ABSTRACT

In this case we have discussed mainly on manufacturing sector, like how new trends or
concepts have emerged in the manufacturing sector, manufacturing industry has undergone
dramatic changes due to significant and steady improvement in productivity. In fact,
manufacturing is the all-industry leader in the rate of productivity improvement over the last 20
years, in manufacturing sector one of the important is physical distribution so we have
described the physical distribution management. Its connected with ensuring the product in the
right place at the right time. Marketing management realized that distribution could be organized
in a scientific way so the concept of business logistics developed, focusing attention on the
increasing the importance of PDM. Business logistics techniques can be applied to PDM so the
cost and customer satisfaction are optimized. So the operational research techniques will support
to minimize the transportation cost by various methods , that always decision maker should try to
minimize the transportation cost to increase the companys profit like which we have used in the
case by justification and analyzing.

INTRODUCTION
The manufacturing industry has undergone dramatic changes due to significant and
steady improvement in productivity. In fact, manufacturing is the all-industry leader in the rate of
productivity improvement over the last 20 years. To remain globally competitive, the
manufacturing industry fundamentally transformed itself through rapidly improving technology,
implementation of manufacturing principles, multi-skilling, and innovative production-process
improvement techniques. This transformation, has led to a new manufacturing paradigm
requiring fewer workers, but higher skills for those remaining. Simultaneously, this
transformation has created a mismatch between skills required and the ability of existing and
new workers. The result - even as overall employment in the manufacturing industry has
declined, many employers report difficulty in finding and hiring the highly skilled employees
they need. In a recent study, 80% of manufacturers stated a need for workers in one or more skill
areas, but the lingering image of the old, dying, smokestack industry makes it hard to recruit
young workers. The study documented that manufacturers have difficulty in recruiting skilled
workers because of longstanding misperceptions of the manufacturing industry.

National Association of Manufacturing (NAM) ideas and

changes opines,

Manufacturing in America is the engine that drives the U.S. economy by

creating job opportunity, and prosperity. Manufacturing sector employs 14.3 million people in
U.S., plus another 6 million in related fields such as supply chain, finance, and wholesale. No
other sector of the economy performs more R&D, drives more innovation, generates more
exports or contributes more to economic growth. The future strength of the American economy,
and the ability to maintain a high standard of living in the face of fierce global competition,
depends on manufacturing..

MANUFACTURING INDUSTRY WORKFORCE CHALLENGES

The rapid evolution of manufacturing processes demands a comprehensive foundation in
basic employability skills, advanced technical skills, and a commitment to life-long learning to
keep pace with the rate of innovation that is commonplace in the industry today. For the industry
to remain competitive, it must address the following workforce challenges:

Poor industry image within the community, education system, and government, making it
an unattractive or unappealing career choice.

Lack of a coordinated manufacturing industry involvement in educational curriculum
development to effectively address skill requirements.

Lack of relevant education content available upto +2 levels, caused by

insufficient revenue streams to create, support and sustain educational
programs, as well as upgrade faculty skill.

PHYSICAL DISTRIBUTION MANAGEMENT

An earlier resource pack described the decisions that must be taken when a company
organizes a channel or network of intermediaries who take responsibility for the management of
goods as they move from the producer to the consumer. Each channel member must be carefully
selected and the company must decide what type of relationship it seeks with each of its
intermediate partners. Having established such a network, the organization must next consider
how these goods can be efficiently transferred, in the physical sense, from the place of
manufacture to the place of consumption.
Physical distribution management (PDM) is concerned with ensuring the product is in the
right place at the right time.
Place has always been thought of as being the least dynamic of the 4Ps. Marketing
practitioners and academics have tended to concentrate on the more conspicuous aspects of
marketing. It is now recognized that PDM is a critical area of overall marketing management.
Much of its expertise is borrowed from military practice. During the Second World War and
the Korean and Vietnam wars, supplies officers had to perform extraordinary feats of PDM, in

terms of food, clothing, ammunition, weapons and a whole range of support equipment having to
be transported across the world. The military skill that marketing has adopted and applied to
PDM is that of logistics. Marketing management realized that distribution could be organized in
a scientific way so the concept of business logistics developed, focusing attention on and
increasing the importance of PDM. Business logistical techniques can be applied to PDM so that
costs and customer satisfaction are optimized. There is little point in making large savings in the
cost of distribution if, in the long-run, sales are lost because of customer dissatisfaction.
Similarly, it does not make economic sense to provide a level of service that is not really
required by the customer and leads to an erosion of profits. This cost/service balance is a basic
dilemma that faces physical distribution managers.

TRANPORTATION
Transportation sector -- An energy-consuming sector that consists of all vehicles whose
primary purpose is transporting people and/or goods from one physical location to another.
Included are automobiles; trucks; buses; motorcycles; trains, subways, and other rail vehicles;
aircraft; and ships, barges, and other waterborne vehicles. Transportation usually represents the
greatest distribution cost. It is usually easy to calculate because it can be related directly to
weight or numbers of units. Costs must be carefully controlled through the mode of transport
selected amongst alternatives, and these must be constantly reviewed.

TRANSPORTATION DIFFICULTIES
There are so many difficulties in transportation system in manufacturing sector. Manager
always try to minimize the transportation cost. There are very many techniques to minimize the
transportation cost, In this OPERATIONAL RESEARCH will help to justify the critical
transport system.

OPERATIONS RESEARCH TRANSPORTATION PROBLEM

Transportation problems are a focus of operations research.

Operations research (OR) is a field of study using mathematical tools to determine the most
efficient way to design business processes. One topic of study in OR is the problem of
maximizing transportation efficiency./ Minimizing the Total Transportation Cost.
Transportation problems in OR deal with the physical distribution of products from place to
place. Because of the costs involved in transporting goods, maximizing its efficiency is of great
interest to businesses. OR uses linear programming (LP) to address transportation problems. LP
is a mathematical planning process allocating resources in the most efficient manner. These
resources include physical and human capital. Setting up an LP to solve transportation problems
rests on a number of assumptions. Among these are that supply will always meet demand and the
number of transportation routes must equal the number of source sites plus the number of
destination sites.
The following table shows all necessary in formation on the availability of supply to each
warehouse.the requirement of each market and the unit transportation cost from each warehouse
to each market.

warehouse

Market

Supply

22

15

12

17

45

Requirement

The shipping clerk has worked out the following schedule from experience.
12 units from A to Q: 1 unit from A to R: 9 units from A to S: 15 units from B to R: 7 units from
C to P: 1 unit from C to R.
C heck and see if the clerk has the optimal schedule.
Find the optimal schedule and minimum cost of total transportation.
If the clerk is approached by carrier to route C to Q, Who offers to reduce his rate in the hope of
getting some business, by how much the rate should be reduced so that the clerk will offer him
the business.

SOLUTION:- 1.MINIMUM MATRIX METHOD:

P

5
12

SUPPLY

4
1

22
9

15

15
C

7
DEMAND 7

0
6

1
12

17

0
9

45
0

M+N-1
4+3-1=6
NOTE:- it has a initial basic feasible solution.
COMPUTATION OF MINIMUM TOTAL TRANSPORTATION COST
Market warehouse

Cellentry allotted entry

Total cost

5 12

36

51

4 9

36

B- R

2 15

30

C-P

5 7

35

8 1

A -Q

TOTAL

150

Vogels approximation method or penalty method:

P

12
B

SUUPLY ROW PENALTIES

22

12
2

8
7

15

8
1

12
0

17
0

9
0

3
2
3

2
3

0
45

--

7
DEMAND

15
C

COMPUTATION OF MINIMUM TOTAL TRANSPORTATION COST

Market warehouse

Cell entry allotted entry

A -Q

Total cost

3 12

36

5 2

10

4 8

32

B- R

2 15

30

C-P

57

35

6 1

TOTAL

149

3.MINIMUM MATRIX METHOD:

P
A

3
7

5
4

SUPPLY

4
2

22
9

0
15

15
C

0
6

8
DEMAND 7

12

0
17

9
0

45
0

M+N-1
4+3-1=6
NOTE:- it has a initial basic feasible solution.
COMPUTATION OF MINIMUM TOTAL TRANSPORTATION COST
Market warehouse

Cell entry allotted entry

Total cost

A -P

6 7

42

3 4

12

5 2

10

4 9

36

B-R

2 15

30

C- Q

78

56

TOTAL

186

Statement showing total transportation cost computed under various method:-

1. Clerks schedule.Rs 150

2. MMMRs 150
3. VAM..Rs 149
4. When the consignment is routed through
C to QRs 186

Differential cost statement

Reduction anticipated
1. Clerical
schedule

186-150=36
186-150=36

2. MMM
3. VAM

36/8 =4.50

36/8 =4.50
186-149=37

37/8 =4.50

INFERENCE:- when minimum transaction cost of clerical schedule is compared with the
anticipated cost and the difference will calculated by total cost per unit then you will get Rs 4.50.
similarly NWCR,MMM and VAMSS cost is compared with the anticipated cost and difference
will be calculated by total cost per unit then we get Rs 1.25, Rs4.50 and Rs4.60 respectively.
When compared to all reduction anticipated cost,VAM is the best method to reduce the
anticipated cost ie,Rs4.60. so, clerk will offer him this consignment.

Transportation Models are typically been designed to deal with critical logistic problems.
In the modern business world, when competition is order of the day, every businessman seeks to
optimize the end-results associated with his venture. The problem occurs with the logistics
manager as to how to minimize his total transportation cost keeping in tact the quality of material
he supplies on the one hand and time efficiency on the other hand. The credit of innovating this
model goes to George B. Dantzig and he came out with Linear Programming algorithm to tackle
the typical logistics problems.
There is a special offer which is made by a supplier of a carrier to reduce the
transportation cost per unit if at all the order is placed to him. But the clerk is in a dilemma as to
how much of reduction he should anticipate to reap the benefit of this offer?

To support and aid the clerk in proper decision-making, the following calculations have
been made.

Firstly, the total transportation cost associated with the conditioned supply of
supplying the consignment from C to Q is calculated.

Secondly, a differential cost statement is prepared to find out the amount of
reduction anticiapated in total cost per unit.
P

Supply

22

15

12

17

45

Warehouse

Market

Requirement