Quantitative Approaches to

Transportation

1
 Distribution and Network Models

Supply Chain Models

• Transportation Problem
• Transshipment Problem
Assignment Problem

2
 Transportation, Transshipment,
and Assignment Problems

A network model is one which can be represented by a set of nodes, a set of

arcs, and functions (e.g. costs, supplies, demands, etc.) associated with the
arcs and/or nodes.
Transportation, transshipment, assignment, shortest-route, and maximal flow
problems are all examples of network problems.

3
 Transportation, Transshipment,
and Assignment Problems

Each of the problems of this chapter can be formulated as linear programs

and solved by general purpose linear programming codes.
For each of the problems, if the right-hand side of the linear programming
formulations are all integers, the optimal solution will be in terms of integer
values for the decision variables.
However, there are many computer packages that contain separate
computer codes for these problems which take advantage of their network
structure.

4
 Supply Chain Models

A supply chain describes the set of all interconnected resources involved in

producing and distributing a product.
In general, supply chains are designed to satisfy customer demand for a
product at minimum cost.
Those that control the supply chain must make decisions such as where to
produce a product, how much should be produced, and where it should be
sent.

5
 Transportation Problem

The transportation problem seeks to minimize the total 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.
The network representation for a transportation problem with two sources and
three destinations is given on the next slide.

6
 Transportation Problem

Network Representation

1 d1
c11
s1 1 c12
c13
2 d2
c21

s2 2 c22
c23
3 d3

Sources Destinations

7
 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

8
 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

9
 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.

10
 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.

11
 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?

12
 Transportation Problem: Example #1

Delivery Cost Per Ton

Northwood Westwood Eastwood

Plant 1 24 30 40
Plant 2 30 40 42

13
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

14
 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. 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.
Destination
Mode San Diego Norfolk Pensacola
Truck $12 $6 $5
Railroad 20 11 9
Airplane 30 26 28

15
 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

16
 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

17
 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 and j = 1, 2, 3

18
 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

19
 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.

20
 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.
The network representation for a transshipment problem with two sources,
three intermediate nodes, and two destinations is shown on the next slide.

21
 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

22
 Transshipment Problem

Linear Programming Formulation (continued)

Linear Programming Formulation
Min ෍ 𝑐𝑖𝑗 𝑥𝑖𝑗
Using the notation:
all arcs
xij = number of units shipped from node i to node j
s.t. ෍ 𝑥𝑖𝑗 − ෍ 𝑥𝑖𝑗 ≤ 𝑠𝑖 Origin nodes i cij = cost per unit of shipping from node i to node j
arcs out arcs in si = supply at origin node i
dj = demand at destination node j
෍ 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

23
 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.

24
 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 Super shelf can supply at most 75 units to its
customers. Additional data is shown on the next slide.

25
 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

Thomas 1 5 8
Washburn 3 4 4

26
 Transshipment Problem: Example

Network Representation

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

7 3
Super Zeron 4
75 Shelf S
4 4 Rock-
Rite 40

27
 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)

28
 Transshipment Problem: Example

Linear Programming Formulation

• Objective Function Defined
Minimize Overall Shipping Costs:

Min 5x13 + 8x14 + 7x23 + 4x24 + 1x35 + 5x36

+ 8x37 + 3x45 + 4x46 + 4x47

29
 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

30
 Transshipment Problem: Example

Computer Output
Objective Function Value = 1150.000
Variable Value Reduced Cost
X13 75.000 0.000
X14 0.000 2.000
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

31
 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

32
 Assignment Problem

An assignment problem seeks to minimize the total

cost assignment of m workers to m jobs, given that the
cost of worker i performing job j is cij.
It assumes all workers are assigned and each job is
performed.
An assignment problem is a special case of a
transportation problem in which all supplies and all
demands are equal to 1; hence assignment problems
may be solved as linear programs.
The network representation of an assignment problem
with three workers and three jobs is shown on the next
slide.

33
 Assignment Problem

Network Representation

c11
1 1
c12
c13
Agents Tasks
c21
c22
2 2
c23
c31
c32
3 c33 3

34
 Assignment Problem

Linear Programming Formulation

Using the notation:

xij = 1 if agent i is assigned to task j

0 otherwise

cij = cost of assigning agent i to task j

continued

35
 Assignment Problem

Linear Programming Formulation (continued)

𝑚 𝑛

Min ෍ ෍ 𝑐𝑖𝑗 𝑥𝑖𝑗

𝑖=1 𝑗=1
𝑛

෍ 𝑥𝑖𝑗 = 1 𝑓𝑜𝑟 𝑗 = 1, 2, … , 𝑛 Tasks

𝑖=1
𝑛

෍ 𝑥𝑖𝑗 ≤ 1 𝑓𝑜𝑟 𝑖 = 1, 2, … , 𝑚 Agents

𝑗=1

xij > 0 for all i and j

36
 Assignment Problem

LP Formulation Special Cases

• Number of agents exceeds the number of tasks:
Extra agents simply remain unassigned.
• Number of tasks exceeds the number of agents:
Add enough dummy agents to equalize the
number of agents and the number of tasks.
The objective function coefficients for these
new variable would be zero.

37
 Assignment Problem

LP Formulation Special Cases (continued)

• The assignment alternatives are evaluated in terms
of revenue or profit:
Solve as a maximization problem.
• An assignment is unacceptable:
Remove the corresponding decision variable.
• An agent is permitted to work t tasks:
𝑛

෍ 𝑥𝑖𝑗 ≤ 𝑡 𝑓𝑜𝑟 𝑖 = 1, 2, … , 𝑚 Agents

𝑗=1

38
 Assignment Problem: Example

An electrical contractor pays his subcontractors a

fixed fee plus mileage for work performed. On a given
day the contractor is faced with three electrical jobs
associated with various projects. Given below are the
distances between the subcontractors and the projects.
Projects
Subcontractor A B C
Westside 50 36 16
Federated 28 30 18
Goliath 35 32 20
Universal 25 25 14
How should the contractors be assigned so that total
mileage is minimized?
39
 Assignment Problem: Example

Network 50
West. A
Represen- 36
tation 16
28

Subcontractors
Fed. 30 B
18
35 32 Projects

Gol. C
20
25 25
Univ.
14

40
 Assignment Problem: Example

Linear Programming Formulation

Min 50x11+36x12+16x13+28x21+30x22+18x23
+35x31+32x32+20x33+25x41+25x42+14x43
s.t. x11+x12+x13 < 1
x21+x22+x23 < 1
Agents
x31+x32+x33 < 1
x41+x42+x43 < 1
x11+x21+x31+x41 = 1
x12+x22+x32+x42 = 1 Tasks
x13+x23+x33+x43 = 1
xij = 0 or 1 for all i and j

41
 Assignment Problem: Example

The optimal assignment is:

Subcontractor Project Distance

Westside C 16
Federated A 28
Goliath (unassigned)
Universal B 25
Total Distance = 69 miles

42
 Distribution and Network Models

Shortest-Route Problem
Maximal Flow Problem
A Production and Inventory Application

43
 Shortest-Route Problem

The shortest-route problem is concerned with finding the shortest path in a

network from one node (or set of nodes) to another node (or set of nodes).
If all arcs in the network have nonnegative values then a labeling algorithm
can be used to find the shortest paths from a particular node to all other nodes
in the network.
The criterion to be minimized in the shortest-route problem is not limited to
distance even though the term "shortest" is used in describing the procedure.
Other criteria include time and cost. (Neither time nor cost are necessarily
linearly related to distance.)

44
 Shortest-Route Problem

Linear Programming Formulation

Using the notation:

xij = 1 if the arc from node i to node j

is on the shortest route
0 otherwise

cij = distance, time, or cost associated

with the arc from node i to node j
continued

45
 Shortest-Route Problem

Linear Programming Formulation (continued)

Min ෍ 𝑐𝑖𝑗 𝑥𝑖𝑗

all arcs

s.t. ෍ 𝑥𝑖𝑗 = 1 Origin nodes i

arcs out

෍ 𝑥𝑖𝑗 − ෍ 𝑥𝑖𝑗 = 0 Transshipment nodes

arcs out arcs in

෍ 𝑥𝑖𝑗 = 1 Destination nodes j

arcs in

xij > 0 for all i and j continued

46
 Example: Shortest-Route

Susan Winslow has an important business meeting in Paducah this evening. She has a number of
alternate routes by which she can travel from the company headquarters in Lewisburg to Paducah.
The network of alternate routes and their respective travel time, ticket cost, and transport mode
appear on the next two slides. If Susan earns a wage of $15 per hour, what route should she take to
minimize the total travel cost? F
2 5
K L
A
B G
C J
3
6
1
D I
H Paducah
Lewisburg E M
4

47
 Example: Shortest-Route

Transport Time Ticket

Route Mode (hours) Cost
A Train 4 $ 20
B Plane 1 $115
C Bus 2 $ 10
D Taxi 6 $ 90
E Train 3 1/3 $ 30
F Bus 3 $ 15
G Bus 4 2/3 $ 20
H Taxi 1 $ 15
I Train 2 1/3 $ 15
J Bus 6 1/3 $ 25
K Taxi 3 1/3 $ 50
L Train 1 1/3 $ 10
M Bus 4 2/3 $ 20

48
Example: Shortest-Route

49
 Example: Shortest-Route

F
2 5
K L
A
B G J
C 3
6
1
D H I Paducah
Lewisburg
E M
4

Total in=total out

Intermediatory nodes/Transshipment nodes

50
 Example: Shortest-Route

Solution Summary

Minimum total cost = $150

x12 = 0 x25 = 0 x34 = 1 x43 = 0 x52 = 0

x13 = 1 x26 = 0 x35 = 0 x45 = 1 x53 = 0
x14 = 0 x36 = 0 x46 = 0 x54 = 0
x15 = 0 x56 = 1
x16 = 0

51
 Maximal Flow Problem

The maximal flow problem is concerned with

determining the maximal volume of flow from one
node (called the source) to another node (called the
sink).
In the maximal flow problem, each arc has a
maximum arc flow capacity which limits the flow
through the arc.

52
53
54
 Maximal Flow Problem

A capacitated transshipment model can be developed

for the maximal flow problem.
We will add an arc from the sink node back to the
source node to represent the total flow through the
network.
There is no capacity on the newly added sink-to-
source arc.
We want to maximize the flow over the sink-to-source
arc.

55
 Maximal Flow Problem

LP Formulation
(as Capacitated Transshipment Problem)
• There is a variable for every arc.
• There is a constraint for every node; the flow out must equal the flow
in.
• There is a constraint for every arc (except the added sink-to-source
arc); arc capacity cannot be exceeded.
• The objective is to maximize the flow over the added, sink-to-source
arc.

56
 Maximal Flow Problem

LP Formulation
(as Capacitated Transshipment Problem)

Max xk1 (k is sink node, 1 is source node)

s.t. xij - xji = 0 (conservation of flow)
i j

xij < cij (cij is capacity of ij arc)

xij > 0, for all i and j (non-negativity)

(xij represents the flow from node i to node j)

57
 Example: Maximal Flow

National Express operates a fleet of cargo planes and is in the package

delivery business. NatEx is interested in knowing what is the maximum it could
transport in one day indirectly from San Diego to Tampa (via Denver, St. Louis,
Dallas, Houston and/or Atlanta) if its direct flight was out of service.
NatEx's indirect routes from San Diego to Tampa, along with their respective
estimated excess shipping capacities (measured in hundreds of cubic feet per
day), are shown on the next slide. Is there sufficient excess capacity to indirectly
ship 5000 cubic feet of packages in one day?

58
 Example: Maximal Flow

Network Representation
3
Denver 2 5 St. Louis
3
4 2 3 2
3 4
San 4 3
Diego 1 4 7 Tampa
3 1
3 5 1 5 Dallas
Houston 3 6 Atlanta
6

59
 Example: Maximal Flow

Modified Network Representation

3
2 5
3
4 2 3 2
Source 3 4 Sink
4 3
1 4 7
3 1
Added
3 5 1 5 arc
3 6
6

60
 Example: Maximal Flow

LP Formulation
• 18 variables (for 17 original arcs and 1 added arc)
• 24 constraints
• 7 node flow-conservation constraints
• 17 arc capacity constraints (for original arcs)

61
 Example: Maximal Flow

LP Objective Function
Max x71

Node Flow-Conservation Constraints

x12 + x13 + x14 – x71 = 0 (node 1)
– x12 + x24 + x25 – x42 – x52 = 0 (node 2)
– x13 + x34 + x36 – x43 = 0 (and so on)
– x14 – x24 – x34 + x42 + x43 + x45 + x46 + x47 – x54 – x64 = 0
– x25 – x45 + x52 + x54 + x57 = 0
– x36 – x46 + x64 + x67 = 0
– x47 – x57 – x67 + x71 = 0

62
 Example: Maximal Flow

LP Formulation (continued)
• Arc Capacity Constraints
x12 < 4 x13 < 3 x14 < 4
x24 < 2 x25 < 3
x34 < 3 x36 < 6
x42 < 3 x43 < 5 x45 < 3 x46 < 1 x47 < 3
x52 < 3 x54 < 4 x57 < 2
x64 < 1 x67 < 5

63
 Example: Maximal Flow

Alternative Optimal Solution #1

Objective Function Value = 10.000
Variable Value Variable Value
x12 3.000 x45 0.000
x13 3.000 x46 0.000
x14 4.000 x47 3.000
x24 1.000 x52 0.000
x25 2.000 x54 0.000
x34 0.000 x57 2.000
x36 5.000 x64 0.000
x42 0.000 x67 5.000
x43 2.000 x71 10.000

64
 Example: Maximal Flow

Alternative Optimal Solution #1

2
2 5
3 1 2
Source Sink
4 3
1 4 7

3 2 5
10 3 6
5

65
 Example: Maximal Flow

Alternative Optimal Solution #2

Objective Function Value = 0.000
Variable Value Variable Value
x12 3.000 x45 0.000
x13 3.000 x46 1.000
x14 4.000 x47 3.000
x24 1.000 x52 0.000
x25 2.000 x54 0.000
x34 0.000 x57 2.000
x36 4.000 x64 0.000
x42 0.000 x67 5.000
x43 1.000 x71 10.000

66
 Example: Maximal Flow

Alternative Optimal Solution #2

2
2 5
3 1 2
Source Sink
4 3
1 4 7
1
3 1 5
10 3 6
4

67
68