E211- OPERATIONS PLANNING II

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

Transportation Problem

How much should be shipped from several
sources to several destinations

 Sources: supply centers such as factories,

warehouses, etc.
 Destinations: receiving centers such as warehouses,
stores, etc.

Transportation models

 Find the shipping arrangement with the lowest cost

 Used primarily for existing distribution systems

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

Transportation Problem (Example)

Cleveland
(200 units required)
DesMoines
(100 unit
capacity)
Boston
(200 units
Albuquerque required)
(300 units
required) Evansville
(300 units
capacity)

Fort Lauderdale
(300 units capacity)

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

Characteristics of Transportation Problems

The Requirements Assumption
 Each source has a fixed supply of units, where this entire supply
must be distributed to the destinations.
 Each destination has a fixed demand for units, where this entire
demand must be received from the sources.

The Feasible Solutions Property

 A transportation problem will have feasible solutions if and only if
the sum of its supplies equals the sum of its demands.

The Cost Assumption

 The cost of distributing units from any particular source to any
particular destination is directly proportional to the number of
units distributed.
 This cost is just the unit cost of distribution times the number of
units distributed.

The objective is to minimize the total cost of distributing

the units.

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

Transportation Table

Cost per Unit Distributed

Destination
1 2 … n Supply
1 c11 c12 … c1n S1
2 c21 c2n S2
Source … … … … … …
m cm1 cm2 cmn Sm
Demand d1 d2 … dn

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

 Network Representation
[d1]
c11
[s1] c12
c1n

c21
[s2] c22 [d2]
c2n

cm1
cm2

[sm] cmn [dn]

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

The Transportation Model

Any problem (whether involving transportation or

not) fits the model for a transportation problem if

 It can be described completely in terms of a

transportation table that identifies all the sources,
destinations, supplies, demands, and unit costs, and

 satisfies both the requirements assumption and the

cost assumption.

 The objective is to minimize the total cost of

distributing the units.

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

Transportation Problem Solution Steps

Define problem

Set up transportation table (matrix) or network

diagram which
 Summarizes all data
 Keeps track of computations

Develop a heuristic solution

 North-West Corner Rule or Lowest Cost Method

Or find an optimal solution

 Solve LP model using Solver

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

 Today’s problem:
Transportation Table (Data Setup)

From/To Institute Design Business Institute of Warehouse

of Tech. Institute Institute Fine Arts Supply

Kuala 21 16 17 22 790
Lumpur

Johor 13 24 10 18 425
Bahru

Ipoh 25 21 20 15 585

University 350 475 465 510 -

Demand

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

 Today’s problem:
Network Representation

Institute
of Tech.
350

21
Kuala 16
790 Lumpur
17 Design
22 475
Institute
13
Johor 24
425 Bahru 10
18
Business
25 465
Institute
21
Ipoh 20
585 15

Institute of
Fine Arts
510

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

Today’s problem:
Heuristic Solution – North-West Corner Rule

 Identify the cell which is at the northwest corner.

 Allocate as many units as possible to that cell without

exceeding the supply or demand. Then cross out that
row or column (or both) that is exhausted by this
assignment.

 Move to the next cell to the right or below, depending

on whether the column or row has been crossed out.

 Repeat steps 2 & 3 until all units have been allocated.

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

 Today’s problem:
Heuristic Solution using North-West Corner Rule

1 3 5

Destinations
To/ Institute Design Business Institute of Warehouse
From of Tech. Institute Institute Fine Arts Supply
Kuala 21 16 17 22 790 2
Lumpur
350 440 440

Johor 13 24 10 18 425 4
Sources Bahru 390
35 390

Ipoh 25 21 20 15 585
75 510 510

University 350 475 465 510

Demand
35 75

Total Cost = 28280

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II
Today’s problem:
Heuristic Solution – Lowest Cost Method

 Identify the cell with the lowest cost. Arbitrarily break

any ties for the lowest cost.

 Allocate as many units as possible to that cell without

exceeding the supply or demand. Then cross out that
row or column (or both) that is exhausted by this
assignment.

 Find the cell with the lowest cost from the remaining
cells.

 Repeat steps 2 & 3 until all units have been allocated.

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

 Today’s problem:
Heuristic Solution using Lowest Cost Method

Destinations
To/ Institute Design Business Institute of Warehouse
From of Tech. Institute Institute Fine Arts Supply
Kuala 21 16 17 22 790
Lumpur

1
Johor 13 24 10 18 425
Sources Bahru 425

Ipoh 25 21 20 15 585

University 350 475 465 510

Demand 40

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

 Today’s problem:
Heuristic Solution using Lowest Cost Method

6 3 4 2

Destinations
To/ Institute Design Business Institute of Warehouse
From of Tech. Institute Institute Fine Arts Supply
Kuala 21 16 17 22 790 5
Lumpur 475 40
275
315 275

Johor 13 24 10 18 425 1
Sources Bahru
425

6
Ipoh 25 21 20 15 585
75 510 75

University 350 475 465 510

Demand 40
75

The solution from the Lowest Cost Method incurs lower

Total cost 27830 27830
cost than the North-West Method. But is this solution optimal?

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

 Today’s problem: LP Formulation
Let xij be the number of laptops to be shipped from warehouse i to
university j (i = 1,2,3; j = 1,2,3,4) – Decision variables

Minimize cost = 21x11 + 16x12 + 17x13 + 22x14 + 13x21 + 24x22 + 10x23

+ 18x24 +25x31 + 21x32 + 20x33 + 15x34 – Objective function

Subject to: - Constraints

Kuala Lumpur supply: x11 + x12 + x13 + x14 = 790
Johor Bahru supply: x21 + x22 + x23 + x24 = 425
Ipoh supply: x31 + x32 + x33 + x34 = 585
Institute of Tech. demand: x11 + x21 + x31 = 350
Design Institute demand: x12 + x22 + x32 = 475
Business Institute demand: x13 + x23 + x33 = 465
Institute of Fine Arts demand: x14 + x24 + x34 = 510

Xij >= 0 (i = 1,2,3; j = 1,2,3,4) – Non-negativity constraint

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

Today’s problem: Integer Solutions Property

 As long as all its supplies and demands have integer

values, any transportation problem with feasible
solutions is guaranteed to have an optimal solution
with integer values for all its decision variables.

 Therefore, it is not necessary to add constraints to the

model that restrict these variables to only have
integer values.

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

Today’s problem:
Optimal Solution using Excel Solver
To/ Institute Design Business Institute of Warehouse
of Tech. Institute Institute Fine Arts Supply
From
Kuala Lumpur 0 475 315 0 790
Johor Bahru 350 0 75 0 425
Ipoh 0 0 75 510 585
University 350 475 465 510
Demand

LP Total cost = $ 27,405

Compared to Minimum Cost Method ($27,830), difference of $425

Compared to North-West Corner Rule ($28280), difference of $875

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

Today’s problem:
Unbalanced Supply-Demand Formulation

If total supply > total demand, it means that some laptops

won’t be distributed. Constraints to be changed are:
Subject to: - Constraints
Kuala Lumpur supply: x11 + x12 + x13 + x14 ≤ 790
Johor Bahru supply: x21 + x22 + x23 + x24 ≤ 425
Ipoh supply: x31 + x32 + x33 + x34 ≤ 585
Institute of Tech. demand: x + x + x ≤ 350

If total supply < total demand, it means some demand
can’t be fulfilled. Constraints to be changed are:
Institute of Tech. demand: x11 + x21 + x31 ≤ 350
Design Institute demand: x12 + x22 + x32 ≤ 475
Business Institute demand: x13 + x23 + x33 ≤ 465
Institute of Fine Arts demand: x14 + x24 + x34 ≤ 510

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

Conclusion

Transportation problems deal with the distribution of
goods from several sources of supply to several
destinations having the demand

The objective is to schedule the shipment in a way to

minimize total transportation costs

Other areas of applications include facility location,

production-inventory control, personnel assignment and
equipment maintenance.

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II

Learning Objectives

Understand transportation problems that deal with the
distribution of goods from multiple supply sources to
multiple demand destinations.

 Set up transportation table (matrix) or network diagram;

 Develop heuristic solution using Northwest Corner Rule

and Lowest Cost Method;

 Formulate the transportation problem as an LP problem;

 Use MS Excel Solver to find an optimal shipment schedule

to minimize total transportation costs.

SCHOOL OF ENGINEERING E211 – OPERATIONS PLANNING II