Supplement to Chapter 8 TRANSPORATION MODEL 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. Transportation model can be used to determine how to allocate the supplies available from the various factories to the warehouses that stock or demand those goods, in such a way the total shipping cost is minimized. The shipping points can be factories, warehouses, departments, or any other place from which goods are sent. Destinations can be factories, warehouses, departments, or any other points that receive goods. The information needed to use the model consists of the following: 1. A list of the origins and each ones capacity or supply quantity per period. 2. A list of the destinations and each ones demand per period. 3. The unit cost of shipping items from each origin to each destination. Use of are: 1. 2. 3. the transportation model implies that certain assumptions are satisfied. The major ones 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 model of transportation being used between each source and each destination.

Major steps: 1. Obtaining an initial solution 2. Testing the solution for optimality 3. Improving suboptimal solutions. Obtaining an Initial Solution Intuitive approach. Heuristic approach to obtaining an initial solution. Procedure. 1. Identify the cell with the lowest cost. 2. Allocate as many units as possible to that cell, and cross out of the row or column that is exhausted by this. 3. Find the cells with the next lowest cost from among the feasible cells. 4. Repeat steps 2 and 3 until all units have been allocated. Testing For Optimality Testing for optimality and revising suboptimal solutions involves analysis of each unused cell to determine the potential for reducing the total cost of the solution. Either of two methods can be used: 1. Stepping-Stone Method. Cell evaluation by borrowing one unit from a full cell to access the impact of shifting units into the empty cell. a. Start by placing + sign in the cell you wish to evaluate. b. Move horizontally to a completed cell. Choose a cell that will permit your next move to another completed cell. Assign a minus sign to the cell. c. Change direction and move to another completed cell. Again, choose one that will permit your next move. Assign a plus sign to the cell. d. Continue this process of moving to completed cells and alternating + and signs until you can complete a closed path back to the original cell. Make only horizontal and vertical moves. e. You may find it helpful to keep track of cells that have been evaluated by placing the cell evaluation value in the appropriate cell with a circle around it. 2. MODI distribution model.

a. Make an initial allocation using the intuitive method. Check for degeneracy and adjust if necessary b. Obtain an index number for each row and column. Do this using only completed cells. Note that there will always be at least one completed cell in each row and in each column. i. Begin by assigning a zero to the first row. ii. Determine the column index for any completed cells in row 1 using the relationship: Column index = Cell cost Row index. iii. Each new column value will permit the calculation of at least one new row value, and vice versa. Continue until all rows and columns have index numbers, using only completed cells. c. Obtain cell evaluation for empty cells using the relationship: Cell evaluation = Cell cost (row index + column index) Obtaining an Improved Solution The presence of negative cell evaluations is evidence that an important solution is possible. By the same token, if no negative appear, an optimum has been achieved. Special Problems 1. Unequal Supply and Demand. Dummy. Imaginary number added equal to the difference between supply and demand when these are unequal. 2. Degeneracy. The condition of too few completed cells to allow all necessary paths to be constructed. Summary of Procedure 1. Make certain that supply and demand are equal. 2. Develop an initial solution using the intuitive, lowest-cost approach. 3. Evaluate each of the empty cells. 4. Repeat steps 3 and 4 until all cells have zero or positive values. Location Decisions The transportation model can be used to compare location alternatives in terms of their impact on the total distribution costs for a system. The pro0cedure involves working through a separate problem for each location being considered and then comparing the resulting total costs. Other Applications 1. Production planning and scheduling 2. problems involving assignment of personnel of jobs 3. capacity planning 4. Transshipment problems.