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    Transportation, Assignment, and Transshipment Problems In this chapter, we discuss three special types of linear programming probloms: transporte tion, assignment, and traneshipment, Each of these can be solved by the simplex algorithm, but specialized algorithms for each typa of prablem are much more eficiont 7.1 Formulating Transportation Problems ‘We begin our discussion of transportation problems by formulating a linear programming ‘mode! of the following situation Poverco Formulation’ ‘Powerco has three electric power plants thet supply the needs of four cities." Bach power plant can supply the following numbers of kilowat-hours (kwh) of electricity: plant 1— 35 million; plant 2-50 million; plant 3-40 million (see Table 1). The peak power de- ‘ands in these cities, which oocur at the same time (2 &.), are as follows (in kwh): city 1-45 million; city 2—20 million; city 3—30 million; city 4~30 million, The costs of sending 1 million kwh of electricity from plant to city depend on the distance the elee- tricity must travel. Formulate an LP to minimize the cost of meeting each city’s peak power demand, ‘To formulate Powerco’s problem as an LP, we begin by defining a variable for each deci- sion that Poveerco must make. Because Powerco must determine how much power is sent from each plant to each city, we define (for = 1, 2,3 andj = 1, 2,3, 4) ‘xy = number of (million) kwh produced at plant / and sent to city j In terms of these variables, the total cost of supplying the peak power demands to cities 1-4 may be written as Bey + Gry + 10my + 9x14 (Cost of shipping power from plant 1) 4 Qxqy + 12exy + I3eay + Taga (Cost of shipping power from plant 2) £ Mey + Seqp + 16x39 + 5x54 (Cost of shipping power from plant 3) Powerco faces two types of constraints, First, the total power supplied by each plant cannot exceed the plant's capacity. For example, the total amount of power sent from plant ‘his example is based o Aarvic and Randolph (1975) 1 The costs of stance the eles ach city’s peak 2 for each des | hn power is seat i) sity ‘mands to cities «plant 1) 1 plant 2) 1 plant 3) 4 by each plant sent fom pan TABLE 1 Shin Cas, Spy, and Beant er owe a fom igi ty 35S 35 ees 50 Cfiisat daar Tee) “0 enon 620 3030 . tion) ee 210 the four cities cannot exceed 35 million kwh Bech variable with frst subscript 1 rep- Feseals a shipment of power from plant 1, so we may express this restriction by the EP constraint Xu tx tos + xg S35 {n & similar fashion, we can find constraints that reflect plant 2's and plant 3s capacities, Because power is supplied by the power plants, each is a supply point. Analogously, 2 constant that ensures thet the total quantity shipped from a plant doesnot exceed plant ‘capacity is@ supply constraint. The LP formulation of Powerco’s problem contsine the following three supply constraints: Su tm tmp +4535 Plant | supply constant) 3a tt + X03 + x4 S50 Plant 2 supply constrain) Satan ta +2440 Plant 3 supply constraint) Secon we need constraints that ensure that each city will receive sufficient power to ‘meet its peak demand. Each city demands power, so each is a demand point. For exam, Plo, city 1 must receive atleast 45 million kwh. Each variable with second subscript 1 Tepresents a shipment of power to city 1, so we obtain the following constraint nyt ag tay B45 Similarly, we obtain a constraint for each of cities 2, 3, and 4. A constraint that ensures {hat s location reesives its demand is a demand constraint, Powerco must satsty the fol owing four demand constraints xu +a) + xa 245 (City 1 demand constraint) m2 + x2 + 32220 City 2 demand constraint) X13 + X25 +a = 30 (City 3 demand constraint) wat ta +4230 City 4 demand constraint) Because all the xy's must be non-negative, we add the sig restrictions 1, 3,7 = 12.3.4) Combining the objective function, supply constraints, demand constraints, and sign re strictions yields the following LP formulation of Powerco’s problem: O@=1,2, rin 2 = 8) + Gra + 10s5 + Ory + kay + I2tpp + 1Bapy + Tie F Mtg) + 950 + Lys + Sig St xu ta tas + 4< 35 Supply constraints) Yar tea tay bag S50 ay) tag t+ Xap + ay = 40 7. Farming Tepe Pte 381 Sept eins amd pit Figure 1 Graphical Representation of Powerco Problem and His Optimal Solution Sen es sat x35, = 45 Demand constraints) aatintm = 20 a zis tas te 30 utah 230 my20 G=1237512,3.4) In Section 7.3, we will find that the optimal solution to this LP is 2 = 1020, x12 = 10, Mas = 25, x01 = 45, 223 = 5, 0, x54 * 30. Figure 1 is @ graphical representation of the Powerco problem and its optimal solution. The variable xy is represented by a lin, tr arc, joining the th supply point (plant /) and the jth demand point (city ). General Description of a Transportation Problem In general, a transportation problem is specified by the following information: 1A set of m supply points from winich a good is shipped. Supply point # can supply at ‘most s, units. In the Powerco example, m = 3, %) = 35,2 = 50, and s5 = 40. 2 A set of n demand potnis to which the good is shipped, Demand point j must receive at least d, units of the shipped good. In the Powerco example, n = 4, dy = 45, d, = 20, ds = 30, and dy = 30. 38 Bach unit produced at supply point and shipped to demand point j incurs a variable cost of ey In the Powerco example, ey2 = 6. Let xy = mumber of nits shipped from supply point / to demand point / then the general formulation of a transportation problem is min 5 Deo 362 euarrea 7 Tangtio, Aion and Tasstpmen Pte Das Dew Do-w cov aera ese ee o« (020, x12 = 10, iphical representation | represented by a ln, at (city m | sformation: point écan supply at nd 55 = 40, ' 4 point j mast receive 4d = 48, da = 20, ‘int incurs a variable rand point j st Day Ss @=12,...,m) (Supply constraints) i © eer ene) oe L2.comfa Qo. my Ifa problem has the constraints given in (1) and is a maximization problem, then itis stil 8 transportation problem (see Problem 7 at the end of this section). If then total supply equals total demand, and the problem is said to be # balaneed trans portation problem. For the Powerco problem, total supply and total demand both equal 125, so this is a balanced transportation problem. in a balanced transportation problem, all the constraints ‘ust be binding. For example, in the Powerco problem, if any supply constraint were nom. binding, then the remaining available power would not be sufficient to meet the needs of all four cities, For a balanced transportation problem, (1) may be written as ‘ener nin SF See : i st. Say=s @=1,2...,m) (Supply constraints) ee 2) Syd U=12...58) Demand constants) wy20 G12... mi j= 122m) Later in this chapter, we will see that itis relatively simple to find a basic feasible solue tion for a balanced transportation problem. Also, simplex pivots for these problems do not involve multiplication and reduce to additions and subtractions. For these reasons, itis de- sirable to formulate a transportation problem as 2 balanced transportation problem. Balancing a Transportation Problem If Total Supply Exceeds Total Demand If tozal supply exceeds total demand, we can balance a transportation problem by creat- ing a dummy demand point that has a demand equal to the amount of excess supply Because shipments to the dummy demand point are not real shipments, they are assigned cost of zero. Shipments to the dummy demand point indicate unused supply capacity. To understand the use of a dummy demand point, suppose that in the Powerco problem, the demand for city 1 were reduced to 40 million kwh. To balance the Powerco problem, Wwe would add a dummy demand point (point 5) with a demand of 125 ~ 120 = 5 mil 4ion kwh, From each plant, the cost of shipping 1 million kwh to the dummy is 0. The op- ‘imal solution to this balanced transportation problem is 2 = 975, m3 = 20, x12 Ray = 40, 293 = 10, 9p = 3, x54 = 30, and x35 = 5, Becouse x35 ~ 5, 5 million kwh of plant 3 capacity will be unused (see Figure 2). A transportation problem is specified by the supply, the demand, and the shipping costs, 0 the relevant data can be summarized in a transportation tableau (s2e Table 2) ‘The square, or cell in row i and column j of a transportation tableau corresponds to the 7.1 Foros Hanon Pens 363 2a enero Fiaure 2 Brapical Ropresentation of Unbalanced Powerce Problem and its Optimal Soution (with Dummy Demand Point TABLE 2 ‘Np Tala TABLE 3 ‘span Ts fe Poser Sup pos oa s Se a 4 4 4 ena iy oy ys tty ¢ 3 6 10 3 Pt 1 10 as a 2 5 7 Pat 2 4s 5 m1 9 16 3 Pant 5 10 30 Denuré 6 0 30 30 eearsee 7 Tats, Aspen, ant Tanspmen bins 35 Solution variable xy. 1f xy is a basic variable, its value is placed in the lower left-hand comer of the ith coll of the tableau. For example, the belanced Powerco problem and its optimal solution could be displayed as shown in Table 3, The tableau format implicitly expresses the supply and demand constrains through the fact thatthe sum of the variables in row i ‘ust equal s; and the sum of the variables in column j must equal d, Balancing a Transportation Problem if Total Supply Is Less Than Total Demand fa transportation problem has a total supply that is strictly less than total demand, then ‘the problem has no feasible solution. For example, if plant 1 had only 30 million kowh of capacity, then a total of only 120 million kowh would be available, This amount of power “would be insufficient to meet the total demand of 125 million kwh, and the Powerco prob- Jem would no longer have a feasible solution, ‘When total supply is less then total demand, itis sometimes desirable to allow the pos- sibility of leaving some demand unmet. In such a situation, a penalty is often associated ‘with unmet demand, Example 2 illustrates how such a situation ean yield a balanced trans- portation problem. 7 Ce ‘Two reservoirs are available to supply the water needs of three cities, Each reservoir can ‘supply up to 50 million gallons of water per day. Each city would like to receive 40 mi tion gallons per day. For each million gallons per day of unmet demand, there is a penalty. Atcity I, the penalty is $20; at city 2, the penalty is $22; and at city 3, the penalty is $23, ‘The cost of transporting 1 million gallons of water from each reservoir to each city is shown in Table 4. Formulate @ balanced transportation problem that can be used to min- ‘mize the sum of shortage and transport costs. In this problem, Daily supply = 50 + 50 = 100 million gallons per day Daily demand = 40 + 40 + 40 = 120 million gallons per day ‘To balance the problem, we add a dummy (or shortage) supply point having a supply of 120 ~ 100 = 20 million gallons per day. The cost of shipping 1 million gallons ffom the ‘dummy supply point toa city is just the shortage cost per million gallons for that city. Table 5 shows the balanced transportation problem and its optimal solution. Reservoir 1 should send 20 million galions per day to city 1 and 30 million gallons per day to city 2, whereas reservoir 2 should send 10 ruillion gallons per day to city 2 and 40 million gallons per day to city 3. Twenty million gallons per day of city 1's demand will be unsatisfied. TABLE 4 Spl Cot fr as i i oat ay? iy ee ee eT Rese? «$9.8 Se 7.41 FamusingTasprain Patios 365 TABLE 5 iy tay? ys sil ‘asprin Ten elec cen fe ReETO pase 1 | 20 50 I 7 is sen? | 0 0 50 20 un tape) Ey 20 em . 0 Modeling Inventory Problems as Transportation Problems ‘Many inventory planning problems can be modeled as balanced transportation problems, ‘To illustrate, we formulate a balanced transportation model ofthe Sailco problem of Sec- tion 3.10. Ee ‘Setting Up an Inventory Problem asia Transportation Probie Sailco Corporation must determine how many sailboats should be produced during each of the next four quarters (one quarter is three months). Demand is as follows: frst quarter, £40 sailboats; second quarter, 60 seilboats, third quarter, 75 sailboats; fourth quarter, 25 sail+ boats. Saileo must meet demand on time. At the beginning of the first quarter, Sailoo has an inventory of 10 sailboats. At the beginning of each quarter, Sailoo must devide how ‘many sailboats should be produced during the current quarter. For simplicity, we assume that sailboats manufactured during a quarter cen be used to meet demand for the current quarter, During each quarter, Saileo can produce up to 40 sailboats at a cost of $400 per sailboat, By having employees work overtime during a quarter, Sailoo can produce addi- tional sailboats ata cost of $450 per sailboat. At the end of each quarter (after production ‘has occurred and the current quarter's demand has been satisfied), © carrying or holding ‘cost of $20 per sailboat is incurred. Formulate a balanced transportation problem to mini ize the sum of production and inventory costs during the next four quarters, Solution We define supply and demand points as follows: Point 1 = initial inventory (6; = 10) Point 2 = quarter 1 regular-time (RT) production (2 = 40) Point 3 = quarter 1 overtime (OT) production (55 = 150) Point 4 = quarter 2 RT production (24 = 40) Supply Points Point 5 = quarter 2 OF production (65 = 150) Point 6 = quarter 3 RT production (s6 = 40) Point 7 = quarter 3 OT production (sy = 150) Point § = quarter 4 RT production (Se = 40) Point 9 = quarter 4 OT production (6 = 150) ‘There is a supply point corresponding to each source from which demand for sailboats ccan be met 366 caursea Taipan Aagnmer, anf Tasman Peters TABLE 6 Tanger Tea ‘or ito. Point 1 = quarter I demand (@, = 40) Point 2 = quarter 2 demand — (¢ = 60) Demand Points Point 3 = querter 3 demand (ds = 75) Point 4 = quarter 4 demand (dy = 25) Point 5 = dummy demand point (ds = 770 ~ 200 = $70) ‘A shipment from, soy, quarter 1 RT to quarter 3 demand means producing 1 unit on regu- Jar time during quarter 1 that is used to meet 1 unit of quarter 3's demand. To determine, say, cy, observe that producing 1 unit during quarter 1 RT and using that unit to meet quar- ter3 demand incurs a cost equal to the cost of producing 1 unit on quarter 1 RT plus the cost ofholding « unit in inventory for 3 ~ 1 = 2 quarters. Thus, c1s = 400 + 2(20) = 440. Because there is no limit on the overtime production during any quactr, itis not clear ‘what value should be chosen for the supply st each overtime production point. Total de- mand = 200, go at most 200 ~ 10 = 190 (~10 is for initial inventory) units will be pro- duced during any quarter. Because 40 units must be produced on regular time before any Units are produced on overtime, overtime production during any quarter will never exceed 190 ~ 40 = 150 units. Any unused overtime capacity will be “shipped” to the dummy demand point. To ensure that no sailboats are used to meet demand during a quarter prior to their produetion, a cost of M (M is a large positive number) is assigned to any cell that corresponds to using production to meet demand for an ealier quate. ? 1 2 2 © bom a 3 w @ o wit 10 10 a) [a | a 10 0 [ao] [ee] io @ 150 150 aa] [ao [0 z 0 “0 a0] [ava] [80 o 10 Mo 150 mo] Tae 7 “0 ” [so] [0 7 3 us 150 00 a 2s 6 “0 i ml [so D 150 180 © 15 Sm 7. Farming Tepe Pris 367 ‘Total supply = 770 and total demand = 200, so we must add 2 dammy demand poiny ‘vith a demand of 770 ~ 200 = 570 to balance the problem. The cost of shipping # unit from any supply point to the dummy demand point is 0. ‘Combining these observations yields the balanced transportation problem and its opt. ‘mal solution shown in Table 6. Thus, Sailco should meet quarter 1 demand with 10 unity of initial inventory and 30 units of quarter 1 RT production; quarter 2 demand with 10, ‘nits of quarter 1 RT, 40 units of quarter 2 RT, and 10 units of quarter 2 OT production; quarter 3 demand with 40 units of quarter 3 RT and 3S units of quarter 3 OT production; and finally, quarter 4 demand with 25 units of quarter 4 RT production. a eH REET STI file Tanalng In Problem 12 at the end of this section, we show how this formulation can be modi- fied to incorporate other aspects of inventoty problems (backlogged demand, perishable inventory, and s0 on). Solving Transportation Problems on the Computer ‘To solve a transportation problem with LINDO, type in the objective function, supply con- straints, and demand constraints. Other menu-driven programs are available that acgept the shipping costs, supply values, and demand values. From these values, the program can generate the objective function and constraint. LINGO can be used to easily solve any transportation problem. The following LINGO ‘model can be used to solve the Powerco exemple (file Trans Ing), Tisers: 2 puates 20, 2,287 cm Shmmsers -_ Shaeeasoncan Syaroncerniae ‘paste ours (2) sense 1.90) >DeNt)> Dyaron uae (2 30) seme (ezeas (315829 2,99)

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