VSS for Birge and Louveaux, Question 1, Page 43

MATP 6960 Stochastic Programming

Finding the value of the deterministic solution:

The same model file can be used. All the demand parameters in the old data file are replaced by their average values, to give a new data file. Solving gives the following:

==================================================
CPLEX 6.6.0: 
CPLEX 6.6.0: optimal solution; objective 225.83335
15 simplex iterations (0 in phase I)
ampl: display x;
x [*] :=
business   28.3333
 economy  134.167
   first   11.6667
;

ampl: display y;
y :=
business midday     28.3333
business morning    28.3333
business weekend    28.3333
economy  midday    134.167
economy  morning   134.167
economy  weekend   134.167
first    midday     11.6667
first    morning    11.6667
first    weekend    11.6667
;
=================================================

Note that 225.833 is the value of the deterministic solution, assuming we can sell the average number of tickets in each scenario.

To calculate the Value of the Stochastic Solution, we need to calculate the objective function value for the following restricted version of y:

y :=
business midday     10
business morning    28.3333
business weekend    25
economy  midday    134.167
economy  morning   134.167
economy  weekend   134.167
first    midday      5
first    morning    11.6667
first    weekend    10
;
This has objective function value 203.0559.

The value of the stochastic solution is thus 208.3333333 - 203.0559 = 5.277.

===============================================
===============================================
If we force integrality, the solution to the deterministic problem is:
===============================================
CPLEX 6.6.0: 
CPLEX 6.6.0: optimal integer solution; objective 225
10 MIP simplex iterations
0 branch-and-bound nodes
ampl: display x;
x [*] :=
business   28
 economy  136
   first   11
;

ampl: display y;
y :=
business midday     28
business morning    28
business weekend    28
economy  midday    136
economy  morning   136
economy  weekend   136
first    midday     11
first    morning    11
first    weekend    11
;
===============================================
Restricting y shows that this has objective function value 204 in the stochastic program.

So VSS = 208.3333333 - 204 = 4.33.


John Mitchell