Distribution and Network

Models
Applied Business Tools and Technology
An Introduction to Management Science
Quantitative Approaches to Decision Making
Anderson, Sweeney, Wiiliams, Camm, Cochran, Fry & Ohlmann
Transportation, Transshipment,
and Assignment Problems

• 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.
• Transportation, transshipment, assignment, shortest-route,
and maximal flow problems of this chapter as well as the
PERT/CPM problems are all examples of network problems.
Supply Chain Models
■ A supply chain describes the set of all interconnected
resources involved in producing and distributing a
product.
■ In general, supply chains are designed to satisfy
customer demand for a product at minimum cost.
■ Those that control the supply chain must make decisions
such as where to produce a product, how much should be
produced, and where it should be sent.
Transportation Problem
• The transportation problem seeks to minimize the total shipping
costs of transporting goods from m origins (each with a supply si)
to n destinations (each with a demand dj), when the unit
shipping cost from an origin, i, to a destination, j, is cij.
• The network representation for a transportation problem with
two sources and three destinations is given on the next slide.
Chapter 6, Part B: Distribution and
Network Models

• Shortest-Route Problem
• Maximal Flow Problem
• A Production and Inventory Application
Shortest-Route Problem
• The shortest-route problem is concerned with finding the
shortest path in a network from one node (or set of nodes)
to another node (or set of nodes).
• If all arcs in the network have nonnegative values then a
labeling algorithm can be used to find the shortest paths
from a particular node to all other nodes in the network.
• The criterion to be minimized in the shortest-route problem
is not limited to distance even though the term "shortest" is
used in describing the procedure. Other criteria include
time and cost. (Neither time nor cost are necessarily
linearly related to distance.)
NETWORK DISTRIBUTION
DIJKSTRA’S ALGORITHM
Route from Casa Nena Plant to
HAU Warehouse
 F11

D5
E7 F12

B2 E6 F11
A
C4 E8 F13
C5
E9 F14
DIJKTRA ALGORITHM
A2
B5

D11

E11

B6 D7

A5 B4
C8
ACTIVITY
 B-10 C-6
A-4
6
E
B
4
1 2 1
A-4 4 3
A 4
C 4 G
E-7 E-9
B5 3
3 3 C-8 H G-10
2 F-9
D 7 F

A-3 E-10 C-7 ACEH / ACFH

D-10
ACTIVITY
B-10 C-6
A-4

B-5

E-9
A-4 E-7
C-8 G-10

F-9

ACEH A-3 E-10 C7

ACFH
D-10