MIE 379 Deterministic Operations Research Todays Goals

Formulate and initialize Transportation Problems

Hillier and Lieberman Sec. 8.1 Signed draft of case study due Today Case Study due Th. Dec. 11!
Homework #11 Due Thursday. Dec. 4th: 8.1-2ab, 8.13a, 8.2-1c

Review

Transportation problems are a special type of LP. We use a streamlined version of the simplex method to solve. Classic problem involves transporting items from one set of nodes to another. But other problems can be modeled as transportation problems and solved more easily.

Review

Basically a transportation problem is one in which you are asking: How many of what should go where?

How many goods should go from which factory to which warehouse? How many goods should go from which warehouse to which store? Inventory: How many goods should be made in month i to be available in month j? (i.e. how many goods should go from month i to month j?) Assigning students to schools.

Review

Transportation Problem Components:

A source set (Supply Centers / Factories) A destination set (Distribution Ctrs / Customers) A cost matrix (Transportation or storage costs)

These are the only parameters in a transportation problem. cij : the cost to move from source i to destination j si: the supply available at source i dj: the demand at destination j.

Review

Everything you need is in this parameter table

Dest 1 Source 1 c11 Source 2 c21 Source 3 c31 Dest 2 c12 c22 c32 Dest 3 c13 c23 c33 Dest Supply 4 c14 c24 c34 s1 s2 s3

Demand d1

d2

d3

d4

Review

A basic transportation problem has fixed supply equal to fixed demand and the goal is to find the least cost way to deliver all the goods from supply nodes to demand nodes. But, we can also handle:
Excess supply (or demand) by adding a dummy demand (or supply) Infeasible routes (make the cost $M) Flexible demand (split into two parts)

Review - Example 1 from last class

The Childfair company has 3 plants producing strollers that are shipped to 4 distribution centers. Plants 1, 2, and 3 can produce 14, 19, and 12 shipments per month. Each distribution center needs 10 shipments per month. The freight cost for each shipment is $100 plus $0.50 per mile. The distance is given in table below. Dist 1 800 miles 1100 600 Dist 2 1300 1400 1200 Dist 3 400 600 800 Dist 4 700 1000 900

plant 1 plant 2 plant 3

Review - Example 1 from last class

Formulate as a transportation problem:

Dist 1 Dist 2 plant 1 $500 $750 Dist 3 $300 Dist 4 $450 Dummy Supply Demand $0 14

plant 2
plant 3

$650
$400

$800
$700 10

$400
$500 10

$600
$550 10

$0
$0 5

19
12

Demand 10

Why Dummy Demand? We have 5 units of excess supply.

Transportation Problem Example 2

The plants produce 60, 80 and 40 units. Firm has committed to sell 40 units to customer 1, 60 units to customer 2, and at least 30 to customer 3. Customers 3 and 4 want as much as they can get.

Cust 1 Cust 2 Cust 3 Cust 4 output

plant 1 plant 2

$800 $500

$700 $200

$500 $100

$200 $300

60 80

plant 3

$600

$400
60

$300

$500

40

Demand 40

30 + ? ?

How do we represent these parameters?

Solution
plant 1 plant 2 plant 3

Cust 1 Cust 2 Cust 3 Cust 3 Cust 4 Output excess $800 $700 $500 $500 $200 60 $500 $600 $200 $400 -$M 60 $100 $300 -$M 30 $100 $300 $0 50 $300 $500 $0 50 80 40 50

Dummy -$M plant Demand 40

Inventory Problems

In inventory problems you are asking how much should I make when to sell when? The sources are the periods in which you produce the goods. The destinations are the periods in which you sell the goods. Do the 2nd in-class example problem. If a particular allocation is impossible, use a big M. (for example, you cant make a boat in Quarter 3 and sell it in Quarter 2).

Transportation Problems Inventory Problems

In-Class Example Problem 2

How many sailboats to produce each of four quarters? Demand is projected to be 20, 30, 55 and 35 Demand must be met on time They start with 10 sailboats Can produce 40 each quarter Holding costs are $20/boat/quarter Total capacity (supply) = Total demand =

Transportation Problems Inventory Problems

1st Q
Initial inventory Capacity 1 Capacity 2 Capacity 3 Capacity 4 Demand

2nd Q 3rd Q

4th Q

Unused capacity

Supply

Transportation Problems Inventory Problems

1st Q
Initial inventory Capacity 1 Capacity 2 Capacity 3 Capacity 4 Demand

2nd Q 3rd Q $20 $20 $0 $M $M 30 $40 $40 $20 $0 $M 55

4th Q $60 $60 $40 $20 $0 35

Unused capacity

Supply 10 40 40 40 40

$0 $0 $M $M $M 20

$M $0 $0 $0 $0 30

Transportation Problems: Algorithm

Transportation problems use a slimmed down version of the simplex method. Because they have equality constraints, we need to find an initial feasible solution. It turns out this is easy in transportation problems you do not need to use the Big-M method.

Initial Allocation Northwest Corner Method

You simply start at the upper left hand corner and allocate as much as you can; Then move right as far as you can; Then down; then right; etc.

Initial Allocation
plant 1 plant 2

Cust 1 Cust 2 Cust 3 Cust 3 Cust 4 Output excess 40 60 80

plant 3
Dummy plant Demand 40

40
50 60 30 50 50

Note: we are using a table similar to the formulation table. But the numbers in the boxes now represent the value of the decision variables, NOT the parameters

Initial Allocation
plant 1 plant 2

Cust 1 Cust 2 Cust 3 Cust 3 Cust 4 Output excess 40 60 80

plant 3
Dummy plant Demand 40

40
50 60 30 50 50

Initial Allocation
plant 1 plant 2

Cust 1 Cust 2 Cust 3 Cust 3 Cust 4 Output excess 40 20 60 80

plant 3
Dummy plant Demand 40

40
50 60 30 50 50

Initial Allocation
plant 1 plant 2

Cust 1 Cust 2 Cust 3 Cust 3 Cust 4 Output excess 40 20 60 40 80

plant 3
Dummy plant Demand 40

40
50 60 30 50 50

Initial Allocation
plant 1 plant 2

Cust 1 Cust 2 Cust 3 Cust 3 Cust 4 Output excess 40 20 60 40 30 80

plant 3
Dummy plant Demand 40

40
50 60 30 50 50

Initial Allocation
plant 1 plant 2

Cust 1 Cust 2 Cust 3 Cust 3 Cust 4 Output excess 40 20 60 40 30 10 80

plant 3
Dummy plant Demand 40

40
50 60 30 50 50

Initial Allocation
plant 1 plant 2

Cust 1 Cust 2 Cust 3 Cust 3 Cust 4 Output excess 40 20 60 40 30 10 80

plant 3
Dummy plant Demand 40

40

40
50

60

30

50

50

Initial Allocation
plant 1 plant 2

Cust 1 Cust 2 Cust 3 Cust 3 Cust 4 Output excess 40 20 60 40 30 10 80

plant 3
Dummy plant Demand 40

40

40
50

60

30

50

50

This represents a degenerate variable. It is basic but equal to zero.

Initial Allocation
plant 1 plant 2

Cust 1 Cust 2 Cust 3 Cust 3 Cust 4 Output excess 40 20 60 40 30 10 80

plant 3
Dummy plant Demand 40

40

0
50

40
50

60

30

50

50

Initial Allocation
Cust 1 plant 1 plant 2 plant 3 40 Cust 2 20 40 30 10 40 0 Cust 3 Cust 3 excess Cust 4 Output 60 80 40

Dummy plant
Demand 40 60 30 50

50
50

50

Are we feasible? Yes; The fixed demand is met, cust 3 gets (30 + 50) 80, cust 4 gets nothing (why?). Are we optimal? Who knows, probably were not. Costs come in later, this is only the allocation to find an initial solution.

Initial Allocation
Cust 1 plant 1 plant 2 plant 3 40 Cust 2 20 40 30 10 40 0 Cust 3 Cust 3 excess Cust 4 Output 60 80 40

Dummy plant
Demand 40 60 30 50

50
50

50

NOTE: This grid looks the same as the grid we used to formulate the problem. But this is completely different. Here, the numbers in the boxes in the center represent the value of the decision variable. In the formulation, these numbers represent costs.

Formulation vs Allocation
Cust 1 plant 1 plant 2 plant 3 Dum my plant Dema nd $800 $500 $600 -$M Cust 2 $700 $200 $400 -$M Cust 3 $500 $100 $300 -$M Cust Cust 3 4 excess $500 $100 $300 $0 $200 $300 $500 $0 Outp ut 60 80 40 50 Dummy plant 40 60 30 50 50 Deman d 40 60 30 50 50 50 50 plant 1 40 20 Cus t1 Cu st 2 Cu Cust st 3 3 exce ss Cust 4 Outp ut

60

plant 2
plant 3

40

30

10
40 0

80
40

The yellow numbers represent the cost of The green numbers represent number of going from plant i to cust j items to produce in plant i for cust j

Transportation Problems Inventory Problems

In-Class Example Problem 2

How many sailboats to produce each of four quarters? Demand is projected to be 20, 30, 55 and 35 Demand must be met on time They start with 10 sailboats Can produce 40 each quarter Holding costs are $20/boat/quarter Total capacity (supply) = Total demand =

Transportation Problems Inventory Problems

1st Q
Initial inventory Capacity 1 Capacity 2 Capacity 3 Capacity 4 Demand

2nd Q 3rd Q $20 $20 $0 $M $M 30 $40 $40 $20 $0 $M 55

4th Q $60 $60 $40 $20 $0 35

Unused capacity

Supply 10 40 40 40 40

$0 $0 $M $M $M 20

$M $0 $0 $0 $0 30

Transportation Problems Inventory Problems

1st Q
Initial inventory Capacity 1 Capacity 2 Capacity 3 Capacity 4 Demand

2nd Q 3rd Q

4th Q

Unused capacity

Supply 10

10 10 30 40 15 25 10 20 30 55 35 30 30

40 40 40 40

Transportation Problem - Example

Mrs. A has a cookie company along with her 2 friends Mrs. B and Mr. C. They each can cook up to 40 dozen cookies per day, and then have their teenagers deliver them. They have a standing order from the 4 local elementary schools of 60,20,15, and 10. The cost of delivery, per dozen, is given by the table.

1
A 1

2
2

3
3

4
4

B
C

2
3

1
3

2
1

5
2