Transportation Problem

Dr Yamini S.
Faculty of Operations and
Analytics

Yamini | Operations Research 1

 Network flow problems
• A network model is one which can be represented by a set of nodes, a
set of arcs, and functions (e.g. costs, supplies, demands, etc.) associated
with the arcs and/or nodes
• A node is a specific point or location in a network; An arc connects two
nodes to each other
Types of Arcs Types of nodes
Unidirectional Supply nodes
Bidirectional Demand nodes
Capacitated Transhipment nodes
Uncapacitated
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 Common Characteristics of Network models
• In all network flow models, decision variables represent the amount of flows
that can occur on the unidirectional arcs in the network
• There will be a constraint written for each node in the network
• The constraint coefficients in the network models equals either 0 or 1. This
special trait allows it to be solved quickly using specialised algorithms
• It can be formulated as linear program and solved by general purpose linear
programming codes
• As the right-hand sides (supply and demand values) of the linear programming
formulations are all integers, the optimal solution will result in integer values
for the decision variables, even if we don’t impose any explicit condition to this
effect
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 Transportation Problem
• It deals with distribution of goods from several supply points (also called
origin, or source) to a number of demand points (also called destinations,
or sink)
• It usually has a given capacity of goods at each source and given
requirement for goods at each destination
• The most common objective is to schedule shipments from sources to
destinations so that costs (production and transportation) are minimised

Yamini | Operations Research 4

 Applications of Transportation Problem
• To transport goods from one location (factory, warehouse) to another
location (retail outlets)
• Facility Location Problems: To find the best location at least cost for a
new factory, warehouse, office, or other outlet facility
• Infrastructure related decisions
• Production scheduling
• Investment decisions
• Recruitment decisions
• Policy decisions – Aircraft Engine Maintenance

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 Network representation of Transportation
Problem
The transportation problem seeks to 1 d1
minimize the total shipping costs of c11
transporting goods from m origins s1 1 c12
(each with a supply si) to n c13
2 d2
destinations (each with a demand dj), c21
when the unit shipping cost from an 2 c22
origin, i, to a destination, j, is cij. c23
3 d3

Sources Destinations
Network representation
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 Formulation of Transportation Problem

Notations Formulation
xij - number of units shipped from
m n
origin i to destination j Min  c x
i =1 j =1
ij ij
cij - cost per unit of shipping from n

origin i to destination j x
j =1
ij  si i =1, 2, ,m Supply

si - supply or capacity in units at origin i m

dj - demand in units at destination j

x
i =1
ij = dj j =1, 2, ,n Demand

xij > 0 for all i and j

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 Special Cases of Transportation Problem
Unbalanced Transportation Problem
Total supply exceeds total demand
No modification is required in the linear programming formulation
Excess supply appear as slack in the linear programming solution, which can be interpreted
as the unused supply or amount not shipped from the origin
Total demand exceeds total supply
Modify the network representation by adding a dummy origin with a supply equal to the
difference between the total demand and total supply for the LP model to have a feasible
solution
Zero cost per unit is assigned to each arc leaving the dummy origin so that new objective
function value represents the actual cost (no shipments will be made from dummy origin)
The destinations receiving the shipments from dummy origin will be the ones experiencing
a shortfall or unsatisfied demand
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 Special Cases of Transportation Problem
Maximisation objective function
Solve as a maximization problem
Route related constraints
Minimum shipping guarantee from i to j
xij > Lij
Maximum route capacity from i to j
xij < Lij
Unacceptable route
Remove the corresponding decision variable
xij = 0
Yamini | Operations Research 9
Klein Chemicals, Inc., produces a special oil-based material that is
currently in short supply. Four of Klein’s customers have already
placed orders that together exceed the combined capacity of Klein’s
two plants. Klein’s management faces the problem of deciding how
many units it should supply to each customer. Because the four
customers are in different industries, different prices can be charged
because of the various industry pricing structures. However, slightly
different production costs at the two plants and varying
transportation costs between the plants and customers make a “sell
to the highest bidder” strategy unacceptable. After considering price,
production costs, and transportation costs, Klein established the
following profit per unit for each plant-customer alternative.

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How many units should each plant produce for each customer to
maximize profits? Which customer demands will not be met?
Show your network model and linear programming formulation.

Profit per unit -Pij D1 D2 D3 D4 Capacity

Clifton Spring 32 34 32 40 5000
Danville 34 30 28 38 3000
Demand 2000 5000 3000 2000

Yamini | Operations Research 11

A manufacturer must produce a certain product in sufficient quantity to meet contracted
sales in the next four months. The production facilities available for this month are
limited. The unit cost of production also varies according to the facilities and personnel
available. The product may be produced in one month and held for sales in later month,
but at a storage cost of Re 1 per unit per month. No storage cost is incurred for goods sold
in the same month in which they are produced. There is presently no inventory of this
product and none is desired at the end of four months. Given the data in the following
table, how much should be produced in each of the months in order to minimise the total
cost.
Month Contracted Maximum Unit cost of Unit storage
Sales production production cost
1 20 40 14 1
2 30 50 15 1
3 50 30 16 1
4 40 50 17 1

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