The Transportation Model McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

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The Transportation Model McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

You should be able to: 1. Describe the nature of a transportation problem 2. Set up transportation problems in the general linear programming format 3. Interpret computer solutions 8S-2 Student Slides

Involves finding the lowest-cost plan for distributing stocks of goods or supplies from multiple origins to multiple destinations that demand the goods. 8S-3 Student Slides

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 8S-4 Student Slides

Shipping (supply) points Any place from which good are sent Factories Warehouses Departments Destinations Any point that receives goods Factories Warehouses Departments 8S-5 Student Slides

Information requirements 1. A list of the origins and each one’s capacity or supply quantity per period 2. A list of the destinations and each one’s demand per period 3. The unit cost of shipping items from each origin to each destination Student Slides 8S-6

Transportation model assumptions 1. The items to be shipped are homogeneous 2. Shipping cost per unit is the same regardless of the number of units shipped 3. There is only one route or mode of transportation being used between each origin and destination Student Slides 8S-7

ABCD Supply Demand Warehouse Factory 450 Factory 1 can supply 100 units per period Total capacity per period Cost to ship one unit from factory 1 to warehouse A Total Demand per period Warehouse B can use 90 units per period Student Slides 8S-8

ABCD Supply Demand Warehouse Factory 450 8S-9 Student Slides

8S-10

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 Student Slides 8S-11

8S-12 Student Slides