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ADM2302 /Rim Jaber1 Transportation Assignment and Transshipments Problems.

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1 ADM2302 /Rim Jaber1 Transportation Assignment and Transshipments Problems

2 ADM2302 /Rim Jaber2 Introduction Problems belong to a special class of LP problems called Network Flow Problems Can be solved using the Simplex method There are specialized algorithms that are more efficient (northwest corner rule, minimum cost method, and stepping stone method, Hungarian Method)

3 ADM2302 /Rim Jaber3 Approach Illustrate each problem with a specific example (application): Develop a graphical representation, called network of the problem Show how each can be formulated and solved as a LP using excel solver (that uses the simplex method)

4 ADM2302 /Rim Jaber4 Transportation Model Characteristics Transportation of goods and services from a number of sources (supply points) to a number of destinations (demand points) at a minimum cost (objective) Each source is able to supply a fixed number of units of the goods or services, and each destination has a fixed demand for the goods or services

5 ADM2302 /Rim Jaber5 Transportation Model: Objective Most common objective of transportation problem is to schedule shipments from sources to destinations so that total production and transportation costs are minimized

6 ADM2302 /Rim Jaber6 Transportation Model (contd) Parameters of the model: Supplies Demands Unit Costs All the parameter of the model are included in a parameter table (summarizes the formulations of a transportation problem by giving all the unit costs, suppliers, and demands)

7 ADM2302 /Rim Jaber7 Example Wheat is harvested in the Midwest and stored in grain elevators in three different cities – Kansas City, Omaha, and Des Moines. These grain elevators supply three flour mills, located in Chicago, St. Louis, and Cincinnati. Grain is shipped to the mills in railroad cars, each car capable of holding one ton of wheat. The cost of shipping one ton of wheat from each grain elevator to each mill, the demand of wheat per month for each mill, and the number of tons that each grain elevator is able to supply to the mills on a monthly basis are shown in the parameters table:

8 ADM2302 /Rim Jaber8 Mill (destination) Grain Elevator A. Chicago B. St. Louis C. Cincinnati Supply (Supplier) 1. Kansas City $6810150 2. Omaha 71111175 3. Des Moines 4512275 Demand200100300 Parameter Table

9 ADM2302 /Rim Jaber9 Example (contd) Determine how many tons of wheat to transport form each grain elevator to each mill on a monthly basis in order to minimize the total cost of transportation Goal Select the shipping routes and units to be shipped to minimize total transportation cost

10 ADM2302 /Rim Jaber10 Network Representation Each supplier (s i,i= 1,2, …,m) and demand (d j, j =1,2,…,n) point is represented by a node (circle) Each possible shipping route is represented by an arc (represent the amounts shipped) Direction of the flow is indicated by the arrows: Origin to Destination The goods shipped from origin to destination represent flow of the network Amount of the supply is written next to the origin node (s i ) Amount of the demand is written next to the destination node (d j )

11 ADM2302 /Rim Jaber11 Supplier (origin)Demand (destination) 1 2 3 A B C 6 8 10 7 11 4 5 12 150 175 275 200 100 300 Total = 600 Network Representation

12 ADM2302 /Rim Jaber12 LP Model Formulation Decision Variables The amount of goods or item to be transported from a numbers of origins to a number of destinations Apply this definition to our Example X ij : The amount of tons of wheat transported from grain elevator i (where i= 1, 2, 3), to mill j (where j = A,B,C) General Form: X ij: : number of units shipped from origin i to destination j. (where i = 1, 2,…, m and j = 1, 2, …, n) The number of decision variables = numbers of arcs

13 ADM2302 /Rim Jaber13 LP Model Formulation (contd) Objective Function Minimize total transportation cost for all shipments The sum of the individual shipping costs from each Grain Elevator to Each Mill: min Z = $ 6x 1A + 8x 1B + 10x 1c + 7x 2A + 11x 2B + 11x 2C + 4x 3A + 5x 3B + 12x 3C

14 ADM2302 /Rim Jaber14 LP Model Formulation (contd) Constraints Deal with the capacities at each origin (origin has a limited supply) Deal with the requirements at each destinations (destination has specific demands) Six constraints: One for each Elevators supply and one for each Mills demand We write a constraint for each node in the network

15 ADM2302 /Rim Jaber15 LP Model Formulation (contd) X ij: The amount of tons of wheat transported from grain elevator i (where i= 1, 2, 3), to mill j (where j = A,B,C) x 1A + x 2A + x 3A = 200 x 1B + x 2B + x 3B = 100 x 1C + x 2C + x 3C = 300 x ij 0 Demand constraints Supply constraints x 1A + x 1B + x 1C = 150 x 2A + x 2B + x 2C = 175 x 3A + x 3B + x 3C = 275 min Z = $ 6x 1A + 8x 1B + 10x 1c + 7x 2A + 11x 2B + 11x 2C + 4x 3A + 5x 3B + 12x 3C Subject to

16 ADM2302 /Rim Jaber16 LP Model Formulation: Comments In a balanced transportation model, supply equals demand such that all constraints are equalities (=) In an unbalanced model, supply does not equal demand and one set of constraints is <=

17 ADM2302 /Rim Jaber17 Solution Excel solver uses the simplex method to solve any kind of linear programming problem Refer to the Transportation_Problem.xsl file

18 ADM2302 /Rim Jaber18 The Optimum Solution SHIP: 150 tons of wheat from Kansas to Cincinnati, 25 tons of wheat from Omaha to Chicago, 150 tons of wheat from Omaha to Cincinnati, 175 tons from Des Moines to Chicago, and 100 tons of wheat Des Moines to St. Louis. Total shipping cost is $4,525.

19 ADM2302 /Rim Jaber19 More than one Optimal solution? Discussed in class

20 ADM2302 /Rim Jaber20 Problem Variations Total supply does not equal to total demand Maximization objective function Route capacities or route minimum Unacceptable routes

21 ADM2302 /Rim Jaber21 Total supply not equal to total demand Total Supply > Total Demand: <= used in the supply constraints instead of = Excess supply will appear as slack (unused supply or amount not shipped from the origin) in the LP solution Example: refer to Transportation_Promblem.xsl Total Supply < Total Demand: <= used in the demand constraints instead of = Some destinations will experience a shortfall or unsatisfied demand Example: Change the demand at Cincinnati to 350 tons

22 ADM2302 /Rim Jaber22 Maximization objective function Objective: Maximize total transportation profit Solve as a maximization LP rather than minimization LP The constraints are not affected

23 ADM2302 /Rim Jaber23 Route capacities or route minimum Constraints need to be added Maximum route capacity, Lij: Xij <= Lij Minimum Route capacity, Mij: Xij >=Mij

24 ADM2302 /Rim Jaber24 Unacceptable routes Drop the corresponding arc from the network Remove the corresponding variable from the linear programming formulation If you want to keep the corresponding variable: make the variables that correspond to unacceptable routes equal zero (Xij = 0 if the route from i to j is not possible)

25 ADM2302 /Rim Jaber25 Example 2 (Midterm/Fall 01) The U.S. government is auctioning off oil leases at two sites: 1 and 2. At each site, 100,000 acres of land are to be auctioned. Cliff Ewing, Blake Barnes, and Alexis Pickens are bidding for the oil. Government rules state that no bidder can receive more than 40% of the total land being auctioned. Cliff has bid $1000/acre for site 1 land and $2000/acre for site 2 land. Blake has bid $900/acre for site 1 land and 2200/acre for site 2 land. Alexis has bid $1100 /acre for site 1 land and $1900/acre for site 2 land.

26 ADM2302 /Rim Jaber26 Example 2 (contd) Draw the transportation network model that corresponds to the problem. Formulate the linear programming (LP) model to maximize the governments revenue. (Dont forget to define the decision variables).

27 ADM2302 /Rim Jaber27 Assignment Problems A special form of transportation problem where all supply and demand values equal one Involve assigning jobs to machines, agents to tasks, sales personnel to sales territories, contracts to bidders etc… Objective: minimize cost, minimize time, or maximize profits etc…

28 ADM2302 /Rim Jaber28 Parameters of the Model Assignees (e.g. agents, jobs…) Tasks (e.g. shifts, machines…) Cost table (gives the cost for each possible assignment of an assignee to a task) Example

29 29 Example 3 Fowle Marketing Research has just received requests for market research studies from three new clients. The company faces the task of assigning a project leader (agent) to each client (task). Currently, three individuals have no other commitments and are available for the project leader assignments. Fowles management realizes, however, that the time required to complete each study depend on the experience and ability of the project leader assigned. The three projects have approximately the same priority.

30 ADM2302 /Rim Jaber30 The company wants to assign project leaders to minimize the total number of days required to complete all three projects. If the project leader is to be assigned to one client only, what assignments should be made? The estimated project completion times in days (cost table) is: Client Project Leader123123 10159 9185 6143 1. Terry 2. Carle 3. McClymonds

31 ADM2302 /Rim Jaber31 Network Representation Nodes Project leaders and clients Arcs Possible assignments of project leaders to clients The supply at each origin node and the demand at each destination node are 1 Cost of assigning a project leader to a client Time it takes that project leader to complete the clients task

32 ADM2302 /Rim Jaber32 LP Model Formulation Variable for each arc and a constraint for each node Use of Double-subscripted decision variables Objective function Constraints

33 ADM2302 /Rim Jaber33 Solution Solved with a special purpose optimization method called Hungarian algorithm. Application of this algorithm requires that number of assignees = number of tasks. (Balanced Model) Refer to Excel (assignment_problems.xsl) Excel Solver uses the simplex method

34 ADM2302 /Rim Jaber34 Problem Variations Parallel those for the transportation Problem: Total number of agents (supply) not equal to the total number of tasks (demand) A maximization objective function Unacceptable assignments

35 ADM2302 /Rim Jaber35 Example 4: Employee Scheduling Application The Department head of a management science department at a major Midwestern university will be scheduling faculty to teach courses during the coming autumn term. Four core courses need to be covered. The four courses are at the UG, MBA, MS, and Ph.D. levels. Four professors will be assigned to the courses, with each professor receiving one of the courses. Student evaluations of professors are available from previous terms. Based on a rating scale of 4 (excellent), 3 (very good), 2 (average), 1(fair), and 0(poor), the average student evaluations for each professor are shown:

36 ADM2302 /Rim Jaber36 Professor D does not have a Ph.D. and cannot be assigned to teach the Ph.D.-level course. If the department head makes teaching assignments based on maximizing the student evaluation ratings over all four courses, what staffing assignments should be made? Course UGMBA MSPh.D.Professor A B C D 2.8 3.2 3.3 3.2 2.2 3.0 3.2 2.8 3.3 3.6 3.5 2.5 3.0 3.6 3.5 -

37 ADM2302 /Rim Jaber37 Example 4 (contd) Formulation: is discussed in class if time permits Solution: Refer to assignment_problems.xsl for the solution Recommendation/analysis of the Solution: Assign Prof. A to the MS course, Prof. B to the Ph.D course, Prof. C to the MBA course, and Prof. D to the UG course

38 ADM2302 /Rim Jaber38 Transshipment Problems Extension of transportation problem is called transshipment problem in which a point can have shipments that both arrive as well as leave. Example would be a warehouse where shipments arrive from factories and then leave for retail outlets.

39 ADM2302 /Rim Jaber39 Transshipment Problems If total flow into a node is equal to total flow out from node, node represents a pure transshipment point. Flow balance equation will have a zero RHS value. It may be possible for firm to achieve cost savings (economies of scale) by consolidating shipments from several factories at warehouse and then sending them together to retail outlets.

40 ADM2302 /Rim Jaber40 Example 5 Five Star Manufacturing Company makes compressors for air conditioners. The compressors are produced in 3 plants, then shipped on to 4 heating, ventilation and air conditioning (HVAC) contractors. A network model is shown on the next slide. Develop a LP model that five Star can solve to minimize the cost of shipping compressors from the plants through the warehouses and on to the HVAC contractors.

41 ADM2302 /Rim Jaber41 Plant Capacities (suppliers) Contractor Demand 1 2 3 7 8 9 9 11 15 13 8 10 50 55 45 55 35 25 Total = 6 5 4 13 9 10 12 9 11 25 Per unit shipping Costs

42 ADM2302 /Rim Jaber42 Example 5 (contd) Formulation: is discussed in class if time permits Solution: Refer to Transhipment_Problem.xsl for the solution

43 ADM2302 /Rim Jaber43 Summary Three network flow models were presented: 1. Transportation model deals with distribution of goods from several supplier to a number of demand points. 2. Transshipment model includes points that permit goods to flow both in and out of them. 3. Assignment model deals with determining the most efficient assignment of issues such as people to projects.

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