1 Distribution problems:

Management Science

Distribution problems are a special type of linear programming problem. Due to their special structure, these problems can be solved by special computational procedures in an efficient manner. There are two main types of distribution problem: Transportation problem and Assignment problem.

Transportation problem: A network flow problem that often involves minimizing the cost of shipping goods from a set of origins to a set of destinations. The transportation problem arises frequently in planning for the distribution of goods and services from several supply locations to several demand locations. Typically, the quantity of goods available at each supply location (origin) is limited and the quantity of goods needed at each of several demand locations (destinations) is known. The usual objective in a transportation problem is to minimize the cost of shipping goods from the origins to the destinations. Assignment problem: A network flow problem that often involves the assignment of agent to tasks. The assignment problem deals with finding the best one-to-one match for each of a given number of candidates to a number of positions. The assignment problem arises in a variety of decision-making situations; typical assignment problem involve assigning jobs to machines, agent to tasks, sales personnel to sales territories, contracts to bidders and so on. A distinguishing feature of the assignment problem is that one agent is assigned to one and only one task. It can be formulated as a linear program and is a special case of the transportation problem. Distribution problems exhibit the following characteristics: Supply: A limited quantity of items, such as cement or oil, is available at certain sources (or origins), such as factories or refineries. Demand: There is a demand for the items at several destinations such as warehouses, distribution centers, or stores. Quantities: The quantities of supply at each source and the demand or requirements at each destination are known Shipping cost: The per unit costs of transporting the commodity from each source to each destination are assumed to be known. Usually, they are based on the distance between the two points or they are negotiated. Moving companies and the post office are examples of users of a similar cost system in their deliveries. No Shipment: It is assumed that no shipments are allowed between sources or between destinations. Allowing such transshipments would require special adjustments in the model. Whole Integer: All supply and demand quantities are given in whole numbers (integers). M K Hossain Khan MBA (MIS), DU

Management Science Solution: The problem is to determine how many units should be shipped from each source to each destination (i.e., what routes to use and in what capacity) so that all demands are satisfied (if possible) at the minimum total shipping cost.

Transshipment problem: It is an extension of transportation problem in which intermediate nodes, referred to as transshipment nodes, are added to account for locations such as warehouses. Shipments may be made between any pair of three general types of nodes: origin nodes, transshipment nodes and destination nodes. For example, the transshipment problem permits shipment of goods from origin to transshipment nodes and on to destinations, from one origin to another origin, from one transshipment location to another, from one destination to another, and directly to from origins to destinations. Heuristic: A commonsense procedure for quickly finding a solution to a problem. Heuristics are used to find initial feasible solutions for the transportation simplex method and in other application. MODI method: A procedure in which a modified distribution method determines the incoming arc in the transportation simplex method. Stepping-stone method: Using a sequence or path of occupied cell to identify flow adjustments necessary when flow is assigned to an unused arc in the transportation simplex method. This identifies the outgoing arc. Incoming arc: The unused arc (represented by an unoccupied cell in the transportation tableau) to which flow is assigned during an iteration of the transportation simplex method. Outgoing arc: The arc corresponding to an occupied cell that is dropped from solution during an iteration of the transportation simplex method. Net evaluation index: The per unit change in the objective function associated with assigning flow to an unused arc in the transportation simplex method. Nodes: The intersection or junction points of a network. Arc: The lines connecting the nodes in a network. Solution Method: Transportation Method The process involves the following five steps, as shown in Figure 7.2 Step 1: Arrange the Data in Tabular Form Step 2: Balance the TableStep 3: The Initial Feasible Solution Step 4: Testing for Optimality Step 5: Improving a Non-optimal Solution M K Hossain Khan MBA (MIS), DU

Management Science

Figure 7.2: Steps in solving the transportation problem

Step 1: Arrange problem In Table Form

Step 2: Balance Table (if necessary)

Step 3: Find an Initial Feasible Solution

Is Solution Degenerate?

Yes No

Resolved Degeneracy

Step 4: Is solution Optimal?

Yes

Problem is solved

No

Step 5: Generate Improved Solution

M K Hossain Khan MBA (MIS), DU