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Web Chapter 17

Transportation and Assignment

Problems

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 P&T Company Distribution Problem

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 Shipping Data
Cannery Output Warehouse Allocation
Bellingham 75 truckloads Sacramento 80 truckloads
Eugene 125 truckloads Salt Lake City 65 truckloads
Albert Lea 100 truckloads Rapid City 70 truckloads
Total 300 truckloads Albuquerque 85 truckloads
Total 300 truckloads

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 Current Shipping Plan
Warehouse
From\To Sacramento Salt Lake City Rapid City Albuquerque
Bellingham 75 0 0 0
Cannery Eugene 5 65 55 0
Albert Lea 0 0 15 85

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 Shipping Cost per Truckload
Shipping Cost per Truckload Warehouse
From\To Sacramento Salt Lake City Rapid City Albuquerque
Bellingham $464 $513 $654 $867
Cannery Eugene $352 $416 $690 $791
Albert Lea $995 $682 $388 $685

Total shipping cost = 75($464) + 5($352) + 65($416) + 55($690) +

15($388) + 85($685)
= $165,595

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 Terminology for a Transportation Problem

P & T Co. Problem General Model

Truckloads of canned peas Units of a commodity
Canneries Sources
Warehouses Destinations
Output from a cannery Supply from a source
Allocation to a warehouse Demand at a destination
Shipping cost per truckload from a Cost per unit distributed from a source
cannery to a warehouse to a destination

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 Characteristics of Transportation
Problems
The Requirements Assumption.
• Each source has a fixed supply of units, where this entire supply must be
distributed to the destinations.
• Each destination has a fixed demand for units, where this entire demand must
be received from the sources.

The Feasible Solutions Property.

• A transportation problem will have feasible solutions if and only if the sum of its
supplies equals the sum of its demands.

The Cost Assumption.

• The cost of distributing units from any particular source to any particular
destination is directly proportional to the number of units distributed.
• This cost is just the unit cost of distribution times the number of units
distributed.

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 The Transportation Model
Any problem (whether involving transportation or not) fits the
model for a transportation problem if
1. it can be described completely in terms of a table like
Table 17.5 that identifies all the sources, destinations,
supplies, demands, and unit costs, and
2. it satisfies both the requirements assumption and the cost
assumption.

The objective is to minimize the total cost of distributing the

units.

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 The P&T Co. Transportation Problem

Unit Cost
Destination (Warehouse) Sacramento Salt Lake City Rapid City Albuquerque Supply
Source (Cannery)
Bellingham $464 $513 $654 $867 75
Eugene $352 $416 $690 $791 125
Albert Lea $995 $682 $388 $685 100
Demand 80 65 70 85

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 Spreadsheet Formulation 1

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 Network Representation

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 The Transportation Problem is an LP
Let xii = the number of truckloads to ship from cannery i to warehouse j
(i = 1, 2, 3; j = 1, 2, 3, 4)
Minimize Cost = $464x11  $513 x12  $654 x13  $867 x14  $352 x21  $416 x22
$690 x23  $791x24  $995 x31  $682 x32  $388 x33  $685 x34
subject to
Cannery 1: x11  x12  x13  x14  75
Cannery 2: x21  x22  x23  x24  125
Cannery 3: x31  x32  x33  x34  100
Warehouse 1: x11  x21  x31  80
Warehouse 2: x12  x22  x32  65

Warehouse 3: x13  x23  x33  70

Warehouse 4: x14  x24  x34  85

and
xii  0 i  1, 2,3; j  1, 2,3, 4 
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 Integer Solutions Property
As long as all its supplies and demands have integer values,
any transportation problem with feasible solutions is
guaranteed to have an optimal solution with integer values
for all its decision variables. Therefore, it is not necessary to
add constraints to the model that restrict these variables to
only have integer values.

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 Distribution System at Proctor and
Gamble
Proctor and Gamble needed to consolidate and re-design their North American
distribution system in the early 1990’s.
• 50 product categories.
• 60 plants.
• 15 distribution centers.
• 1000 customer zones.

Solved many transportation problems (one for each product category).

Goal: find best distribution plan, which plants to keep open, etc.
Closed many plants and distribution centers, and optimized their product sourcing
and distribution location.
Implemented in 1996. Saved $200 million per year.

For more details, see 1997 Jan-Feb Interfaces article, “Blending OR/MS,
Judgement, and GIS: Restructuring P&G’s Supply Chain”.

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 Better Products (Assigning Plants to
Products)
The Better Products Company has decided to initiate the product of four
new products, using three plants that currently have excess capacity.
Unit Cost
Product: 1 2 3 4 Capacity
Plant Available
1 $41 $27 $28 $24 75
2 $40 $29 - $23 75
3 $37 $30 $27 $21 45
Required production 20 30 30 40

Question: Which plants should produce which products?

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 Transportation Problem Formulation
Unit Cost
Destination (Product) 1 2 3 4
Source (Plant) Supply
1 $41 $27 $28 $24 75
2 $40 $29 - $23 75
3 $37 $30 $27 $21 45
Demand 20 30 30 40

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 Spreadsheet Formulation 2

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 Nifty Co. (Choosing Customers)
• The Nifty Company specializes in the production of a
single product, which it produces in three plants.
• Four customers would like to make major purchases.
There will be enough to meet their minimum purchase
requirements, but not all of their requested purchases.
• Due largely to variations in shipping cost, the net profit per
unit sold varies depending on which plant supplies which
customer.
Question: How many units should Nifty sell to each
customer and how many units should they ship from
each plant to each customer?

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 Data for the Nifty Company
Unit Profit
Customer 1 2 3 4 Production
Plant Quantity
1 $55 $42 $46 $53 8,000
2 $37 $18 $32 $48 5,000
3 $29 $59 $51 $35 7,000
Minimum purchase 7,000 3,000 2,000 0
Requested purchase 7,000 9,000 6,000 8,000

Question: How many units should Nifty sell to each customer and
how many units should they ship from each plant to each
customer?

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 Spreadsheet Formulation 3

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 Metro Water (Distributing Natural
Resources)
Metro Water District is an agency that administers water distribution in a large
goegraphic region. The region is arid, so water must be brought in from outside
the region.
• Sources of imported water: Colombo, Sacron, and Calorie rivers.
• Main customers: Cities of Berdoo, Los Devils, San Go, and Hollyglass.

Cost per Acre Foot

Berdoo Los Devils San Go Hollyglass Available
Colombo River $160 $130 $220 $170 5
Sacron River 140 130 190 150 6
Carlorie River 190 200 230 - 5
Needed 2 5 4 1.5 (million acre feet)

Question: How much water should Metro take from each river, and how much
should they send from each river to each city?

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 Spreadsheet Formulation 4

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 Northern Airplane (Production Scheduling)

Northern Airplane Company produces commercial airplanes. The last stage in

production is to produce the jet engines and install them.
• The company must meet the delivery deadline indicated in column 2.
• Production and storage costs vary from month to month.

Unit Cost of
Maximum Unit Cost of Production Storage
Production ($million) ($thousand)

Month Scheduled Regular OverTime Regular Time Overtime

Installations Time
1 10 20 10 1.08 1.10 15
2 15 30 15 1.11 1.12 15
3 25 25 10 1.10 1.11 15
4 20 5 10 1.13 1.15

Question: How many engines should be produced in each of the four months
so that the total of the production and storage costs will be minimized?
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 Spreadsheet Formulation 5

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 Optimal Production at Northern Airplane

Month Production Installations Stored

1 (RT) 20 10 10
2 (RT) 10 15 5
3 (RT) 25 25 5
3 (OT) 10 0 10
4 (RT) 5 20 0

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 Middletown School District
• Middletown School District is opening a third high school and
thus needs to redraw the boundaries for the area of the city that
will be assigned to the respective schools.
• The city has been divided into 9 tracts with approximately equal
populations.
• Each school has a minimum and maximum number of students
that should be assigned.
• The school district management has decided that the
appropriate objective is to minimize the average distance that
students must travel to school.

Question: How many students from each tract should be

assigned to each school?

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 Data for the Middletown School District
Distance (Miles) to a School
Number of High
Tract 1 2 3
School Students
1 2.2 1.9 2.5 00
2 1.4 1.3 1.7 400
3 0.5 1.8 1.1 450
4 1.2 0.3 2.0 400
5 0.9 0.7 1.0 500
6 1.1 1.6 0.6 450
7 2.7 0.7 1.5 450
8 1.8 1.2 0.8 400
9 1.5 1.7 0.7 500
Minimum enrollment 1,200 1,500 1,350
Maximum enrollment 1,800 1,700 1,500

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 Spreadsheet Formulation 6

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 Energetic (Meeting Energy Needs)
The Energetic Company needs to make plans for the energy systems for
a new building.
The energy needs fall into three categories:
• electricity (20 units).
• heating water (10 units).
• heating space (30 units).

The three possible sources of energy are

• Electricity.
• natural gas.
• solar heating unit (limited to 30 units because of roof size).

Question: How should Energetic meet the energy needs for the new
building?
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 Cost Data for Energetic
Unit Cost
Energy Need: Electricity Water Heating Space Heating
Source of Energy
Electricity $400 $500 $600
Natural gas - 600 500
Solar heater - 300 400

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 Spreadsheet Formulation 7

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 Location of Texago’s Facilities
Type of Facility Locations
Oil fields 1. Several in Texas.
2. Several in California.
3. Several in Alaska.
Refineries 1. Near New Orleans, Louisiana.
2. Near Charleston, South Carolina.
3. Near Seattle, Washington.
Distribution Centers 1. Pittsburgh, Pennsylvania.
2. Atlanta, Georgia.
3. Kansas City, Missouri.
4. San Francisco, California.

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 Potential Sites for Texago’s New Refinery

Potential Site Main Advantages

Near Los Angeles, California 1. Near California oil fields.
2. Ready access from Alaska oil
fields.
3. Fairly near San Francisco
distribution center.
Near Galveston, Texas 1. Near Texas oil fields.
2. Ready access from Middle East
imports.
3. Near corporate headquarters.
Near St. Louis, Missouri 1. Low operating costs.
2. Centrally located for distribution
centers.
3. Ready access to crude oil via the
Mississippi River.

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 Production Data for Texago
Crude Oil Crude Oil Produced
Needed Annually Annually (Million
Refinery (Million Barrels) Oil Fields Barrels)
New Orleans 100 Texas 80
Charleston 60 California 60
Seattle 80 Alaska 100
New site 120 Total 240
Total 360
Needed imports = 360 − 240 = 120

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 Cost Data for Shipping to Refineries
Cost per Unit Shipped to Refinery or Potential Refinery
(Millions of Dollars per Million Barrels)
New Los
Orleans Charleston Seattle Angeles Galveston St. Louis
Source
Texas 2 4 5 3 1 1
California 5 5 3 1 3 4
Alaska 5 7 3 4 5 7
Middle 2 3 5 4 3 4
East

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 Cost Data for Shipping to Distribution
Centers
Cost per Unit Shipped to Distribution Center
(Millions of Dollars)

San
Pittsburgh Atlanka Kanasas City Francisco
Refinery
New Orleans 6.5 5.5 6 8
Charleston 7 5 4 7
Seattle 7 8 4 3
Potential Refinery
Los Angeles 8 6 3 2
Galveston 5 4 3 6
St. Louis 4 3 1 5
Number of units needed 100 80 80 100

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 Estimated Operating Costs for Refineries

Site Annual Operating Cost (Millions of Dollars)

Los Angeles 620
Galveston 570
St. Louis 530

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 Basic Spreadsheet for Shipping to Refineries

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 Shipping to Refineries, Including Los
Angeles

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 Shipping to Refineries, Including Galveston

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 Shipping to Refineries, Including St. Louis

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 Basic Spreadsheet for Shipping to D.C.’s

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 Shipping to D.C.’s When Choose Los Angeles

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 Shipping to D.C.’s When Choose Galveston

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 Shipping to D.C.’s When Choose St. Louis

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 Annual Variable Costs
Total Cost of
Total Cost Shipping Operating Cost Total
of Shipping Finished for New Variable
Site Crude Oil Product Refinery Cost
Los Angeles $880 million $1.57 billion $620 million $3.07 billion
Galveston 920 million 1.63 billion 570 million 3.12 billion
St. Louis 960 million 1.43 billion 530 million 2.92 billion

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 Sellmore Company Assignment Problem
The marketing manager of Sellmore Company will be holding the company’s
annual sales conference soon.
He is hiring four temporary employees:
• Aliyah.
• Ian.
• Joan.
• Mihir.

Each will handle one of the following four tasks:

• Word processing of written presentations.
• Computer graphics for both oral and written presentations.
• Preparation of conference packets, including copying and organizing materials.
• Handling of advance and on-site registration for the conference.

Question: Which person should be assigned to which task?

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 Data for the Sellmore Problem
Required Time per Task (Hours)

Temporary World Hourly

Employee Processing Graphics Packets Registrations Wage
Aliyah 35 41 27 40 $14
Ian 47 45 32 51 12
Joan 39 56 36 43 13
Mihir 32 51 25 46 15

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 Spreadsheet Formulation 8

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 The Model for Assignment Problems
Given a set of tasks to be performed and a set of assignees who are
available to perform these tasks, the problem is to determine which
assignee should be assigned to each task.
To fit the model for an assignment problem, the following assumptions
need to be satisfied:
1. The number of assignees and the number of tasks are the same.
2. Each assignee is to be assigned to exactly one task.
3. Each task is to be performed by exactly one assignee.
4. There is a cost associated with each combination of an assignee
performing a task.
5. The objective is to determine how all the assignments should be
made to minimize the total cost.

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 The Network Representation

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 Job Shop (Assigning Machines to Locations)

• The Job Shop Company has purchased three new

machines of different types.
• There are five available locations where the machine could
be installed.
• Some of these locations are more desirable for particular
machines because of their proximity to work centers that
will have a heavy work flow to these machines.

Question: How should the machines be assigned to

locations?

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 Materials-Handling Cost Data
Cost per Hour
Location: 1 2 3 4 5
Machine
1 $13 $16 $12 $14 $15
2 15 - 13 20 16
3 4 7 10 6 7

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 Spreadsheet Formulation 9

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 Better Products (No Product Splitting)

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 Middletown School District (No Tract
Splitting)

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 End of Main Content

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