The Transshipment Problem

This section is a slight

modification of the transportation
problem.
You might recall in the transportation problem that we had a
source of product and a destination for product. An analogy
might be you had production locations and sales (retail)
locations. We looked for the cheapest way to get products
from the production places to the sales places.
Here we have the possibility of an intermediate step. Maybe
between the production and the sales places we have
warehouses.
Warehouses would then get stuff from production places and
move the stuff on to the sales places. Here is a visual to have
you “see” the situation.
Production warehouse 5 sales

1 3
6

2 4 7
8
 Call xij the amount shipped from place i to place j. Note in my
visual the flow is from left to right, but in the real world we would
have to keep track of the “type” of entity of each location.
Subscripts 1 and 2 here refer to production places, 3 and 4 to
warehouses and 5 through 8 for sales places. On page 439 of the
book we have cost data and from this we have the following
objective function in linear programming.
Min 2x13 + 3x14 + 3x23 + 1x24 + 2x35 + 6x36 + 3x37 + 6x38 + 4x45 + 4x46 + 6x47 + 5x48

You might note here that we do not have a smooth flow in our
subscripts like x11, x12, x13, x21, and so on because, for
example, x12 does not make sense since locations 1 and 2 are
both production places and we would not ship from production
place to production place (this is in context of outputs).
Now, the production places have a limit to what can be produced
and we will have a constraint for each in the form
xi3 + xi4 ≤ production limit,
Specifically, here we have
x13 + x14 ≤ 600 and x23 + x24 ≤ 400.
Next, what comes out of a warehouse has to first come in. This
means each warehouse will have a constraint that has an equality
of what comes in and what goes out. For warehouse 3 we have
x13 + x23 = x35 + x36 + x37 + x38 or to be in the form for the
computer we have
x13 + x23 – x35 – x36 – x37 – x38 = 0. Similarly for warehouse
4 we have
x14 + x24 – x45 – x46 – x47 – x48 = 0.
As in the transportation problems we have the destinations get what
they need, so those constraints would be
x35 + x45 = 200,
x36 + x46 = 150,
x37 + x47 = 350, and
x38 + x48 = 300.
On the next slide I have the results of the linear program from the
software that comes with our book.
 Note the values to
ship on each route.

Note the cost of shipping

on x36 is 6 but the reduced
cost is only 1. If you forced
a unit to be shipped on x36
you would think costs
would go up 6, but is only 1
here. The reason is when
you force 1 shipped on x36
destination 6 now has one
more unit than needed, so
the program reduces
shipments from other
places and the net is only
1. Neat, huh?