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# Topic 6

## Transport and Assignment

Analysis
P&T Company Distribution Problem
CANNERY 1
Bellingham

WAREHOUSE 3
CANNERY 2 Rapid City
Eugene CANNERY 3
Albert Lea
WAREHOUSE 2
Salt Lake City
WAREHOUSE 1
Sacramento

WAREHOUSE 4
Albuquerque
q q
Shipping Data
Cannery Output Warehouse Allocation
T t l
kl d

## Current Shipping Plan

Warehouse
From \ To Salt Lake
S
Sacramento
t R id City
Rapid Cit Alb
Albuquerque
City
Cannery
Bellingham 75 0 0 0
Eugene 5 65 55 0
Albert Lea 0 0 15 85
Warehouse
From \ To Sacramento Salt Lake City Rapid City Albuquerque
Cannery
Bellingham \$464 \$513 \$654 \$867
Eugene 352 416 690 791
Albert Lea 995 682 388 685

Total shipping cost under the current plan = 75(\$464) + 5(\$352) + 65(\$416) + 55(\$690) + 15(\$388) + 85(\$685)

= \$165,595

Is this optimal?
Terminology
e o ogy for
o a Transportation
a spo tat o Problem
ob e

P&T Company
p y Problem General Model

## Truckloads of canned peas Units of a commodity

Canneries Sources

Warehouses Destinations

## Allocation to a warehouse Demand at a destination

Shipping cost per truckload from a Cost per unit distributed from a source
cannery to a warehouse to a destination
Characteristics of Transportation Problems

## The Requirements Assumption

Each source has a fixed supply of units, where this entire supply must
b di
be distributed
t ib t d tto th
the d
destinations.
ti ti
Each destination has a fixed demand for units, where this entire
demand must be received from the sources.

## The Feasible Solutions Property

A transportation problem will have feasible solutions if and only if the
sum of its supplies equals the sum of its demands.
demands

## The Cost Assumption

The cost of distributing units from any particular source to any
particular destination is directly proportional to the number of units
distributed.
This cost is just the unit cost of distribution times the number of units
distributed.
P&T Company Distribution Problem
Warehouse
From \ To Sacramento Salt Lake City Rapid City Albuquerque
Cannery
Bellingham \$464 \$513 \$654 \$867
Eugene 352 416 690 791
Albert Lea 995 682 388 685
Supplie s De ma nds

Destina tions
Sourc es
D1 80 (Sa cr amento)
464
(Be llingham) 75 S1 513
654
867 D2 65 (Sa lt La ke City
352 416
(E ugene) 125 S2 690
791
682 D3 70 (Rapid City)
995
388
(Alber t Le a)100 S3
685
D4 85 (Albuquerque )
P&T Mathematical Model
Let xij = the number of truckloads to ship from cannery i to warehouse j
(i = 1, 2, 3; j = 1, 2, 3, 4)

## Minimize Cost = \$464x11 + \$513x12 + \$654x13 + \$867x14 + \$352x21 + \$416x22

+ \$690x
\$690 23 + \$791x
\$ 91 24 + \$995x
\$99 31 + \$682x
\$682 32 + \$388x
\$388 33 + \$685x
\$68 34

subject
j to
Cannery 1: x11 + x12 + x13 + x14 = 75
Cannery 2: x21 + x22 + x23 + x24 = 125
C
Cannery 3:
3 x31 + x32 + x33 + x34 = 100
Warehouse 1: x11 + x21 + x31 = 80
Warehouse 2: x12 + x22 + x32 = 65
Warehouse 3: x13 + x23 + x33 = 70
Warehouse 4: x14 + x24 + x34 = 85
and
xijj ≥ 0 (i = 1, 2, 3; j = 1, 2, 3, 4)

...refer to P&T.xls
Integer Solutions Property

As long as all its supplies and demands have integer values, any
transportation problem with feasible solutions is guaranteed to
have an optimal solution with integer values for all its decision
variables. Therefore, it is not necessary to add constraints to the
model
d l th
thatt restrict
t i t these
th variables
i bl tto only
l hhave iinteger
t values.
l

## We will discuss integer programming problems are discussed Topic

IX.
Variations on Transport Problems

## 1. sum of supplies > sum of demands

- each supply
pp y is the maximum to be distributed

## 2. sum of supplies < sum of demands

- each demand is maximum to be received

## 3. destination has both minimum and maximum

- can receive a quantity between the two constraints

## 5. objective is to maximise profit, not minimise cost

Better Products (Assigning Plants to Products)
The Better Products Company has decided to initiate the production
of four new products, using three plants that currently have excess
capacity.
Unit Cost
Capacity
Product: 1 2 3 4 Available

Pl t
Plant
1 \$41 \$27 \$28 \$24 75

2 40 29 — 23 75

3 37 30 27 21 45

Required production 20 30 30 40

## - basically a transportation problem

problem, but: 1) plant 2 can’t
can t produce product 3
2) supply > demand
...refer to Better products.xls
Nifty Co. (Choosing Customers)

## - The Nifty Company specializes in the production of a single product, which it

produces in three plants.

- Four customers would like to make major purchases. There will not be
enough to meet each customers’ requested purchases, so management
has set a minimum acceptable delivery to each customer
customer.

- Due largely to variations in shipping cost, the net profit per unit sold varies
depending
p g on which p plant supplies
pp which customer.

Question: How many units should Nifty sell to each customer and how
many units should they ship from each plant to each customer?
Data for the Nifty Company

Unit Profit

Production
Customer: 1 2 3 4 Quantity

Plant
1 \$55 \$42 \$46 \$53 8000

2 37 18 32 48 5000

3 29 59 51 35 7000
Minimum purchase 7000 3000 2000 0
Requested purchase 7000 9000 6000 8000

Question: How many units should Nifty sell to each customer and
how many units should they ship from each plant to each customer?

...refer to nifty.xls
Metro Water (Distributing Natural Resources)
Metro Water District is an agency that administers water distribution in a large
geographic region. The region is arid, so water must be brought in from outside the
region.

## Sources off imported

S i t d water:
t Colombo,
C l b S Sacron, anddCCalorie
l i rivers.
i
Main customers: Cities of Berdoo, Los Devils, San Go, and Hollyglass.
* there is no infrastructure for Calorie River water to be delivered to Hollyglass

## Berdoo Los Devils San Go Hollyglass Available

Colombo River \$
\$160 \$
\$130 \$
\$220 \$
\$170 5
Sacron River 140 130 190 150 6
Calorie River 190 200 230 — 5
(million
Needed 2 5 4 1.5
acre feet)

Question: How much water should Metro take from each river, and
how much should they send from each river to each city?

...refer to Metro.xls
Northern Airplane (Production Scheduling)
Northern Airplane
p Company
p yp produces commercial airplanes.
p The last
stage in production is to produce the jet engines and install them.

## The company must meet the delivery deadline indicated in column 2.

Production and storage costs vary from month to month.

Unit Cost of
M i
Maximum P
Production
d ti P d ti (\$million)
Production (\$ illi ) Unit Cost
Scheduled Regular Regular of Storage
Month Installations Time Overtime Time Overtime (\$thousand)
1 10 20 10 1 08
1.08 1 10
1.10 15
2 15 30 15 1.11 1.12 15
3 25 25 10 1.10 1.11 15
4 20 5 10 1 13
1.13 1 15
1.15

## Question: How many engines should be produced in each of the four

months so that the total of the production and storage costs will be
minimized?
Northern Airplane (Production Scheduling)
What are the decision variables?
- number of units produced in each quarter in regular time and in
over time

## What are the costs?

- production costs in regular time and over time and storage costs

## What are the constraints?

- meeting production requirements
- maximum productive capacity

## Month Production Installations Stored

1 (RT) 20 10 10
2 (RT) 10 15 5
3 (RT) 25 25 5
3 (OT) 10 0 10
4 (RT) 5 20 0
Middletown School District

## Middletown School District is opening a third high school and needs to

redraw the boundaries for the area of the city that will be assigned to the
respective schools.
schools

The city has been divided into 9 tracts with approximately equal
populations.
populations

Each school has a minimum and maximum number of students that should
be assigned.
g

The school district management has decided that the appropriate objective
is to minimise the average distance that students must travel to school.
* note that this is equivalent to minimising the total distance that
all students travel because the number of students is fixed

## Question: How many students from each tract should be assigned to

each school?
Middletown School District
Distance to School (km)
( )
Number of
Tract 1 2 3 Students
1 2.2 1.9 2.5 500
2 1.4 1.3 1.7 400
3 0.5 1.8 1.1 450
4 12
1.2 03
0.3 20
2.0 400
5 0.9 0.7 1.0 500
6 1.1 1.6 0.6 450
7 2.7 0.7 1.5 450
8 1.8 1.2 0.8 400
9 1.5 1.7 0.7 500
Minimum
1,200 1,100 1,000
enrollment
Maximum
1 800
1,800 1 700
1,700 1 500
1,500
enrollment
Middletown School District

## What are the decision variables?

- # of students from each tract assigned to each of the three schools

## What are the costs?

- distance traveled by each student

## What are the constraints?

- all students must be allocated to a school
- minimum and maximum enrollment at each of the three schools

...refer to Middleton.xls
Texago Corporation Site Selection Case Study

## ● Texago owns oil fields, refineries and distribution centres

● Texago is expanding operations and will require an additional refinery and have to
increase its oil imports

● Management
M t mustt decide
d id where
h tto b
build
ild th
the new refinery
fi

## ● require several pieces of information:

1) costt off transporting
t ti oilil ffrom sources to
t refineries
fi i
2) cost of transporting product from refineries to distribution centres
3) operating costs for new refineries in various locations
Texago Corporation Site Selection Case Study

## Oil fields 1. Several in Texas

2. Several in California
3.
Refineries 1. Near New Orleans, Louisiana
2. Near Charleston, South Carolina
3 Near Seattle
3. Seattle, Washington
Distribution Centers 1. Pittsburgh, Pennsylvania
2. Atlanta, Georgia
3. Kansas City,
y Missouri
4. San Francisco, California
Texago Corporation Site Selection Case Study

Near Los Angeles, California 1. Near California oil fields.
3. Fairly near San Francisco distribution center.
Near Galveston, Texas 1. Near Texas oil fields.
2. Ready access from Middle East imports.
N
Near S
St. L
Louis,
i MiMissourii 1. L
1 Low operating
i costs.
2. Centrally located for distribution centers.
River.
Texago Corporation Site Selection Case Study

● managementt wants
t allll refineries
fi i tto operate
t att full
f ll capacity
it
- need to know Texago’s supply and demand for oil at various stages in the
supply chain

## Crude Oil Crude Oil

Needed Annually Produced Annually
Refinery (Million Barrels) Oil Fields (Million Barrels)
New Orleans 100 Texas 80
Charleston 60 California 60
New site 120 Total 240
Total 360 Needed imports = 360 – 240 = 120

● note that refineries require 360m barrels, domestic fields only deliver 240m barrels
- the remainder (120m barrels) will be imported from the Middle East
- transport costs will be key in the decision
Texago Corporation Site Selection Case Study

## Cost per Unit Shipped to Refinery or Potential Refinery

(Millions of Dollars per Million Barrels)
New Los
Orleans Charleston Seattle Angeles Galveston St. Louis
Source
Texas 2 4 5 3 1 1

California 5 5 3 1 3 4

Alaska 5 7 3 4 5 7

Middle East 2 3 5 4 3 4
Texago Corporation Site Selection Case Study

## Cost per Unit Shipped to Distribution Center

(Millions of Dollars)
Pittsburgh Atlanta Kansas City San Francisco
R fi
Refinery
New Orleans 6.5 5.5 6 8
Charleston 7 5 4 7
Seattle 7 8 4 3
Potential Refinery
Los Angeles 8 6 3 2
Galveston 5 4 3 6
St. Louis 4 3 1 5
Number of units needed 100 80 80 100
Texago Corporation Site Selection Case Study

● each
h refinery
fi h
has diff
differentt operating
ti costst
- labour costs, taxes, rent, energy, etc.

## Site Annual Operating Cost

(Millions of Dollars)

Los
os Angeles
ge es 6 0
620
Galveston 570
St. Louis 530

## ● setting up the problem

- goal is to determine the ideal location for the new refinery (i.e. the location
that minimises costs)

proposed site

## - select the location that has the minimum cost optimum

Texago Corporation Site Selection Case Study

● 2 steps:
t
1) solve optimal distribution plan from oil fields to all 4 refineries
- this will require solving 3 problems, 1 for each proposed refinery
...refer to Texago
g 1.xls

## 2) solve optimal distribution plan from 4 refineries to distribution centres

- this will require solving 3 problems
problems, 1 for each proposed refinery
...refer to Texago 2.xls

## ● next step is to consider refinery operation costs:

Total Cost
Total Cost of Shipping Operating Cost Total
of Shipping Finished for New Variable
Site Crude Oil Product Refinery Cost
Los Angeles \$880 million \$1.57 billion \$620 million \$3.07 billion

## Galveston 920 million 1.63 billion 570 million 3.12 billion

St. Louis 960 million 1.43 billion 530 million 2.92 billion
Sellmore Company Assignment Problem

The marketing manager of Sellmore Company will be holding the company’s annual
sales conference soon.

## He is hiring four temporary employees:

Ann, Ian, Joan, Sean

## Each will handle one of the following four tasks:

Word processing of written presentations
Computer graphics for both oral and written presentations
Preparation of conference packets, including copying and organizing materials
Handling of advance and on-site registration for the conference

Each employee can do all of the tasks, but some are more efficient at some tasks

## Question: Which person should be assigned to which task?

Data for the Sellmore Problem

## Required Time per Task (Hours)

Temporary Word Hourly
p y
Employee Processing
g Graphics
p Packets Registrations
g Wage
g
Ann 35 41 27 40 \$14

Ian 47 45 32 51 12

Joan 39 56 36 43 13

Sean 32 51 25 46 15

Total Cost
Word
Processing Graphics Packets Registrations
Ann \$490 \$574 \$378 \$560
Assignee Ian \$564 \$540 \$384 \$612
Joan \$507 \$728 \$468 \$559
Sean \$480 \$765 \$375 \$690
The Network Representation

## (Ann) A1 490 T1 (Word processing

574

560 378

564
(Ian) A2 540 T2 (Graphics)

384
612

507 728

(Joan) A3
468 T3 (Packets)

559

765
375 ...refer
refer to sellmore.xls
sellmore xls
480

## (Sean) A4 690 T4 (Registrations)

Variants of Assignment Problems
1 Better Products revisited
1.

## - Better Products assigned production of four products to three plants

- optimal solution told us to produce product 4 in both plants 2 and 3
- producing the same product in more than one location can generate additional costs

- we introduce a new constraint that all of any specific product must be produced in only one plant
- i.e. no product splitting

## - there are three plants and four products

- one plant will produce two products
- two plants will each produce only one product

- only plants 1 and 2 have capacity to produce more than one product