profitability.īefore you proceed with finding solution for a problem with Solver, ensure that the Solver Add-in is activated in Excel as follows − Solver adjusts the values in the decision variable cells to satisfy the limits on constraint cells and produce the result you want for the objective cell. This means that the Solver works with a group of cells called decision variables that are used in computing the formulas in the objective and constraint cells. In Excel, you can use Solver to find an optimal value (maximum or minimum, or a certain value) for a formula in one cell called the objective cell, subject to certain constraints or limits, on the values of other formula cells on the worksheet. Then, one or more other variables are changed repeatedly, subject to the specified constraints, until you discover the best values for the target variables. Instead of setting a specific target value for a variable, the goal is to find the optimum value for one or more target variables, under certain constraints.

Solver is a Microsoft Excel add-in program you can use for optimization in what-if analysis.Īccording to O'Brien and Marakas, optimization analysis is a more complex extension of goal-seeking analysis.

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