The Transportation Model Supplement 8 The Transportation Model

Transportation Problem Involves finding the lowest-cost plan for distributing stocks of goods or supplies from multiple origins to multiple destinations that demand the goods. Demand Supply

Transportation Model: Applications The transportation model has numerous applications: Location decisions Compare location alternatives in terms of their impact cost on the total distribution costs for the system Involves working through a separate model for each location being considered Production planning Capacity planning Transshipment

Transportation Problem Shipping (supply) points Any place from which good are sent Factories Warehouses Departments Destinations Any point that receives goods

Model: Information Requirements A list of the origins and each one’s capacity or supply quantity per period A list of the destinations and each one’s demand per period The unit cost of shipping items from each origin to each destination

Model: Assumptions Transportation model assumptions The items to be shipped are homogeneous Shipping cost per unit is the same regardless of the number of units shipped There is only one route or mode of transportation being used between each origin and destination

Transportation Table

Transportation Table

Transportation Problem: Formulation

Transportation: Computer Solution Transportation problems can be solved manually in a straightforward manner Except for very small problems, solving the problem manually can be very time consuming For medium to large problems, computer solution techniques are more practical A variety of software packages are available for solving the transportation model Some require formulating the problem as a general LP model Others allow data entry in a more simple, tabular format

Transportation Problem: Excel Template

F1 10 D1 100 220 5 8 6 F2 7 D2 200 180 8 8 10 D3 F3 200 300 8