BMFG 3113 Ch2 Part4

Chapter 2
PROCESS SYSTEMS FOR

MANUFACTURING
LOGISTIC PLANNING & DESIGN
2.5 Logistic Planning & Design
2.5.1 Transportation
2.5.2 Distribution
Chapter 2
Transportation Problems
allocation of raw materials purchased from
various suppliers.

delivery of finished goods produced from various
factories to various distribution center.

Suppliers Manufacturers Warehouses &
Distribution Centers
Customers
Material Costs
Transportation
Costs
Transportation
Costs
Transportation
Costs Inventory Costs Manufacturing Costs
Chapter 2
Chapter 2
Linear Programming Models
presents a matrix of:
1- Quantities required at the sinks (market).
2- Unit cost transportation from each source
(factory).

Chapter 2
Linear Programming Models (continue)

Distributors
Plants
D1 D2 D3 Plant
capacity
P1 $ $ $ Q1
P2 $ $ $ Q2
P3 $ $ $ Q3
P4 $ $ $ Q4
Demand X1 X2 X3
Chapter 2

Three ways:

1- Northwest Corner Rule
allocating to (1,1) cell as much as is needed
for sink 1(distributor 1) or as much as it can be
supplied from source 1 (plant 1).
Chapter 2

Distributors
Plants
D1 D2 D3 Plant
capacity
P1 $
max(X1,Q1)
$ $ Q1
P2 $ $ $ Q2
P3 $ $ $ Q3
P4 $ $ $ Q4
Demand X1 X2 X3
1- Northwest Corner Rule (example)
Chapter 2

1- Northwest Corner Rule (continue)
if the needed of sink 1 is satisfied, no
assignment to any other cell in the 1
st
column.

move to the (1,2) cell of the 1
st
row and
allocate min (a1 b1, b2) to this cell; and so on.
Chapter 2

Distributors
Plants
D1 D2 D3 Plant
capacity
P1 $ (X1) $ min(Q1-X1,X2) $ Q1
P2 $ $ $ Q2
P3 $ $ $ Q3
P4 $ $ $ Q4
Demand X1 X2 X3
1- Northwest Corner Rule (continue)
Chapter 2

2- Least unit transportation cost
starting with a combination of factory and
market having least unit transportation cost.

quantity required is allocated in this cell as
much as is needed.
Chapter 2

Distributors
Plants
D1 D2 D3 Plant
capacity
P1 $ $ $ Q1
P2 $ $ $ Q2
P3 $ min$
max(X2,Q3)
$ Q3
P4 $ $ $ Q4
Demand X1 X2 X3
2- Least unit transportation cost (example)
Chapter 2

2- Least unit transportation cost
no assignment is needed to any other cell in
this row when all products are exhausted OR all
demands are satisfied.

the same process is continued for 2
nd
, 3
rd
,
least unit transportation cost.
Chapter 2

Distributors
Plants
D1 D2 D3 Plant
capacity
P1 $ $ $ Q1
P2 $ $ min$
max(X3,Q2)
Q2
P3 $ min$
max(X2,Q3)
$ Q3
P4 $ $ $ Q4
Demand X1 X2 X3
2- Least unit transportation cost (example)
Chapter 2

3- VAM (Vogels Approximation Method)
in each row OR each column, calculate the
difference between 2
nd
least and the least
transportation cost.

assign a cell with the least transportation
cost that having THE GREATEST DIFFERENCE.
Chapter 2

Distributors
Plants
D1 D2 D3 Plant
capacity
P1 Diff.$ Diff.$ Diff.$ Q1
P2 Diff $ Diff $ Diff $ Q2
P3 Max. Diff.$ Diff.$ Diff.$ Q3
P4 Diff $ Diff $ Diff $ Q4
Demand X1 X2 X3
3- VAM (Vogels Approximation Method)
EXAMPLE
Example 1

The Pear Disk Drive Corporation produces several capacities of IBM
drives for personnel computers. Pear produces the drives in three
plants located in California, Ireland, and Thailand. The production
quantities at the factories in the next month are expected to as shown
in Table 1 below.
Plant Anticipated Production
Quantity (in 1000 units)
California 45
Ireland 120
Thailand 95
Chapter 2
Example (continue):

Periodically, shipments are made from the three plants to four
distribution warehouses located in USA; Texas, New Jersey, Chicago,
South Dakota. Over the next month, it has been determined that these
warehouses should receive the following companys production as
shown in Table 2 below.
Warehouse Total Shipment Quantity
(in 1000 unit)
Texas 80
New Jersey 78
Chicago 47
South Dakota 55
Chapter 2
Example (continue):

The unit cost for shipping 1,000 units from each plant to each ware
house is given in the Table 3 below.
TO
Texas Chicago New
Jersey
South
Dakota
FROM California 250 420 380 280
Ireland 1,280 990 1,440 1,520
Thailand 1,550 1,420 1,660 1,730
Chapter 2
Question

What is the optimum total cost for the
transportations from plants to warehouses?
Chapter 2
Solution
Step 1: Construct the transportation tableau.
WAREHOUSES Anticipated
Production
quantity
FACTORIES Texas Chicago New
Jersey
South
Dakota
California 250 420 380 280 45
Ireland 1,280 990 1,440 1,520 120
Thailand 1,550 1,420 1,660 1,730 95
Total
Shipment
quantity
80 78 47 55
Chapter 2
Solution
Step 2: Select the lowest shipment cost.
WAREHOUSES Anticipate
d
Productio
n quantity
FACTORI
ES
Texas Chicago New
Jersey
South
Dakota
California 250

420 380 280 45
Ireland 1,280 990 1,440 1,520 120
Thailand 1,550 1,420 1,660 1,730 95
Total
Shipment
quantity
80 78 47 55
Chapter 2
Solution
Step 3: Select and write the minimum quantity between
production and shipment at the column of the minimum shipment cost.
Production
quantity
Jersey
South
Dakota
California 250
(45)
420 380 280 45
Ireland 1,280 990 1,440 1,520 120
Thailand 1,550 1,420 1,660 1,730 95
Total
Shipment
quantity
80 78 47 55
Chapter 2
NOTES

At this point, no more can be shipped out from
California to Texas. Then, draw a line through
the first row.
Chapter 2
Solution
Step 4: Draw a line through the row (in this example, the 1
st
row)
Production
quantity
Jersey
South
Dakota
California 250
(45)
420 380 280
45
Ireland 1,280 990 1,440 1,520 120
Thailand 1,550 1,420 1,660 1,730 95
Total
Shipment
quantity
80 78 47 55
Chapter 2
Solution
Step 5: Select another lowest shipment cost.
Production
quantity
Jersey
South
Dakota
California 250
(45)
420 380 280
45
Ireland 1,280 990 1,440 1,520 120
Thailand 1,550 1,420 1,660 1,730 95
Total
Shipment
quantity
80 78 47 55
Chapter 2
Solution
Step 6: Select the lowest quantity between production and
shipment.
Production
quantity
Jersey
South
Dakota
California 250
(45)
420 380 280
45
Ireland 1,280 990
(78)
1,440 1,520 120
Thailand 1,550 1,420 1,660 1,730 95
Total
Shipment
quantity
80 78 47 55
Chapter 2
NOTES

At this point, no more can be shipped out to
Chicago. Then, draw a line through the 2
nd

column.
Chapter 2
Solution
Step 7: Draw a line across the column (in this example, across 2
nd

column.
Production
quantity
Jersey
South
Dakota
California 250
(45)
420 380 280
45
Ireland 1,280 990
(78)
1,440 1,520 120
Thailand 1,550 1,420 1,660 1,730 95
Total
Shipment
quantity
80 78 47 55
Chapter 2
Solution
Step 8: Repeat the same step for the following row (3
rd
row).
Production
quantity
Jersey
South
Dakota
California 250
(45)
420 380 280
45
Ireland 1,280 990
(78)
1,440 1,520 120
Thailand 1,550 1,420 1,660 1,730 95
Total
Shipment
quantity
80 78 47 55
Chapter 2
Result
Production
quantity
FACTORIES Texas Chicag
o
New Jersey South
Dakota
California 250
(45)
420 380 280
45
Ireland 1,280
(80 45 = 35)
(120 78 = 42)
990
(78)
1,440

1,520 120
Thailand 1,550

1,420 1,660 1,730 95
Total
Shipment
quantity
80 78 47 55
Chapter 2
Production
quantity
FACTORIES Texas Chicago New Jersey South
Dakota
California 250
(45)
420 380 280
45
Ireland 1,280
(35)
990
(78)
1,440 1,520 120
Thailand 1,550

1,420 1,660
(47)
1,730 95
Total
Shipment
quantity
80 78 47 55
Result the minimum quantity for Ireland/Texas is selected.
Chapter 2
NOTES

At this point, no more can be shipped out to
Texas. Then, draw a line through the 1
st

column.
Chapter 2
Production
quantity
Dakota
California 250
(45)
420 380 280
45
Ireland 1,280
(35)
990
(78)
1,440
[120 (35 + 78)]
1,520 120
Thailand 1,550

1,420 1,660 1,730 95
Total
Shipment
quantity
80 78 47 55
Result the minimum quantity for Ireland/New Jersey is
selected.
Chapter 2
Production
quantity
Dakota
California 250
(45)
420 380 280
45
Ireland 1,280
(35)
990
(78)
1,440
(7)
1,520 120
Thailand 1,550

1,420 1,660
(47 7 = 40)
1,730 95
Total
Shipment
quantity
80 78 47 55
Result the minimum quantity for Thailand/New Jersey is
selected.
Chapter 2
Production
quantity
Jersey
South
Dakota
California 250
(45)
420 380 280
45
Ireland 1,280
(35)
990
(78)
1,440
(7)
1,520 120
Thailand 1,550

1,420 1,660
(40)
1,730
(95 - 40 = 55)
95
Total
Shipment
quantity
80 78 47 55
Result the quantity for Thailand/South Dakota is
calculated.
Chapter 2
Production
quantity
Dakota
California 250
(45)
420 380 280
45
Ireland 1,280
(35)
990
(78)
1,440
(7)
1,520 120
Thailand 1,550

1,420 1,660
(40)
1,730
(55)
95
Total
Shipment
quantity
80 78 47 55
Overall Result
Chapter 2
Thus, the optimum shipment quantities for each factory to warehouses
for next month are:
California-Texas = 45; no shipment to other warehouses.
Ireland-Texas = 35
Ireland-Chicago = 78
Ireland-New Jersey = 7
No shipment from Ireland to South Dakota.
Thailand-New Jersey = 40
Thailand-South Dakota = 55
No shipment from Thailand to Texas and Chicago.
Chapter 2

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Chapter 2

PROCESS SYSTEMS FOR

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