Integer Programming: Budget Allocation with Excel Solver (Knapsack Problem)

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Given a limited resource (e.g. a budget) and a collection of activities, each of which consumes a portion of the resource and provides some benefit, choose which activities to perform so that the total benefit is maximized without exceeding the budget. This problem captures several real-life situations in which the "budget" can be money, time, space, weight, etc. In the literature, this problem is known as the knapsack problem.

[roberthuff]

🎯 Key Takeaways for quick navigation:

00:00 *📚 Introduction to Integer Programming in Excel*
- Overview of transitioning from linear to integer programming, focusing on integral or whole number variables and binary variables for decision-making.
- Introduction to binary variables for yes/no decisions and their common applications.
- Preview of utilizing binary and whole number variables in Excel models.
02:08 *🎯 Budget Allocation Problem: The Knapsack Problem*
- Explanation of the budget allocation problem as a practical application of integer programming, referring to the historical knapsack problem.
- Setting the scenario for applying a budget allocation strategy using binary variables in advertising channel selections.
- Detailing the process of mapping out the problem's constraints and objectives using a hypothetical business case.
06:05 *💻 Setting up the Excel Model for Integer Programming*
- Instructions on creating the Excel model for the problem, including data input, defining binary variables, and formulating the objective and constraints.
- Demonstrating the setup of formulas for total exposure and total expense based on binary decisions.
- Guidance on using Excel Solver for maximizing exposure within the budget constraint by adjusting Solver parameters for binary variables.
11:07 *🔄 Different Applications of the Knapsack Problem*
- Describing the versatility of the knapsack problem by illustrating various real-life applications beyond budget allocation, such as camping gear selection and space mission preparation.
- Highlighting the adaptability of the problem structure to different contexts, including time management, space utilization, and auditing projects.
- Introduction to extending the binary variable model to accommodate logical conditions in subsequent scenarios.

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[kambalejeremie]

Good teacher... I understood it from here
Thanks to much for this powerful video

[reuben]

Such a helpful video, thanks so much!

[reinzue]

Very help full video, thank you!
I want to ask a question,
Do you have any explanation on how to effectively determine which facilities should be developed, when they should be developed and at what capacity in order to achieve minimum system costs?

Thanks in advance

[ravikirankawde]

Did you have some formulas in grey cells?? I am not sure

[EloisaLira]

Obrigada pela disponibilização dessa aula, tenho um pouco de dificuldade em entender os assuntos de programação inteira, mas consegui entender bem este assunto com o seu vídeo.

[iam_eclipseena]

Very insightful. How will will determine if the problem is binary or integer?

[hakankosebas]

Sir, I don't quite understand the solver, I have a stock and have 3 feature (for example A, B, C features) of it, I want to find optimum stock that staisfy maximizing A and minimizing B and C, how can I set objective and contraints? I couldn't find same type of problem solution on youtube, please help me. I am not sure how I can set the objective and constraints.

[reuben]

How do I set a limit on how many items it can pick?

[kiramanda]

Hello can I ask for the graphical solution of this problem?

[therunningsloth]

Hi, how do you limit the number of picks it can show but can still cover the budget?