Chapter 6, Part A: Distribution and Network Models

Special cases of LPP

• Transportation Problem
• Transshipment Problem
• Assignment Problem
 Transportation Problem

 The transportation problem seeks to minimize the

total transportation/shipping costs of transporting
goods from m origins (each with a supply si) to n
destinations (each with a demand dj), when the unit
shipping cost from an origin, i, to a destination, j, is
cij.
 Transportation Problem

 Network Representation

1 d1
c11
s1 1 c12
c13
2 d2
c21

s2 2 c22
c23
3 d3

Sources Destinations
 Transportation Problem

 Linear Programming Formulation

Using the notation:

xij = number of units shipped from
origin i to destination j
cij = cost per unit of shipping from
origin i to destination j
si = supply or capacity in units at origin i
dj = demand in units at destination j
continued
 Transportation Problem

 Linear Programming Formulation (continued)

𝑚 𝑛

Min 𝑐𝑖𝑗 𝑥𝑖𝑗

𝑖=1 𝑗=1
𝑛

𝑥𝑖𝑗 ≤ 𝑠𝑖 𝑓𝑜𝑟 𝑖 = 1, 2, … , 𝑚 Supply

𝑗=1
𝑚

𝑥𝑖𝑗 ≤ 𝑑𝑗 𝑓𝑜𝑟 𝑖 = 1, 2, … , 𝑛 Demand

𝑖=1

xij > 0 for all i and j

Foster Generators operates plants in Cleveland, Ohio;
Bedford, Indiana; and York, Pennsylvania. Production
capacities over the next three-month planning period for
one particular type of generator are as follows:

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The firm distributes its generators through four regional
distribution centers located in Boston, Chicago, St.
Louis, and Lexington; the three-month forecast of
demand for the distribution centers is as follows:

Management would like to determine how much of its

production should be shipped from each plant to each
distribution center.

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TRANSPORTATION COST PER UNIT FOR THE FOSTER
GENERATORS TRANSPORTATION PROBLEM

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xij number of units shipped from origin i to destination j where i 1, 2, . . . , m and j 1, 2, . . . , n

Solve with MS Excel Solver

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 Transportation Problem

 LP Formulation Special Cases

• Total supply exceeds total demand:
No modification of LP formulation is necessary.

• Total demand exceeds total supply:

Add a dummy origin with supply equal to the
shortage amount. Assign a zero shipping cost
per unit. The amount “shipped” from the
dummy origin (in the solution) will not actually
be shipped.

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 Transportation Problem

 LP Formulation Special Cases (continued)

• The objective is maximizing profit or revenue:
Solve as a maximization problem.

• Minimum shipping guarantee from i to j:

xij > Lij
• Maximum route capacity from i to j:
xij < Lij
• Unacceptable route:
Remove the corresponding decision variable.

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Solution for BFS-
 N-W corner Method
 Least Cell Method
 VAM Method

Solution for Optimality-

Stepping Stone
Modi-Method (UV method) Most Preferred

Solve with MS Excel Solver

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 Transportation Problem: Example #1

Acme Block Company has orders for 80 tons of

concrete blocks at three suburban locations as follows:
Northwood -- 25 tons, Westwood -- 45 tons, and
Eastwood -- 10 tons. Acme has two plants, each of
which can produce 50 tons per week. Delivery cost per
ton from each plant to each suburban location is shown
on the next slide.
How should end of week shipments be made to fill
the above orders?
 Transportation Problem: Example #1

 Delivery Cost Per Ton

Northwood Westwood Eastwood

Plant 1 24 30 40
Plant 2 30 40 42
 Transportation Problem: Example #1

 Optimal Solution

Variable From To Amount Cost

x11 Plant 1 Northwood 5 120
x12 Plant 1 Westwood 45 1,350
x13 Plant 1 Eastwood 0 0
x21 Plant 2 Northwood 20 600
x22 Plant 2 Westwood 0 0
x23 Plant 2 Eastwood 10 420
Total Cost = $2,490
 Transportation Problem: Example #2

The Navy has 9,000 pounds of material in Albany,

Georgia that it wishes to ship to three installations:
San Diego, Norfolk, and Pensacola. They require 4,000,
2,500, and 2,500 pounds, respectively. Government
regulations require equal distribution of shipping
among the three carriers.
 Transportation Problem: Example #2

The shipping costs per pound for truck, railroad,

and airplane transit are shown on the next slide.
Formulate and solve a linear program to determine the
shipping arrangements (mode, destination, and
quantity) that will minimize the total shipping cost.
Transportation Problem: Example #2

Destination
Mode San Diego Norfolk Pensacola
Truck $12 $6 $5
Railroad 20 11 9
Airplane 30 26 28
 Transportation Problem: Example #2

 Define the Decision Variables

We want to determine the pounds of material, xij , to

be shipped by mode i to destination j. The following
table summarizes the decision variables:

San Diego Norfolk Pensacola

Truck x11 x12 x13
Railroad x21 x22 x23
Airplane x31 x32 x33
 Transportation Problem: Example #2

 Define the Objective Function

Minimize the total shipping cost.
Min: (shipping cost per pound for each mode per
destination pairing) x (number of pounds shipped
by mode per destination pairing).
Min: 12x11 + 6x12 + 5x13 + 20x21 + 11x22 + 9x23
+ 30x31 + 26x32 + 28x33
 Transportation Problem: Example #2

 Define the Constraints

Equal use of transportation modes:
(1) x11 + x12 + x13 = 3000
(2) x21 + x22 + x23 = 3000
(3) x31 + x32 + x33 = 3000
Destination material requirements:
(4) x11 + x21 + x31 = 4000
(5) x12 + x22 + x32 = 2500
(6) x13 + x23 + x33 = 2500
Non-negativity of variables:
xij > 0, i = 1, 2, 3 and j = 1, 2, 3
 Transportation Problem: Example #2

 Computer Output

Objective Function Value = 142000.000

Variable Value Reduced Cost
x11 1000.000 0.000
x12 2000.000 0.000
x13 0.000 1.000
x21 0.000 3.000
x22 500.000 0.000
x23 2500.000 0.000
x31 3000.000 0.000
x32 0.000 2.000
x33 0.000 6.000
 Transportation Problem: Example #2

 Solution Summary
• San Diego will receive 1000 lbs. by truck
and 3000 lbs. by airplane.
• Norfolk will receive 2000 lbs. by truck
and 500 lbs. by railroad.
• Pensacola will receive 2500 lbs. by railroad.
• The total shipping cost will be $142,000.
 Transshipment Problem

 Transshipment problems are transportation problems

in which a shipment may move through intermediate
nodes (transshipment nodes) before reaching a
particular destination node.
 Transshipment problems can be converted to larger
transportation problems and solved by a special
transportation program.
 Transshipment problems can also be solved by
general purpose linear programming codes.
 Transshipment Problem

 Network Representation

c36
3
c13
s1 1 c37 6 d1
c14
c15 c46
Supply 4 c47 Demand
c23
c24 c56
s2 2 7 d2
c25
5 c57
Sources Destinations
Intermediate Nodes
 Transshipment Problem

 Linear Programming Formulation

Using the notation:

xij = number of units shipped from node i to node j
cij = cost per unit of shipping from node i to node j
si = supply at origin node i
dj = demand at destination node j
continued
 Transshipment Problem

 Linear Programming Formulation (continued)

Min 𝑐𝑖𝑗 𝑥𝑖𝑗

all arcs

s.t. 𝑥𝑖𝑗 − 𝑥𝑖𝑗 ≤ 𝑠𝑖 Origin nodes i

arcs out arcs in

𝑥𝑖𝑗 − 𝑥𝑖𝑗 = 0 Transshipment nodes

arcs out arcs in

𝑥𝑖𝑗 − 𝑥𝑖𝑗 = 𝑑𝑗 Destination nodes j

arcs in arcs out

xij > 0 for all i and j continued

 Transshipment Problem: Example

The Northside and Southside facilities of Zeron

Industries supply three firms (Zrox, Hewes, Rockrite)
with customized shelving for its offices. They both
order shelving from the same two manufacturers,
Arnold Manufacturers and Supershelf, Inc.
Currently weekly demands by the users are 50
for Zrox, 60 for Hewes, and 40 for Rockrite. Both
Arnold and Supershelf can supply at most 75 units to
its customers.
Additional data is shown on the next slide.
 Transshipment Problem: Example

Because of long standing contracts based on

past orders, unit costs from the manufacturers to the
suppliers are:

Zeron N Zeron S
Arnold 5 8
Supershelf 7 4

The costs to install the shelving at the various

locations are:

Zrox Hewes Rockrite

Zeron N 1 5 8
Zeron S 3 4 4
 Transshipment Problem: Example

 Network Representation

Zrox
50
5
5 Zeron 1
Arnold
75 1
N 5
3
8 8
Hewes
6 60

7 3
Super Zeron
75 Shelf S 4
2 4 4 4 Rock-
Rite 40
7
 Transshipment Problem: Example

 Linear Programming Formulation

• Decision Variables Defined
xij = amount shipped from manufacturer i to supplier j
xjk = amount shipped from supplier j to customer k
where i = 1 (Arnold), 2 (Supershelf)
j = 3 (Zeron N), 4 (Zeron S)
k = 5 (Zrox), 6 (Hewes), 7 (Rockrite)
• Objective Function Defined
Minimize Overall Shipping Costs:
Min 5x13 + 8x14 + 7x23 + 4x24 + 1x35 + 5x36 + 8x37
+ 3x45 + 4x46 + 4x47
 Transshipment Problem: Example

 Constraints Defined
Amount Out of Arnold: x13 + x14 < 75
Amount Out of Supershelf: x23 + x24 < 75
Amount Through Zeron N: x13 + x23 - x35 - x36 - x37 = 0
Amount Through Zeron S: x14 + x24 - x45 - x46 - x47 = 0
Amount Into Zrox: x35 + x45 = 50
Amount Into Hewes: x36 + x46 = 60
Amount Into Rockrite: x37 + x47 = 40

Non-negativity of Variables: xij > 0, for all i and j.

 Transshipment Problem: Example

 Computer Output
Objective Function Value = 1870.000
Variable Value Reduced Cost
X13 0.000 0.000
X14 75.000 0.000
X23 0.000 4.000
X24 75.000 0.000
X35 50.000 0.000
X36 25.000 0.000
X37 0.000 3.000
X45 0.000 3.000
X46 35.000 0.000
X47 40.000 0.000
 Transshipment Problem: Example

 Solution

Zrox 50

5
75 1
Zeron
75 Arnold
N 5
8 8
Hewes 60
7 3 4
Super Zeron
75 Shelf S
4 4 Rock-
Rite 40
 Transshipment Problem

 LP Formulation Special Cases

• Total supply not equal to total demand
• Maximization objective function
• Route capacities or route minimums
• Unacceptable routes
The LP model modifications required here are
identical to those required for the special cases in
the transportation problem.
Ryan is an electronics company with production facilities
in Denver and Atlanta. Components produced at either
facility may be shipped to either of the firm’s regional
warehouses, which are located in Kansas City and
Louisville. From the regional warehouses, the firm
supplies retail outlets in Detroit, Miami, Dallas, and New
Orleans. The key features of the problem are shown in
the network model depicted in Figure 6.4. Note that the
supply at each origin and demand at each destination
are shown in the left and right margins, respectively.
nodes 1 and 2 are the origin nodes; nodes 3 and 4 are
the transshipment nodes; and nodes 5, 6, 7, and 8 are
the destination nodes. The transportation cost per unit
for each distribution route is shown in Table 6.3 and on
the arcs of the network model in Figure 6.4.

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Small modification

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