1. The Transportation Model
Supplement 8
The Transportation Model

2. 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

3. 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

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

5. 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

6. 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

7. Transportation Table

8. Transportation Table

9. Transportation Problem: Formulation

10. 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

11. Transportation Problem: Excel Template

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