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05 Transportation & Transshipment Models (Complete)

Linear programming can be used to solve transportation and transshipment models. Transportation models involve a single tier of suppliers delivering goods to destinations, while transshipment models have multiple tiers with goods transported to warehouses before reaching destinations. An example transportation problem involves minimizing the costs of shipping generators from three plants with different production capacities to four distribution centers with known demands, subject to supply and demand constraints.

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43 views13 pages

05 Transportation & Transshipment Models (Complete)

Linear programming can be used to solve transportation and transshipment models. Transportation models involve a single tier of suppliers delivering goods to destinations, while transshipment models have multiple tiers with goods transported to warehouses before reaching destinations. An example transportation problem involves minimizing the costs of shipping generators from three plants with different production capacities to four distribution centers with known demands, subject to supply and demand constraints.

Uploaded by

Kashif Zaheer
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Linear Programming:

Transportation &
Transshipment Models
Transportation & Transshipment
Models Models in LP
1. Transportation – a single tier of suppliers/origin points
with one or more destinations (e.g. retail stores sending
delivery of goods to consumers)

2. Transshipment Problems – multiple tiers of


suppliers/origin points with one or more destinations
(e.g. factories transporting goods to warehouses which in
turn transport to retail stores)
1. Transportation Models in LP
• The transportation problem arises frequently in planning for
the distribution of goods and services from several supply
locations to several demand locations.

• Typically, the quantity of goods available at each supply


location (origin) is limited, and the quantity of goods
needed at each of several demand locations (destinations) is
known.

• The usual objective in a transportation problem is to


minimize the cost of shipping goods from the origins to the
destinations.
Recall the FedEx Case

• Transportation models are critical to the success of travel-intensive businesses such as FedEx

• They are also widely applicable to help organizations optimize their supply chain
1. Transportation Problem:
E.g. Foster Generators
• This problem involves the transportation of a particular type of
generator (the product) from three plants to four distribution centers.

• Foster Generators operates plants in Cleveland, Bedford, and York.

• Production capacities over the next three-month planning period for the
product are as follows:
1. Transportation Problem:
E.g. Foster Generators
• 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:

• Note: This is a simple example where the supply and demand are equal
at 13,500 units. Later, we will look at cases where the two are not equal.
1. Transportation Problem:
E.g. Foster Generators
• The costs associated with transporting one unit of the product
from each plant (origin) to each distribution center (destination)
are presented below:

• For Foster’s transportation problem, the objective is to determine


the routes to be used and the quantity to be shipped via each
route that will provide the minimum total transportation cost.
1. Transportation Problem:
E.g. Foster Generators
1. Transportation Problem:
E.g. Foster Generators
Step 1: Defining the decision variables

• In general, the decision variables for a transportation


problem having m origins and n destinations are written as
follows:

• In this case, m = 3 (plants) and n = 4 (distribution centers)

• Therefore, there will be 3 x 4 = 12 decision variables, one


for each possible route (assuming all routes are valid)
1. Transportation Problem:
E.g. Foster Generators

x11

x12

x13
x14

And onwards for the


remaining routes…
1. Transportation Problem:
E.g. Foster Generators
Step 2: Defining the objective function

• Therefore, the objective function for this problem is:


1. Transportation Problem:
E.g. Foster Generators
Step 3: Defining the constraints

• Constraints regarding limitations of supply from plants:

• Constraints regarding limitations of demand at distribution centers:


1. Transportation Problem:
E.g. Foster Generators
Final LP Model (12 DVs and 7 constraints excl. non-negativity):

Supply
constraints

Demand
constraints

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