Abstract
This paper stresses the use of goal programming as a what-if device and examines two methods of applying goal programming to a financial planning problem. Traditional goal programming ranks the competing goals by assigning preemptive priority factors to the corresponding deviations; another approach is to provide more flexible penalty functions and to modify the penalties for missing the various goals during subsequent what-if sessions. Examples are provided that illustrate that 1) the user is provided with more potential solutions in the search for a satisfactory one if the latter method is used, and 2) this method produces a better mix of deviations-from-goal. This procedure was applied by corporate financial planners at Texas Instruments, Inc. and was found to be a very flexible and powerful planning instrument.
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