# topic 4 transportation and assignment models _chapter 9

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Topic 4 Transportation and Assignment Models(Chapter 9)

Source: Render et al., 2012. Quantitative Analysis Management, 11 editions, Pearson.

Learning ObjectivesStudents will be able to: 1. Structure LP problems using the transportation, and assignment models. 2. Use the northwest corner and stepping-stone methods. 3. Solve facility location and other application problems with transportation models. 4. Solve assignment problems with the Hungarian (matrix reduction) method.

Chapter Outline9.1 9.2 9.3 9.5 9.6 9.7 9.8 9.9 Introduction The Transportation Problem The Assignment Problem The Transportation Algorithm Special Situations with the Transportation Algorithm Facility Location Analysis The Assignment Algorithm Special Situations with the Assignment Algorithm

IntroductionTwo Special LP ModelsThe Transportation and Assignment problems are types of LP techniques called network flow problems. 1. Transportation Problem Deals with the distribution of goods from several points of supply (sources) to a number of points of demand (destinations). Transportation models can also be used when a firm is trying to decide where to locate a new facility. Good financial decisions concerning facility location also attempt to minimize total transportation and production costs for the entire system.

IntroductionTwo Special LP Models2. Assignment Problem Refers to the class of LP problems that involve determining the most efficient assignment ofo o o o people to projects, salespeople to territories, contracts to bidders, jobs to machines, etc.

The objective is most often to minimize total costs or total time of performing the tasks at hand. One important characteristic of assignment problems is that only one job or worker is assigned to one machine or project.

Importance of Special-Purpose AlgorithmsSpecial-purpose algorithms (more efficient than LP) exist for solving the Transportation and Assignment problems. As in the simplex algorithm, they involve finding an initial solution, testing this solution to see if it is optimal, and developing an improved solution. repeating these steps until an optimal solution is reached.

The Transportation and Assignment methods are much simpler than the simplex algorithm in terms of computation.

Importance of Special-Purpose AlgorithmsStreamlined versions of the simplex method are important for two reasons: 1. Their computation times are generally 100 times faster than the simplex algorithm. 2. They require less computer memory (and hence can permit larger problems to be solved).

Importance of Special- Purpose Algorithms Two common techniques for developing initial solutions are: the northwest corner method and Vogelsapproximation method.

After an initial solution is developed, it must be evaluated by either the stepping-stone method or themodified distribution (MODI) method.

Also introduced is a solution procedure for assignment problems alternatively called the Hungarian method,Floods technique, or the reduced matrix method.

Setting Up a Transportation ProblemThe Executive Furniture Corporation Manufactures office desks at three locations: Des Moines, Evansville, and Fort Lauderdale. The firm distributes the desks through regional warehouses located in Boston, Albuquerque, and Cleveland (see following slide).

Transportation ProblemThe Executive Furniture CorporationDes Moines (100 units) capacity Albuquerque (300 units) required Cleveland (200 units) required

Evansville (300 units) capacity

Boston (200 units) required

Ft. Lauderdale (300 units) capacity

The Executive Furniture Corporation An estimate of the monthly production capacity at each factory and an estimate of the number of desks that are needed each month at each of the three warehouses is shown in the following figure.

Transportation CostsThe Executive Furniture Corporation Production costs per desk are identical at each factory; the only relevant costs are those of shipping from each source to each destination. These costs are shown below. They are assumed to be constant regardless of the volume shipped.

From (Sources) Des Moines Evansville Fort Lauderdale

To (Destinations) Albuquerque $5 $8 $9 Boston $4 $4 $7 Cleveland $3 $3 $5

Transportation CostsThe Executive Furniture Corporation1. The first step is to set up a transportation table. Its purpose is to summarize concisely and conveniently all relevant data and to keep track of algorithm computations. * It serves the same role that the simplex tableau did for LP problems.

2. Construct a transportation table and label its various components. Several iterations of table development are shown in the following slides.

Unit Shipping Cost: Factory to WarehouseThe Executive Furniture CorporationCell representing a source-todestination (Evansville to Cleveland) shipping assignment that could be made TO WAREHOUSE AT ALBUQUERQUE $5 WAREHOUSE AT BOSTON $4 WAREHOUSE AT CLEVELAND $3 Des Moines capacity constraint

FROMDES MOINES FACTORY EVANSVILLE FACTORY FORT LAUDERDALE FACTORY WAREHOUSE REQUIREMENTS

FACTORY CAPACITY100

$8

$4

$3

300

$9

$7

$5

300

300

200

200

700

Cost of shipping 1 unit from Fort Lauderdale factory to Boston warehouse

Cleveland warehouse demand

Total supply and demand

Total Demand and Total SupplyThe Executive Furniture CorporationAlbuquerque (A) Des Moines (D) Boston (B) Cleveland (C) Factory Capacity 100

Evansville (E)Fort Lauderdale (F) Warehouse Req. 300 200 200

300300 700

Transportation Table for Executive Furniture Corp.The Executive Furniture CorporationAlbuquerque (A) 5 8 9 Boston (B)

Des Moines (D) Evansville (E) Fort Lauderdale (F)

44 7

Cleveland Factory (C) Capacity 3 100 3 300 5 300

Warehouse Req.

300

200

200

700

Initial Solution Using the Northwest Corner RuleStart in the upper left-hand cell and allocate units to shipping routes as follows: 1. Exhaust the supply (factory capacity) of each row before moving down to the next row. 2. Exhaust the demand (warehouse) requirements of each column before moving to the next column to the right. 3. Check that all supply and demand requirements are met.

Initial Solution Using the Northwest Corner RuleIt takes five steps in this example to make the initial shipping assignments. Step 1: Beginning in the upper left-hand corner, assign 100 units from Des Moines to Albuquerque. This exhaust the supply from Des Moines but leaves Albuquerque 200 desks short. We move to the second row in the same column.TO FROM DES MOINES (D) EVANSVILLE (E) FORT LAUDERDALE (F) WAREHOUSE REQUIREMENTS 300 ALBUQUERQUE (A) 100 $5 BOSTON (B) $4 CLEVELAND (C) $3 FACTORY CAPACITY 100

$8

$4

$3

300

$9

$7

$5

300

200

200

700

Initial Solution Using the Northwest Corner RuleStep 2: Assign 200 units from Evansville to Albuquerque. This meets Albuquerques demand. Evansville has 100 units remaining so we move to the right to the next column of the second row.TO FROM DES MOINES (D) EVANSVILLE (E) FORT LAUDERDALE (F) WAREHOUSE REQUIREMENTS 300 ALBUQUERQUE (A) $5 BOSTON (B) $4 CLEVELAND (C) $3

FACTORY CAPACITY 100

100

200

$8

$4

$3

300

$9

$7

$5

300

200

200

700

Initial Solution Using the Northwest Corner RuleStep 3: Assign 100 units from Evansville to Boston. The Evansville supply has now been exhausted, but Bostons warehouse is still short by 100 desks. At this point, move down vertically in the Boston column to the next row.TO FROM DES MOINES (D) EVANSVILLE (E) FORT LAUDERDALE (F) WAREHOUSE REQUIREMENTS 300 ALBUQUERQUE (A) 100 $5 BOSTON (B) $4 CLEVELAND (C) $3 FACTORY CAPACITY 100

200

$8

100

$4

$3

300

$9

$7

$5

300

200

200

700

Initial Solution Using the Northwest Corner RuleStep 4: Assign 100 units from Fort Lauderdale to Boston. This shipment will fulfill Bostons demand for a total of 200 units. Note that the Fort Lauderdale factory still has 200 units available that have not been shipped.TO FROM DES MOINES (D) EVANSVILLE (E) FORT LAUDERDALE (F) WAREHOUSE REQUIREMENTS 300 ALBUQUERQUE (A) 100 $5 BOSTON (B) $4 CLEVELAND (C) $3 FACTORY CAPACITY 100

200

$8

100

$4

$3

300

$9

100

$7

$5

300

200

200

700

Initial Solution Using the Northwest Corner RuleStep 5: Assign 200 units from Fort Lauderdale to Cleveland. This final move exhausts Clevelands demand and Fort Lauderdales supply. This always happens with a balanced problem. The initial shipment schedule is now complete.TO FROM DES MOINES (D) EVANSVILLE (E) FORT LAUDERDALE (F) WAREHOUSE REQUIREMENTS 300 ALBUQUERQUE (A) 100 $5 BOSTON (B) $4 CLEVELAND (C) $3 FACTORY CAPACITY 100

200

$8

100

$4

$3

300

$9

100

$7

200

$5

300

200

200

700

Total Shipping Cost = 100($5+$4+$7) + 200($8+$5) = $4,200

Initial Solution Using the Northwest Corner Rule This solution is feasible since demand and supply constraints are all satisfied. It must be evaluated to see if it is optimal. Compute an improvement index for each empty cell using either the stepping-stone method. If this indicates a better solution is possible, use the stepping-stone path to move from this solution to improved solutions until an optimal solution is found.