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Transportation Problems: Dr. Ron Tibben-Lembke

This document discusses using linear programming to solve transportation problems. Transportation problems involve determining the optimal way to ship goods from distribution centers to customers to minimize costs while meeting demand. The document outlines how to formulate a transportation problem as a linear program by defining variables, constraints, and an objective function to minimize total shipping costs. It also addresses how to handle situations where total supply does not meet total demand, such as allowing shortages from a phantom supplier at a high cost.

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Karan Bagga
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53 views20 pages

Transportation Problems: Dr. Ron Tibben-Lembke

This document discusses using linear programming to solve transportation problems. Transportation problems involve determining the optimal way to ship goods from distribution centers to customers to minimize costs while meeting demand. The document outlines how to formulate a transportation problem as a linear program by defining variables, constraints, and an objective function to minimize total shipping costs. It also addresses how to handle situations where total supply does not meet total demand, such as allowing shortages from a phantom supplier at a high cost.

Uploaded by

Karan Bagga
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Transportation Problems

Dr. Ron Tibben-Lembke

Transportation Problems
Linear programming is good at solving problems with zillions of options, and finding the optimal solution. Could it work for transportation problems? Costs are linear, and shipment quantities are linear, so maybe so.

Defining Variables
Define cij as the cost to ship one unit from i to j. Demand at location j is dj. Supply at DC i is Si Xij is the quantity shipped from DC i to customer j.

Formulation
Min
i 1 N M

c
j 1 ij

ij

xij f or i 1, , M

s.t.

x
j 1 M

Si

x
i 1

ij

d j f or j 1, , N

xij 0 f or all i, j

Transportation Method
You have 3 DCs, and need to deliver product to 4 customers. D2
A 10 E4 B 10 F 12 C 10 G 11

Find cheapest way to satisfy all demand

Solving Transportation Problems

Trial and Error Linear Programming ooh, whats that?! Tell me more!

D
A B C 10 10 8

E
9 11 7

F
8 4 4

G
7 5 8

Setting up LP

Create a matrix of shipment costs (in grey in example). Create a matrix to hold the decision variables, shipment quantities (in yellow). Sum amount sent to each destination. Sum amount sent from each DC. Enter demands and supplies at each location. Compute total cost of shipments (in blue).

Using Solver

If you dont check assume non-negative we get the following results:

Solver doesnt converge to an optimal solution. Why not?

Inequalities
Use <= for shipments from DCs. Use >= for shipments to customers.

Do

we really need to?

What do we do if supply is greater than demand?

Product Shortages
If total demand is greater than total supply, what happens? If demand in G is 15, we get this:

Product Shortages
If demand at G is 15, there are no feasible solutions, much less a best one. We need to add a phantom source, Z, with huge capacity. Think of it as a supplier that ships empty boxes. Now supply can satisfy total demand.

Shortage Costs

What cost should we use for supplier Z? It should be the last resort, so it should be higher than any real costs. The cost of a shipment from Z is really the cost of shorting the customer. If all customers are created equal, give them all the same shortage cost. If some are more important, give them higher shortage costs, and well only short them as a last resort.

Shortage Solution
Shortage is dealt with by shorting customer A, and B. Demand exceeds supply by 3 units. Our first choice is to short A, because they are the cheapest. We can only short them by 2, their total demand. Next, short B by 1 unit.

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