Transshipment

- Transportation but with Transshipment points /Intermediate points between supplier and
destination (demand location)
- Complication: No capacity limit from transshipment points
- Additional one group of constraints: Transshipment Flow (requires all products shipped in
transshipment point will be shipped out to destination) (every pairing of supplier to
transshipment and transshipment to destination point is a DV)
- Total Quantity of products shipped in TP = Total Quantity of products shipped to DP
- Every transportation of product will cost
- Objective is still to MIN Total Cost of shipping

Points to remember:

1.) Objective function will be expanded in terms of quantity of DV (decision variables)

2.) 3 groups of explicit constraints (supply + demand + transshipment flows)
3.) Total Quantity of products shipped in TP = Total Quantity of products shipped to DP

EXAMPLE:

i (source) j (transshipment) k (destination)

1 (Nebraska) A (Kansas City) x (Chicago)
2 (Colorado) B (Omaha) y (St. Louis)
C (Des Moines) z (Cincinnati)

Objective Functions:

Min Z = (16x1A + 10x1B + 12x1C + 15x2A + 14x2B + 17x2C) + (6xAx + 8xAy + 10xAz + 7xBx + 11xBy +
11xBz + 4xCx + 5xCy + 12xCz)

Constraints: (no inequalities because BALANCED except non-negativity)

Supply: x1A + x1B + x1C = 300

x2A + x2B + x2C = 300

x1A + x2A = xAx + xAy + xAz (transshipment: Kansas)

x1B + x2B = xBx + xBy + xBz (transshipment: Omaha)

x1C + x2C = xCx + xCy + xCz (transshipment: Des Moines)

Demand: xAx + xBx + xCx = 200 (destination: Chicago)

xAy + xBy + xCy = 100 (destination: St. Louis)

xAz + xBz +xCz = 300 (destination: Cincinnati)

Non-negativity: xij, xjk >= 0