OM 300 1nd Edition Lecture 14 Outline of Last Lecture I Elements of Optimization II Feasibility III Excel Solver Outline of Current Lecture I The Transportation Problem II Example Current Lecture The Transportation Problem Also known as the Demand Allocation Problem Minimize cost of satisfying fixed and known costs at multiple destinations Limited supply of product at multiple sources Transportation Problem Statement Objective minimize total cost of shipping product from each of the sources to each of the destinations Subject to the following requirements o Total amount shipped out of a source outbound cannot exceed its supply o Total amount shipped to a destination inbound must equal its demand requirement These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Solving the Transportation Problem Manual Methods o Greedy Heuristic Computerized o Optimization o Excel Solver o Specialized optimization packages o LATER The Greedy Heuristic for the TP 1 Find the cheapest remaining origin destination O D pair 2 Set the amount shipped equal to the amount of supply let at the origin to the amount of unfilled demand at the destination whichever is smaller 3 If all demand is filled stop Otherwise go back to Step 1
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