Production capacities over the next three-month

Distribution and Network planning period for one particular type of generator are:

Models
Unit 7

Transportation, Transshipment, and Assignment

Problems
The firm distributes its generators through four regional
The models discussed in this chapter belong to a special distribution centers located in Boston, Chicago, St.
class of linear programming problems called network Louis, and Lexington; the three-month forecast of
flow problems. demand for the distribution centers is:

Examples: Supply chains, transportation and

transshipment problems, assignment problems, shortest-
route problems, and maximal flow problems.

In each case, we present a graphical representation of

the problem in the form of a network. We can show how
the problem can be formulated and solved as a linear
program.
Management would like to determine how much of its
Supply Chain Models production should be shipped from each plant to each
distribution center.
Supply chain – describes the set of all interconnected
resources involved in producing and distributing a 12 distribution routes Foster can use.
product.

In general, supply chains are designed to satisfy

customer demand for a product at minimum cost.

Those that control the supply chain must make decisions

such as where to produce a product, how much should
be produced, and where it should be sent.

Transportation Problem

Transportation problem – arises frequently in planning

for the distribution of goods and services from several
supply locations to several demand locations

Typically, the quantity of goods available at each supply

location (origin) is limited, and the quantity of goods
needed at each of several demand locations
(destinations) is known

The usual objective in a transportation problem is to

minimize the cost of shipping goods from the origins to
the destinations.

Let us consider a transportation problem faced by Foster

Generators. This problem involves the transportation of
a product from three plants to four distribution centers.
 Such a graph is called a network
Foster Generators operates plants in Cleveland, Ohio;
 The circles are referred to as nodes and the lines
Bedford, Indiana; and York, Pennsylvania.
connecting the nodes as arcs.
 Note! – the direction of flow (from origin to
destination) is indicated by the arrows
 Each origin and destination are represented by a
node, and each possible shipping route is
represented by an arc.
  The amount of the supply is written to each origin
node, and the amount of the demand is written next
With the four distribution centers as the destination, four
to each destination node.
demand constraints are needed:
 The goods shipped from the origins to the
destinations represent the flow in the network. Boston demand x 11 + x 2 1+ x3 1=6000
The objective is to determine the routes to be used and Chicago demand x 1 2+ x 22+ x32 =4000
the quantity to be shipped via each route that will provide St. Louis demand x 1 3+ x 23 + x 33 =2000
the minimum total transportation cost.
Lexington demand x 1 4 + x 24 + x34 =1500
The cost for each unit shipped on each route is shown
on each arc. Optimal solution for the Foster Generators
Transportation Problem:
A linear programming model can be used to solve this
transportation problem. We use double-subscripted
decision variables,

x 11 = the number of units shipped from origin 1

(Cleveland) to destination 1 (Boston)

x 1 2 = the number of units shipped from origin 1

(Cleveland) to destination 2 (Chicago), and so on.

In general, the decision variables for a transportation

problem having m origins and n destinations are written:

X i = number of units shipped from origins i to

destination j The minimal cost transportation schedule:

Where i = 1,2, …, m and j = 1, 2, …, n

Because the objective of the transportation problem is to

minimize the total transportation cost, we develop the
following cost expressions:

Transportation costs for units shipped from Cleveland

¿ 3 x 11+2 x1 2 +7 x 13 +6 x 1 4 Network diagram for the optimal solution:

Transportation costs for unit shipped from Bedford

¿ 7 x 21 +5 x 22+2 x 23 +3 x 24
Transportation costs for unit shipped from York

¿ 2 x3 1 +5 x 32+ 4 x33 +5 x 34
The sum of these expressions provides the objective
function showing the total transportation cost for Foster
Generators.

Transportation problems need constraints because

each origin has a limited supply and each destination
has a demand. The constraints for the total number of
units shipped are:

Cleveland supply x 11+ x 1 2+ x1 3 + x 1 4 ≤5000

Bedford supply x 2 1+ x 22 + x23 + x 24 ≤ 6000
York supply x 3 1+ x 32 + x33 + x 34 ≤ 2500
For example, 3500 units should be shipped from Kansas City warehouse, x 1 4 denotes the number of
Cleveland to Boston, and 1500 units should be shipped units shipped from the Denver plant to the Louisville
from Cleveland to Chicago. warehouse, and so on.
Transshipment Problem

Transshipment problem – an extension of the

transportation problem in which intermediate nodes,
referred to as transshipment nodes, are added to
account for locations such as warehouses.

 In this general type of distribution problem,

shipments may be made between any pair of the
three general types of nodes: origin nodes,
transshipment nodes, and destination nodes.
 As was true for the transportation problem, the
supply available at each origin is limited, and the
demand at each destination is specified.
 The objective in the transshipment problem is to
determine how many units should be shipped over
each arc in the network so that all destination
demands are satisfied with the minimum possible
transportation cost.

Consider the transshipment problem faced by Ryan

Electronics. Ryan is an electronics company with
production facilities in Denver and Atlanta. Components
produced at either facility may be shipped to either of the Because the supply at the Denver plant is 600 units, the
firm’s regional warehouses, which are located in Kansas amount shipped from the Denver plant must be less than
City and Louisville. From the regional warehouses, the or equal to 600. Mathematically, we write this supply
firm supplies retail outlets in Detroit, Miami, Dallas, and constraint as
New Orleans.
x 1 3+ x 14 ≤6 00
Similarly, for the Atlanta plant we have

x 23+ x 2 4 ≤ 400
We now consider how to write the constraints
corresponding to the two transshipment nodes.

For node 3 (the Kansas City, warehouse), we must

guarantee that the number of units shipped out must
equal the number of units shipped into the warehouse. If
the number of units shipped out of node 3 equals
x 23+ x 36 + x 37+ x 38 .
And the number of units shipped into node 3 equals
x 1 3+ x 23 we obtain x 35 + x 36 + x 37+ x 38=x 1 3 + x 23
Placing all the variables on the left-hand side provides
the constraint corresponding to node 3 as

−x 1 3−x 23+ x 3 5 + x 36+ x 37 + x 38=0

Similarly, the constraint corresponding to node 4 is
We need a constraint for each node and a variable for
each arc. Let x ij denote the number of units shipped
−x 14−x 2 4 + x 4 5 + x 46 + x 47+ x 48=0
from nodei to node j . For example, x 1 3 denotes the To develop the constraints associated with the
number of units shipped from the Denver plant to the destination nodes, we recognize that for each node the
amount shipped to the destination must equal the For an illustration of a more general type of
demand. transshipment problem, let us modify the Ryan
Electronics Problem.

Suppose that it is possible to ship directly from Atlanta to

For example, to satisfy the demand for 200 units at node New Orleans at $4 per unit and from Dallas to New
5 (the Detroit retail outlet), we write x 35+ x 45 =200. Orleans at $1 per unit.
Similarly, for nodes 6,7, and 8, we have

x 36 + x 46=150

x 37+ x 47=350

x 38+ x 48 =300
As usual, the objective function reflects the total shipping
cost over the 12 shipping routes.

Combining the objective function and constraints leads

to a 12-variable, 8-constraint linear programming model
of the Ryan Electronics transshipment problem.

The new variables x 28 and x 78 appear in the objective

function and in the constraints corresponding to the
nodes to which the new arcs are connected.
The optimal solution for the Ryan Electronics
Transshipment problem is

The value of the optimal solution has been reduced $600

by allowing these additional shipping routes. The value
of x 28 = 300 indicates that 300 units are being shipped
directly from Atlanta to New Orleans. The value of
x 7 8=0 indicates that no units are shipped from Dallas to
The optimal solution to the Ryan Electronics
Transshipment problem is New Orleans in this Situation.
 o The three projects have approximately the same
priority, and management wants to assign
project leaders to minimize the total number of
days required to complete all three projects
o A project leader is to be assigned to one client
only

Fowle’s management must first consider all possible

project leader-client assignments and then estimate the
corresponding project completion times. With three
project leaders and three clients, nine assignment
alternatives are possible.

As with transportation problems, transshipment

problems may be formulated with several variations, The estimated project completion times (days) for each
including possible project leader-client assignment:
1. Total supply not equal to total demand
2. Maximization objective function
3. Route capacities or route minimums
4. Unacceptable routes

The linear programming model modifications required to

accommodate these variations are identical to the
modifications required for the transportation problem. Note! – the similarity between the network models of the
When we add one or more constraints of the form assignment problem and the transportation problem.
x ij ≤ Lij to show that the route from node i to node j has
capacity Lij, we refer to the transshipment problem as a
capacitated transshipment problem.

Assignment Problem

Assignment Problem – arises in a variety of decision-

making situations; typical assignment problems involve
assigning jobs to machines, agents to tasks, sales
personnel to sales territories, contracts to bidder, and so
on.

 A distinguishing feature of the assignment problem

is that one agent is assigned to one and only one
task
 Specifically, we look for the set of assignments that
will optimize a stated objective, such as minimize
cost, minimize time, or maximize profits.

Let’s consider the case of Fowle Marketing Research,

which has received requests for market research studies
from 3 new clients.

o The company faces the task of assigning a The assignment problem is a special case of the
transportation problem in which all supply and demand
project leader (agent) to each client (task)
values equal to 1, and the amount shipped over each arc
o Three individuals have no other commitments
is either 0 or 1.
and are available for the project leader
assignments o If x 11 =1, we interpret this as “project leader 1
o The time required to complete each study will
(Terry) is assigned to client 1.”
depend on the experience and ability of the
o If x 11=0, we interpret this as “project leader 1
project leader assigned
(Terry) is not assigned to client 1.”
Using this notation and the completion time data, we
develop completion time expressions;

Days required for Terry’s assignment ¿ 10 x11 +15 x 12+9 x 13

Days required for Carle’s assignment ¿ 9 x 21+18 x 22 +5 x 23

Days required for McClymonds’ assignment
¿ 6 x 31+14 x 32 +3 x33 Because the assignment problem can be viewed as a
special case of the transportation problem, the problem
The sum of the completion times for the 3 project
variations that may arise in an assignment problem
leaders provide the total days required to complete the
parallel those for the transportation problem.
three assignments. Thus, the objective function is:
Specifically, we can handle
Min10 x 11 +15 x 12+ 9 x13 +9 x 21+18 x 22+5 x 23 +6 x 31+14 x 32+ 3 x 33 1. Total number of agents (supply) not equal to the
The constraints reflect the conditions that each project total number of tasks (demand)
leader can be assigned to at most one client and each 2. A maximization objective function
client must have one assigned project leader. These 3. Unacceptable assignments
constraints are:

If the total number of agents (supply) are not equal to

the total number of tasks (demand):

 This is analogous to total supply not equaling total

demand in a transportation problem
 The extra agents simply remain unassigned in the
linear programming solution
 If the number of tasks exceeds the number of
Combining the objective function and constraints into agents, the linear programming model will not have
one model provides the following nine-variable, six- a feasible solution.
constraint liner programming model:  By adding two dummy project leaders, we can
create a new assignment problem with the number
of project leaders equal to the number of clients
 The objective function coefficients for the
assignment of dummy project leaders would be zero
so that the value of the optimal solution would
represent the total number of days required by the
assignments actually made.

If the assignment alternatives are evaluated in terms of

The optimal solution is: revenue or profit rather than time or cost, the linear
programming formulation can be solved as a
maximization rather than a minimization problem.

If one or more assignments are unacceptable, the

corresponding decision variable can be removed from
the linear programming formulation. This situation could
happen if an agent did not have the experience
necessary for one or more of the tasks.

Shortest-Route Problem

Shortest-Route Problem – concerned with finding the

shortest path in a network form one node (or set of
nodes) to another node (or set of nodes)

 If all arcs in the network have nonnegative values,

then labelling algorithm can be used to find the
shortest paths from a particular node to all other
nodes in the network
 The criterion to be minimized in the shortest-route
problem is not limited to distance even though the
term “shortest” is used in describing the procedure.
Other criteria include time and cost. (Neither time
nor cost are necessarily linearly related to distance)

Maximal Flow Problem

The objective in a maximal flow problem is to

determine the maximum amount of flow (vehicles,
messages, fluid, etc.) that can enter and exit a network
system in a given period of time.

 In this problem, we attempt to transmit flow through

all arcs of the network as efficiently as possible
 The amount of flow is limited due to capacity
restrictions on the various arc of the network. For
example, highway types limit vehicle flow in a
transportation system, whil pipe sizes limit oit flow in
an oil distribution system
 The maximum or upper limit on the flow in an arc is
referred to as flow capacity of the arc
 Even though we do not specify capacities for the
nodes, we do assume that the flow out of a node is
equal to the flow into the node

A Production & Inventory Application

 Transportation and transshipment models can be

developed for applications that have been nothing to
do with the physical movement of goods from origins
to destinations.
 A transshipment model can be used to solve a
production and inventory problem.

Examples:
Contois Carpets is a small manufacturer of carpeting for
home and office installations. Production capacity,
demand, production cost per square yard, and inventory
holding cost per square yard for the next four quarters
are determined. Production capacity, demand, and
production cost vary by quarter, where the cost of
carrying inventory from one quarter to the next is
constant at $0.25 per yard. Contois wants to determine
how many yards of carpeting to manufacture each
quarter to minimize the total production and inventory
cost for the four-quarter period.