Optimal transportation of goods in a supply chain is
essential because it is important that:
• The total transportation cost is minimized
• The demand at warehouses is satisfied
• The capacity at production facilities is not exceeded
Read this article that describes in detail the role of
transportation in a supply chain.
Consider the following example that demonstrates
optimization of transportation.
There are production facilities in Battle Creek, Cherry
Creek, and Dee Creek with annual
capacities of 500 units, 400 units, and 600 units,
respectively. The annual demands at
warehouses in Worchester, Dorchester, and Rochester are 300
units, 700 units, and 400
units, respectively. The table below gives the unit
transportation costs between the
production facilities and the warehouses.
Worchester Dorchester Rochester
Battle Creek $20/unit $30/unit $13/unit
Cherry Creek $10/unit $5/unit $17/unit
Dee Creek $15/unit $12/unit $45/unit
How much of the demand at each of the warehouses must be met
by each of the production facilities?
This problem can be modeled as a linear programming model as
Xbw = # of units to be transported from Battle Creek to
Xcw = # of units to be transported from Cherry Creek to
Xdw = # of units to be transported from Dee Creek to
Xbd = # of units to be transported from Battle Creek to
Xcd = # of units to be transported from Cherry Creek to
Refer to the example in the
Module Seven lecture document. Solve the linear programming model using the
Microsoft Excel Solver tool