Transportation

Chapter 11 Supplement
Operational Decision-Making Tools:
Transportation and Transshipment Models

Operations
Operations Management
Management -- 66hhhhEdition
Edition
Roberta Russell & Bernard W. Taylor, III
Copyright 2006 John Wiley & Sons, Inc.
Beni Asllani
University of Tennessee at Chattanooga
Just how do you make

decisions?
Emotional direction
Intuition
Analytic thinking
Are you an intuit, an analytic, what???
How many of you use models to make
decisions??
Supplement 10-2
Problems
Arise whenever there is a perceived
difference between what is desired and
what is in actuality.
Problems serve as motivators for doing
something
Problems lead to decisions
42
Supplement 10-4
Model Classification Criteria

Purpose
Perspective
Use the perspective of the targeted decision-maker
Degree of Abstraction
Content and Form
Decision Environment
{This is what you should start any modeling
facilitation meeting with}
Supplement 10-5
Purpose
Planning
Forecasting
Training
Behavioral research
Supplement 10-6
Perspective
Descriptive
Telling it like it is
Most simulation models are of this type
Prescriptive
Telling it like it should be

Most optimization models are of this type
Supplement 10-7
Degree of Abstraction
Isomorphic
One-to-one
Homomorphic
One-to-many
Supplement 10-8
Content and Form

verbal descriptions
mathematical constructs
simulations
mental models
physical prototypes
Supplement 10-9
Decision Environment
Decision Making Under Certainty
TOOL: all of mathematical programming
Decision Making under Risk and Uncertainty
TOOL: Decision analysis--tables, trees, Bayesian

revision
Decision Making Under Change and

Complexity
TOOL: Structural models, simulation models
Supplement 10-10
Mathematical Programming
Linear programming
Integer linear programming
some or all of the variables are integer variables
Network programming (produces all integer

solutions)
Nonlinear programming
Dynamic programming
Goal programming
The list goes on and on
Geometric Programming
Supplement 10-11
A Model of this class

What would we include in it?
Supplement 10-12
Management Science Models

A QUANTITATIVE REPRESENTATION
OF A PROCESS THAT CONSISTS OF
THOSE COMPONENTS THAT ARE
SIGNIFICANT FOR THE PURPOSE
BEING CONSIDERED
Supplement 10-13
Mathematical programming models

covered in Ch 11, Supplement
Transportation Model
Transshipment Model
Not included are:
Shortest Route
Minimal Spanning Tree
Maximal flow
Assignment problem
many others
Supplement 10-14
Transportation Model
A transportation model is formulated for a class of
problems with the following characteristics
a product is transported from a number of sources to a

number of destinations at the minimum possible cost
each source is able to supply a fixed number of units of
product
each destination has a fixed demand for the product
Solution (optimization) Algorithms
stepping-stone
modified distribution
Excels Solver
Supplement 10-15
Transportation Method: Example
Supplement 10-16
Transportation Method: Example
Supplement 10-17
Problem
Formulation
Using Excel
Total Cost
Formula
Supplement 10-18
Using Solver
from Tools
Menu
Supplement 10-19
Solution
Supplement 10-20
Modified
Problem
Solution
Supplement 10-21
The Underlying Network
Supplement 10-22
For problems in which there is an

underlying network:
There are easy (fast) solutions
An exception is the traveling salesman

problem
The solutions are always integer ones

{How about solving a 50,000 node
problem in less than a minute on a
laptop??}
Supplement 10-23
CARLTON PHARMACEUTICALS
Carlton Pharmaceuticals supplies drugs and other
medical supplies.
It has three plants in: Cleveland, Detroit, Greensboro.
It has four distribution centers in:
Boston, Richmond, Atlanta, St. Louis.
Management at Carlton would like to ship cases of a
certain vaccine as economically as possible.
Supplement 10-24
Data
Unit shipping cost, supply, and demand
From
From
Cleveland
Cleveland
Detroit
Detroit
Greensboro
Greensboro
Demand
Demand
Boston
Boston
$35
$35
37
37
40
40
1100
1100
Richmond
Richmond
30
30
40
40
15
15
400
400
To
To
Atlanta
Atlanta
40
40
42
42
20
20
750
750
St.
St.Louis
Louis
32
32
25
25
28
28
750
750
Supply
Supply
1200
1200
1000
1000
800
800
Assumptions
Unit shipping cost is constant.

All the shipping occurs simultaneously.
The only transportation considered is between
sources and destinations.
Total supply equals total demand.
Supplement 10-25
NETWORK
REPRESENTATION
Sources
Destinations
D1=1100
Boston
35
30
40
Cleveland
S1=1200
32
37
Detroit
S2=1000
25
35
Greensboro
40
42
Richmond
D2=400
Atlanta
15
20
28
S3= 800
D3=750
St.Louis
D4=750
Supplement 10-26
The Associated Linear Programming Model
The structure of the model is:

Minimize <Total Shipping Cost>
ST
[Amount shipped from a source] = [Supply at that source]
[Amount received at a destination] = [Demand at that
destination]
Decision variables
Xij = amount shipped from source i to destination j.

where: i=1 (Cleveland), 2 (Detroit), 3 (Greensboro)
j=1 (Boston), 2 (Richmond), 3 (Atlanta), 4(St.Louis)
Supplement 10-27
Supply from Cleveland X11+X12+X13+X14 = 1200

Supply from Detroit X21+X22+X23+X24
= 1000
Supply from Greensboro X31+X32+X33+X34 = 800
The supply constraints
Boston
D1=1100
X11
Cleveland
S1=1200
X12
X13
X21
X31
Richmond
X14
X22
Detroit
S2=1000
D2=400
X32
X23
X24
Atlanta
X33
St.Louis
Greensboro
S3= 800
D3=750
X34
D4=750
Supplement 10-28
The complete mathematical programming model

Minimize 35X11+30X12+40X13+ 32X14 +37X21+40X22+42X23+25X24+
40X31+15X32+20X33+38X34
ST
Supply constrraints:
X11+ X12+ X13+ X14
X21+ X22+ X23+ X24
X31+ X32+ X33+ X34
Demand constraints:
X11+
X12+
X13+
X21+
X31
X22+
X32
X23+
X14+
All Xij are nonnegative
X33
X24+
X34
= 1200
= 1000
= 800
= 1000
= 400
= 750
= 750
Supplement 10-29
Excel Optimal Solution

CARLTON PHARMACEUTICALS
UNIT COSTS
BOSTON RICHMOND ATLANTA ST.LOUIS
CLEVELAND
$
35.00 $
30.00 $
40.00 $
32.00
DETROIT
$
37.00 $
40.00 $
42.00 $
25.00
GREENSBORO $
40.00 $
15.00 $
20.00 $
28.00
DEMANDS
1100
400
750
750
SHIPMENTS (CASES)
BOSTON RICHMOND ATLANTA ST.LOUIS
CLEVELAND
850
350
0
0
DETROIT
250
0
0
750
GREENSBORO
0
50
750
0
TOTAL
1100
400
SUPPLIES
1200
1000
800
750
TOTAL
1200
1000
800
750
TOTAL COST =
84000
Supplement 10-30
WINQSB
WINQSBSensitivity
SensitivityAnalysis
Analysis
If this path is used, the total cost

will increase by $5 per unit
shipped along it
eo
g
n
Ra
lity
a
tim
p
o
Supplement 10-31
Ra
ng
eo
f fe
as
ibi
lity
Shadow prices for warehouses - the cost resulting from 1 extra case of vaccine
demanded at the warehouse
Shadow prices for plants - the savings incurred for each extra case of vaccine available at
the plant
Supplement 10-32
Transshipment
Model
Supplement 10-33
Transshipment Model: Solution
Supplement 10-34

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no responsibility for errors, omissions, or
damages caused by the use of these programs
Supplement 10-35
DEPOT MAX
A General Network Problem
Depot Max has six stores.
Stores 5 and 6 are running low on the

model
65A Arcadia workstation, and need a total
of 25 additional units.
Stores 1 and 2 are ordered to ship a total of
25 units to stores 5 and 6.
Stores 3 and 4 are transshipment nodes
with no demand or supply of their own.
Supplement 10-36
Other restrictions
There is a maximum limit for quantities

shipped on various routes.
There are different unit transportation costs
for different routes.
Depot Max wishes to transport the

available workstations at minimum total
cost.
Supplement 10-37
DATA:
20
10
Arcs: Upper bound and lower bound constraints:

6
12
0 X ij U ij
15
11
15
Supply nodes:
Network
presentation
Net flow out

of the node] nodes:
= [Supply at the node]
Intermediate
transshipment
Transportation
X15node]
- X21= =[Total
10 flow into the
(Node
1)
[TotalX12
flow+ X13
out of+ the
node]
Demand
nodes:
unit cost
X21
+=X24
- X12
= 15
(Node
[Net flow
into the
node]
= [Demand
for the node]
X34+X35
X13
(Node
3) 2)
X24 +- X34
(Node 4)
X15 +X46
X35= +X65
X56 = 12
(Node 5)
X46 +X56 - X65 = 13
(Node 6) Supplement 10-38
The Complete mathematical model

Minimize 5 X12 10 X13 20 X15 6 X21 15 X24 12 X34 7 X35 15 X 46 11X 56 7 X 65
ST
X12 + X13 + X15 - X21
- X12
= 10
+ X21 + X24
- X13
= 15
+ X34 + X35
- X24
- X15
- X34
= 0
+ X46
- X35
= 0
+ X56 - X65 = -12
- X46
- X56 + X65 = -13
0 X12 3; 0 X13 12; 0 X15 6; 0 X21 7; 0 X24 10; 0 X34 8; 0 X35 8;

0 X46 17; 0 X56 7; 0 X65 5
Supplement 10-39
WINQSB
WINQSBInput
InputData
Data
Supplement 10-40
WINQSB
WINQSBOptimal
OptimalSolution
Solution
Supplement 10-41
MONTPELIER SKI COMPANY

Using a Transportation model for production
scheduling
Montpelier is planning its production of skis for the months of

July, August, and September.
Production capacity and unit production cost will change from
month to month.
The company can use both regular time and overtime to
produce skis.
Production levels should meet both demand forecasts and
end-of-quarter inventory requirement.
Management would like to schedule production to minimize
its costs for the quarter.
Supplement 10-42
Data:
Initial inventory = 200 pairs

Ending inventory required =1200 pairs
Production capacity for the next quarter = 400 pairs in
regular time.
= 200 pairs in
overtime.
Holding cost rate is 3% per month per ski.
Production
Production
Costs
ProductionForecasted
capacity, and
forecasted
demand
Forecasted
Production
Production
Costs for this
Month
Demand
Capacity
Month
Demand
Capacity Regular
RegularTime
Time Overtime
Overtime
quarter
July
400
1000
25
30
July
400
1000
25
30
(in
pairs of skis),
and production
cost
per unit
(by
August
600
800
26
32
August
600
800
26
32
September
1000
400
29
37
months)
September
1000
400
29
37
Supplement 10-43
Analysis of demand:
Net demand to satisfy in July = 400 - 200 = 200 pairs

Initial inventory
Analysis of Unit costs
Net demand in August = 600

Unit cost = [Unit production cost] +
Net demand in September = 1000 + 1200 = 2200 pairs
[Unit holding cost per month][the number of months stays in

Forecasted demand In house inventory
inventory]
Analysis of Supplies:
Example:
A
unit
produced
in
July
in
Regular
time
and
sold
in
Production capacities are thought of as supplies.

There are two sets of supplies:
September costs 25+ (3%)(25)(2 months) = $26.50
Set
1- Regular time supply (production capacity)

Set 2 - Overtime supply
Supplement 10-44
Production
Month/period
1000
800
400
400
200
July
O/T
Aug.
R/T
Aug.
O/T
25
25.75
26.50
0
30
30.90
31.80 +M
0
Month
sold
July
+M
26
+M
26.78
32
Sept.
R/T
Sept.
O/T
32.96
+M
29
200
+M
Aug.
600
Sept.
2200
Dummy
300
Demand
Production Capacity
500
July
July
R/T
R/T
Network representation
+M
37
0
0
Supplement 10-45
Source: July production in R/T

Source: Aug. production in O/T
Destination: Julys demand.
Destination: Sept.s demand
Unit cost= $25 (production)
32+(.03)(32)=$32.96
Unit cost =Production+one month holding cost
Supplement 10-46
Supplement 10-47
Summary of the optimal solution
In July produce at capacity (1000 pairs in R/T, and 500

pairs in O/T). Store 1500-200 = 1300 at the end of July.
In August, produce 800 pairs in R/T, and 300 in O/T.
Store additional 800 + 300 - 600 = 500 pairs.
In September, produce 400 pairs (clearly in R/T). With
1000 pairs
retail demand, there will be
(1300 + 500) + 400 - 1000 = 1200 pairs available for

shipment to
Ski+ Chalet
.
Inventory
Production
-
Demand
Supplement 10-48
Problem 4-25
Supplement 10-49
Supplement 10-50
Supplement 10-51
Supplement 10-52
Supplement 10-53
6.3 The Assignment Problem

Problem definition
m workers are to be assigned to m jobs

A unit cost (or profit) Cij is associated with worker i
performing job j.
Minimize the total cost (or maximize the total
profit) of assigning workers to job so that each
worker is assigned a job, and each job is
performed.
Supplement 10-54
BALLSTON ELECTRONICS
Five different electrical devices produced on five
production lines, are needed to be inspected.
The travel time of finished goods to inspection
areas depends on both the production line and the
inspection area.
Management wishes to designate a separate
inspection area to inspect the products such that
the total travel time is minimized.
Supplement 10-55
Data: Travel time in minutes from

assembly
lines to
inspection areas.
Assembly
Assembly
Lines
Lines
11
22
33
44
55
AA
10
10
11
11
13
13
14
14
19
19
BB
44
77
88
16
16
17
17
Inspection
Inspection Area
Area
CC
66
77
12
12
13
13
11
11
DD
10
10
99
14
14
17
17
20
20
EE
12
12
14
14
15
15
17
17
19
19
Supplement 10-56
NETWORK REPRESENTATION
Assembly Line
S1=1
1
Inspection Areas
A D1=1
S2=1
S3=1
C D3=1
S4=1
D4=1
S5=1
D5=1
D2=1
Supplement 10-57
Assumptions and restrictions
The number of workers equals the number of jobs.

Given a balanced problem, each worker is assigned
exactly once, and each job is performed by exactly
one worker.
For an unbalanced problem dummy workers (in
case there are more jobs than workers), or
dummy jobs (in case there are more workers than
jobs) are added to balance the problem.
Supplement 10-58
Computer solutions
A complete enumeration is not efficient even for

moderately large problems (with m=8, m! >
40,000 is the number of assignments to
enumerate).
The Hungarian method provides an efficient
solution procedure.
Special cases
A worker is unable to perform a particular job.

A worker can be assigned to more than one job.
A maximization assignment problem.
Supplement 10-59
6.5 The Shortest Path Problem

For a given network find the path of minimum
distance, time, or cost from a starting point,
the start node, to a destination, the terminal node.
Problem definition
There are n nodes, beginning with start node 1 and

ending with terminal node n.
Bi-directional arcs connect connected nodes i and j
with nonnegative distances, d i j.
Find the path of minimum total distance that connects
node 1 to node n.
Supplement 10-60
Fairway Van Lines
Determine the shortest route from Seattle to El

Paso over the following network highways.
Supplement 10-61
1
180
Seattle
497
3
432
Portland
5
Sac.
599
691
Boise
420
138
Reno
6
345
Bakersfield
114
13
Los Angeles
621
108
155
452
Kingman
469
15
207
Albuque.
Phoenix
386
17
Denver 9
Las Vegas
11
Barstow
14
8
102
432
425
12
403
16
118
San Diego
440
526
280
Cheyenne
Salt Lake City
291
10
Butte
Tucson
18
314
19
Supplement
10-62
El Paso
Solution - a linear programming approach

Decision variables
1 if a truck travels on the highway from city i to city j

X ij
0 otherwise
Objective = Minimize dijXij
Supplement 10-63
Subject to the following constraints:

599
1 Seattle
180
497
3
432
Portland
Butte
Boise
4
345
Salt Lake City
[The number of highways traveled out of Seattle (the start node)] = 1

X12 + X13 + X14 = 1
In a similar manner:
[The number of highways traveled into El Paso (terminal node)] = 1
X12,19 + X16,19 + X18,19 = 1
[The number of highways used to travel into a city] =
[The number of highways traveled leaving the city].
For example, in Boise (City 4):
X14 + X34 +X74 = X41 + X43 + X47. Supplement 10-64
Nonnegativity
constraints
Copyright
2006 John Wiley & Sons, Inc.
WINQSB
WINQSBOptimal
OptimalSolution
Solution
Supplement 10-65
Solution - a network approach

The Dijkstras algorithm:
Find the shortest distance from the START node to
every other node in the network, in the order of the
closet nodes to the START.
Once the shortest route to the m closest node is
determined, the shortest route to the (m+1) closest
node can be easily determined.
This algorithm finds the shortest route from the start

to all the nodes in the network.
Supplement 10-66
An illustration of the Dijkstras algorithm

1119
+ 420
SLC.=
SLC
599
599
BUT.
BUT
691
CHY.
SEA.
BOI
BOI
BOI.
Seattle
497
497
842
345 =
+ SLC
SLC.
SLC
180
497
3
432
Portland
5
Sac.
138
114
+ 602 =
SACSAC.
599
4
Reno
6
13
Los Angeles
420
345
Salt Lake City
Cheyene
440
526
8
102
432
621
Denver 9
Las Vegas
and so on
until the
Kingman
Barstow
whole network
15
12
14
Albuque.
isPheonix
covered.
11
280
108
155
452
469
207
386
17
403
16
118
San Diego
Butte
691
Boise
291
10
Bakersfield
782
POR
612
POR.
180
180
+ 432 =
BOIBOI
1290
425
Tucson
18
19
314
Supplement
10-El67Paso
6.6 The Minimal Spanning Tree

This problem arises when all the nodes of a
given network must be connected to one
another, without any loop.
The minimal spanning tree approach is
appropriate for problems for which
redundancy is expensive, or the flow along
the arcs is considered instantaneous.
Supplement 10-68
THE METROPOLITAN TRANSIT DISTRICT

The City of Vancouver is planning the development of a
new light rail transportation system.
The system should link 8 residential and commercial
centers.
The Metropolitan transit district needs to select the set
of lines that will connect all the centers at a minimum
total cost.
The network describes:
feasible lines that have been drafted,

minimum possible cost for taxpayers per line.
Supplement 10-69
SPANNING TREE
NETWORK
North Side
PRESENTATION
3
34
38
45
32
28
40
43
35
2
City
Center
41
37
36
Business
District
39
4
33
West Side
University
50
30
55
7
Shopping
Center
8
East Side
44
South Side
Supplement 10-70
Solution - a network approach
The algorithm that solves this problem is a very easy

(trivial) procedure.
It belongs to a class of greedy algorithms.
The algorithm:
Start
by selecting the arc with the smallest arc length.

At each iteration, add the next smallest arc length to the set
of arcs already selected (provided no loop is constructed).
Finish when all nodes are connected.
Computer solution
Input consists of the number of nodes, the arc length,

and the network description.
Supplement 10-71
WINQSB Optimal Solution
Supplement 10-72
OPTIMAL SOLUTION
NETWORK
REPRESENTATION
North Side
34
1
Loop
38
45
32
28
40
Business
District
39
4
33
West Side
University
50
30
55
43
35
2
City
Center
41
37
36
Shopping
Center
8
East Side
44
Total Cost = $236 million

7
South Side
Supplement 10-73

Transportation

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Chapter 11 Supplement

Operational Decision-Making Tools:

Transportation and Transshipment Models

Copyright 2006 John Wiley & Sons, Inc.

Just how do you make

Copyright 2006 John Wiley & Sons, Inc.

Model Classification Criteria

Use the perspective of the targeted decision-maker

Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc.

Telling it like it should be

Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc.

Content and Form

Copyright 2006 John Wiley & Sons, Inc.

TOOL: all of mathematical programming

Decision Making under Risk and Uncertainty

TOOL: Decision analysis--tables, trees, Bayesian

Decision Making Under Change and

TOOL: Structural models, simulation models

Copyright 2006 John Wiley & Sons, Inc.

some or all of the variables are integer variables

Network programming (produces all integer

Copyright 2006 John Wiley & Sons, Inc.

A Model of this class

Copyright 2006 John Wiley & Sons, Inc.

Management Science Models

Copyright 2006 John Wiley & Sons, Inc.

Mathematical programming models

Copyright 2006 John Wiley & Sons, Inc.

a product is transported from a number of sources to a

Solution (optimization) Algorithms

Copyright 2006 John Wiley & Sons, Inc.

Transportation Method: Example

Copyright 2006 John Wiley & Sons, Inc.

Transportation Method: Example

Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc.

The Underlying Network

Copyright 2006 John Wiley & Sons, Inc.

For problems in which there is an

An exception is the traveling salesman

The solutions are always integer ones

Copyright 2006 John Wiley & Sons, Inc.

Unit shipping cost, supply, and demand

Unit shipping cost is constant.

Copyright 2006 John Wiley & Sons, Inc.

The Associated Linear Programming Model

The structure of the model is:

Xij = amount shipped from source i to destination j.

Copyright 2006 John Wiley & Sons, Inc.

Supply from Cleveland X11+X12+X13+X14 = 1200

The supply constraints

The complete mathematical programming model

Copyright 2006 John Wiley & Sons, Inc.

Excel Optimal Solution

Copyright 2006 John Wiley & Sons, Inc.

If this path is used, the total cost

Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc.

Transshipment Model: Solution