Chapter 2D

Linear Programming: The Transshipment

Problem

Slide 1 of 26
 Introduction

 Linear Programming (LP) problems can be solved on

the computer using dedicated software such as
WhatsBest!, solver (Excel add-on) and many others.
 There are special classes of LP problems such as the
Transshipment Problem (a special class of TP).
 Efficient solutions methods exist to solve the
Transshipment Problem.

Slide 2 of 26
 Transshipment Problem

 A network model is one which can be represented by

a set of nodes, a set of arcs, and functions (e.g. costs,
supplies, demands, etc.) associated with the arcs
and/or nodes.
 Transshipment Problem is an example of a network
problem.

Slide 3 of 26
 Transshipment Problem

 Transshipment problems are transportation problems in

which a shipment may move through intermediate
nodes (transshipment nodes) before reaching a
particular destination node.
 Transshipment problems can be converted to larger
transportation problems and solved by a special
transportation program.
 Transshipment problems can also be solved by general
purpose linear programming codes.
 The network representation for a transshipment
problem with two sources, three intermediate nodes,
and two destinations is shown on the next slide.

Slide 4 of 26
 Transshipment Problem

 Network Representation

3 c36
c13 c37
s1 1 c14 6 d1
c15 c46
4 c47
c23 c24
c56 7 d2
s2 2
c25
5 c57

SOURCES INTERMEDIATE DESTINATIONS

NODES

Slide 5 of 26
 Transshipment Problem
 Linear Programming Formulation
xij represents the shipment from node i to node j

Min cijxij
ij

s.t. xij < si for each source (origin) i

j

xik - xkj = 0 for each intermediate

i j node k (conservation of flow)

xij > dj for each destination j

i
xij > 0 for all i and j (nonnegativity)

Slide 6 of 26
 Useful Excel/Solver Functions: Sumproduct

 SUMPRODUCT
Multiplies corresponding components in the given arrays,
and returns the sum of those products.
 Syntax: SUMPRODUCT(array1,array2,array3, ...)
• Array1, array2, array3, ...   are 2 to 30 arrays whose
components you want to multiply and then add.

Slide 7 of 26
 Useful Excel/Solver Functions: VLOOKUP

Searches for a value in the leftmost column of a table, and then

returns a value in the same row from a column you specify in
the table. Use VLOOKUP instead of HLOOKUP when your
comparison values are located in a column to the left of the
data you want to find.

Slide 8 of 26
 Useful Excel/Solver Functions: VLOOKUP
 Syntax:
VLOOKUP(lookup_value,table_array,col_index_num,
range_lookup)
• Lookup_value is the value to be found in the first
column of the array.
• Table_array is the table of information in which data
is looked up.

If range_lookup is TRUE, the values in the first
column of table_array must be placed in
ascending order.

Slide 9 of 26
 Useful Excel/Solver Functions: VLOOKUP
 Syntax:
VLOOKUP(lookup_value,table_array,col_index_num,
range_lookup)
• Col_index_num   is the column number in table_array from
which the matching value must be returned. A col_index_num
of 1 returns the value in the first column in table_array; a
col_index_num of 2 returns the value in the second column in
table_array, and so on.
• Range_lookup is a logical value that specifies whether you
want VLOOKUP to find an exact match or an approximate
match. If TRUE or omitted, an approximate match is returned.

Slide 10 of 26
 Useful Excel/Solver Functions: Sumif

 SUMIF: Adds the cells specified by a given criteria.

 Syntax: SUMIF(range,criteria,sum_range)
• Range is the range of cells you want evaluated.
• Criteria is the criteria in the form of a number,
expression, or text that defines which cells will be
added.
• Sum_range are the actual cells to sum. The cells in
sum_range are summed only if their corresponding
cells in range match the criteria. If sum_range is
omitted, the cells in range are summed.

Slide 11 of 26
 Example 1: Thomas & Washburn

Thomas Industries and Washburn Corporation

supply three firms (Zrox, Hewes, Rockwright) with
customized shelving for its offices. They both order
shelving from the same two manufacturers, Arnold
Manufacturers and Supershelf, Inc.
Currently weekly demands by the users are 50 for
Zrox, 60 for Hewes, and 40 for Rockwright. Both
Arnold and Supershelf can supply at most 75 units to its
customers.
Additional data is shown on the next slide.

Slide 12 of 26
 Example 1: Thomas & Washburn
Because of long standing contracts based on past orders, unit costs
from the manufacturers to the suppliers are:

Thomas Washburn
Arnold 5 8
Supershelf 7 4

The cost to install the shelving at the various locations are:

Zrox Hewes Rockwright

Thomas 1 5 8
Washburn 3 4 4

Find the quantities to be shipped from each source to each

destination to minimize the total shipping cost.

Slide 13 of 26
 Example 1: Thomas & Washburn

 Network Representation 5
ZROX
Zrox +50
1 3
5 1
ARNOLD
-75 Arnold Thomas 5
8 8 6

Hewes +60
HEWES

2 4
3 4
7
Super Wash-
-75 WASH 7
Shelf 4 Burn 4
BURN

Rock-
Supply nodes Transshipment nodes Wright +40

Demand nodes
Slide 14 of 26
 Example 1: Thomas & Washburn

 Linear Programming Formulation

• Decision Variables Defined
xij = amount shipped from manufacturer i to supplier j
xjk = amount shipped from supplier j to customer k
where i = 1 (Arnold), 2 (Supershelf)
j = 3 (Thomas), 4 (Washburn)
k = 5 (Zrox), 6 (Hewes), 7 (Rockwright)
• Objective Function Defined
Minimize Overall Shipping Costs:
Min 5x13 + 8x14 + 7x23 + 4x24 + 1x35 + 5x36 + 8x37
+ 3x45 + 4x46 + 4x47

Slide 15 of 26
 Example 1: Thomas & Washburn

 Constraints Defined
Amount Out of Arnold: x13 + x14 < 75
Amount Out of Supershelf:x23 + x24 < 75
Amount Through Thomas: x13 + x23 - x35 - x36 - x37 = 0
Amount Through Washburn: x14 + x24 - x45 - x46 - x47 = 0
Amount Into Zrox: x35 + x45 > 50
Amount Into Hewes: x36 + x46 > 60
Amount Into Rockwright: x37 + x47 > 40

Non-negativity of Variables: xij > 0, for all i and j.

Slide 16 of 26
Example 1: Thomas & Washburn problem via LP
 The solver formulation is:
The Transshipment Problem

Ship From To Unit Cost

0 1 Arnold 3 Thomas $5
0 1 Arnold 4 Washburn $8
0 2 SuperShelf 3 Thomas $7
0 2 SuperShelf 4 Washburn $4
0 3 Thomas 5 Zrox $1
0 3 Thomas 6 Hewes $5
0 3 Thomas 7 Rock-Wright $8
0 4 Washburn 5 Zrox $3
0 4 Washburn 6 Hewes $4
0 4 Washburn 7 Rock-Wright $4

Nodes Net Flow Supply/Demand

1 Arnold 0 -75
2 SuperShelf 0 -75
3 Thomas 0 0
4 Washburn 0 0
5 Zrox 0 50
6 Hewes 0 60
7 Rock-Wright 0 40

Total Transportation Cost $0

Slide 17 of 26
Example 1: Thomas & Washburn problem via LP
 The solver solution is:
The Transshipment Problem

Ship From To Unit Cost

75 1 Arnold 3 Thomas $5
0 1 Arnold 4 Washburn $8
0 2 SuperShelf 3 Thomas $7
75 2 SuperShelf 4 Washburn $4
50 3 Thomas 5 Zrox $1
25 3 Thomas 6 Hewes $5
0 3 Thomas 7 Rock-Wright $8
0 4 Washburn 5 Zrox $3
35 4 Washburn 6 Hewes $4
40 4 Washburn 7 Rock-Wright $4

Supply (-) or
Nodes Net Flow Demand (+)
1 Arnold -75 -75
2 SuperShelf -75 -75
3 Thomas 0 0
4 Washburn 0 0
5 Zrox 50 50
6 Hewes 60 60
7 Rock-Wright 40 40

Total Transportation Cost $1,150

Slide 18 of 26
 Example 2: The Bavarian Motors Company
(BMC)
BMC manufactures (very) expensive sports luxury cars in Germany
and ships them for sale in the US to Newark and Jacksonville.
From these entry ports the cars can be transported to distributors
located in Boston, Columbus, Atlanta, Richmond and Mobile.
There are 200 cars available for shipment in Newark and 300 in
Jacksonville. The distributors ordered the following quantities of
cars:
• Boston: 100
• Columbus: 60
• Atlanta: 170
• Richmond: 80
• Mobile: 70.
The shipping costs per unit for are shown in the next slide. You are
retained (for a large consulting fee) to determine shipping
quantities to minimize the total shipping cost.

Slide 19 of 26
Example 2: The Bavarian Motors Company
(BMC)
From To Unit Cost
1 Newark 2 Boston $30
1 Newark 4 Richmond $40
2 Boston 3 Columbus $50
3 Columbus 5 Atlanta $35
5 Atlanta 3 Columbus $40
5 Atlanta 4 Richmond $30
5 Atlanta 6 Mobile $35
6 Mobile 5 Atlanta $25
7 Jacksonville 4 Richmond $50
7 Jacksonville 5 Atlanta $45
7 Jacksonville 6 Mobile $50

Slide 20 of 26
 Example 2: The Bavarian Motors Company
(BMC)
 Network Representation
$45
$40 ZROX
Richmond
(4)
80

$50 $50 $30

Newark
ARNOLD $30 Boston
-200 (1) (2)

100
Atlanta
$35 HEWES
(5) 170
$50
$25
Jacksonville Columbus
-300 (7)
WASH
(3)
$40 $35
BURN

Mobile
60 $50 70
Supply nodes (6)

Slide 21 of 26
 Example 2: The Bavarian Motors Company
(BMC)
 Linear Programming Formulation:

• Decision Variables Defined

xij = amount shipped from source i to destination j
(i, j = 1 through 7)

• Objective Function Defined

Minimize Overall Shipping Costs:

Min 30x12 + 40x14 + 50x23 + 35x35 + 40x53 + 30x54 +

35x56 + 25x65 + 50x74 + 45x75+ 50x76

Slide 22 of 26
 Example 2: The Bavarian Motors Company
(BMC)
 Constraints Defined
Flow constraint for node 1: -x12 - x14 > -200
Flow constraint for node 2: x12 - x23 > 100
Flow constraint for node 3: x23 + x53 - x35 > 60
Flow constraint for node 4: x14 + x54 + x74 > 80
Flow constraint for node 5:
x35 + x65 + x75 - x53 - x54 - x56 > 170
Flow constraint for node 6: x56 + x76 - x65 > 70
Flow constraint for node 7: -x74 - x75 - x76 > -300

Non-negativity of variables: xij > 0, for all i and j.

Slide 23 of 26
 Example 2: The Bavarian Motors Company
(BMC)
 The solver formulation is:

Bavarian Motor Company

Ship From To Unit Cost Nodes Net Flow Supply/Demand

0 1 Newark 2 Boston $30 1 Newark 0 -200
0 1 Newark 4 Richmond $40 2 Boston 0 100
0 2 Boston 3 Columbus $50 3 Columbus 0 60
0 3 Columbus 5 Atlanta $35 4 Richmond 0 80
0 5 Atlanta 3 Columbus $40 5 Atlanta 0 170
0 5 Atlanta 4 Richmond $30 6 Mobile 0 70
0 5 Atlanta 6 Mobile $35 7 Jacksonville 0 -300
0 6 Mobile 5 Atlanta $25
0 7 Jacksonville 4 Richmond $50
0 7 Jacksonville 5 Atlanta $45
0 7 Jacksonville 6 Mobile $50

Total Transportation Cost $0

Slide 24 of 26
 Example 2: The Bavarian Motors Company
(BMC)
 The solver solution is:

Bavarian Motor Company

Ship From To Unit Cost Nodes Net Flow Supply/Demand

120 1 Newark 2 Boston $30 1 Newark -200 -200
80 1 Newark 4 Richmond $40 2 Boston 100 100
20 2 Boston 3 Columbus $50 3 Columbus 60 60
0 3 Columbus 5 Atlanta $35 4 Richmond 80 80
40 5 Atlanta 3 Columbus $40 5 Atlanta 170 170
0 5 Atlanta 4 Richmond $30 6 Mobile 70 70
0 5 Atlanta 6 Mobile $35 7 Jacksonville -280 -300
0 6 Mobile 5 Atlanta $25
0 7 Jacksonville 4 Richmond $50
210 7 Jacksonville 5 Atlanta $45
70 7 Jacksonville 6 Mobile $50

Total Transportation Cost $22,350

Slide 25 of 26
The End of Chapter 2D

Slide 26 of 26