Linear

Programming:
Transportation
Model

Contents
Linear programming:
Transportation, Assignment,
Transshipment

Practical example
Demand = Supply
Demand > Supply

Linear Programming
Decision-making technique
Applied in
marketing
finance
production and operations
management
project scheduling
revenue management

Network Flow problems

Network Flow Problems

Transportation
Distribution of goods/services
Several demand and supply locations

Assignment
Assignment of tasks to people, jobs to
machines, etc.
One agent to one task

Transshipment
Intermediate locations (warehouses,
distribution centres, etc.)
Shipments are combinations

Example Problem
Demand = Supply =
700

Destination

Costs per unit

Origin

Retailer 1 Retailer 2 Retailer 3

Supply
(units)

Factory
1

400

Factory
2

300

Demand
(units)

150

300

250

Example Problem

Demand
150

Suppl
y
40
0

5
3

4
300

3
30
0

7
250

Linear Model
1. VAR

XF1R1, XF1R2, XF1R3, XF2R1, XF2R2, XF2R3

[number of

units]

2. OF
7XF2R3

min costs

5XF1R1 + 4XF1R2 + 3XF1R3 + 3XF2R1 + 6XF2R2 +

[$]

3. ST
Supply
Factory 1

XF1R1+ XF1R2 + XF1R3 <= 400

units

Factory 2

XF2R1 + XF2R2 + XF2R3 <= 300

units

Demand
Retailer 1

XF1R1 + XF2R1 = 150

units

Retailer 2

XF1R2 + XF2R2 = 300

units

Retailer 3

XF1R3 + XF2R3 = 250

units

Non-negativity

XIJ >= 0

Excel Output
Origin

Retailer
1

Retailer
2

Retailer
3

Suppl
y

Factory 1

400

Factory 2

300

Demand

150

300

250

Min costs

728
Destination

Origin
Retailer 1 Retailer 2 Retailer 3 Total
Factory 1
150
250
0
400 <=
Factory 2
0
50
250
300 <=
Demand

150
=

300
=

150

250
=

300

250

Supply
400
300

Example Problem: D>S

Retailer 2 + 100 units = 400 units demanded; Total demand
= 800 units; Supply = 700 units
Origin
Factory
1
Factory
2

Retailer 1

Retailer 2

Retailer 3

Supply

400

300

Demand

150

400

250

Min
costs

828

dummy

Destination
Origin
Factory
1
Factory

Retailer 1

Retailer 2
0

250

Retailer 3

Total
150

400 <=

Supply
400

Thank you!