Transportation & Distribution Planning

Lecture 24
Decision Analysis

Course Instructor: Sayda Uzma Tahira

UCP Business School, University of Central Punjab Lahore
Network Modeling

2
 Introduction
 A number of business problems can be
represented graphically as networks.
 This chapter focuses on several such problems:
– Transshipment Problems
– Shortest Path Problems
– Maximal Flow Problems
– Transportation/Assignment Problems
– Generalized Network Flow Problems
– The Minimum Spanning Tree Problem

3
 Network Flow Problem
Characteristics
 Network flow problems can be represented as a
collection of nodes connected by arcs.
 There are three types of nodes:
– Supply
– Demand
– Transshipment
 We’ll use negative numbers to represent supplies
and positive numbers to represent demand.

4
 Network Flow Problem
Characteristics
 Supply: Sending Nodes
 Demand: Receiving Nodes
 Transshipment: Nodes that send and
receive
 We’ll use negative numbers to represent supplies
and positive numbers to represent demand.
 The direction of arcs or arrows show the direction
of material flow in the network

5
 Example
The Bavarian Motor Company (BMC) manufactures expensive luxury
cars in Hamburg, Germany, and exports cars to sell in the United
States. The exported cars are shipped from Hamburg to ports in
Newark, New Jersey, and Jacksonville, Florida. From these ports, the
cars are transported by rail or truck to distributors located in Boston,
Massachusetts; Columbus, Ohio; Atlanta, Georgia; Richmond, Virginia;
and Mobile, Alabama. Figure shows the possible shipping routes
available to the company along with the transportation cost for shipping
each car along the indicated path. Currently, 200 cars are available at
the port in Newark, and 300 are available in Jacksonville. The numbers
of cars needed by the distributors in Boston, Columbus, Atlanta,
Richmond, and Mobile are 100, 60, 170, 80, and 70, respectively. BMC
wants to determine the least costly way of transporting cars from the
ports in Newark and Jacksonville to the cities where they are needed.

6
 A Transshipment Problem:
The Bavarian Motor Company
+100

Boston $30
$50 2 Newark -200
1

Columbus
+60
3 $40
$40
$35 $30 Richmond
+80
Atlanta 4
+170 5
$25
$45 $50
$35

+70 Mobile
6 J'ville -300
$50 7
7
 Defining the Decision Variables

For each arc in a network flow model

we define a decision variable as:

Xij = the amount being shipped (or flowing) from node i to node j

For example…
X12 = the # of cars shipped from node 1 (Newark) to node 2
(Boston)
X56 = the # of cars shipped from node 5 (Atlanta) to node 6
(Mobile)
Note: The number of arcs
determines the number of
variables! 8
 Defining the Objective Function
Minimize total shipping costs.

MIN: 30X12 + 40X14 + 50X23 + 35X35

+40X53 + 30X54 + 35X56 + 25X65
+ 50X74 + 45X75 + 50X76

9
Constraints for Network Flow Problems:
The Balance-of-Flow Rules
For Minimum Cost Network Apply This Balance-of-Flow
Flow Problems Where: Rule At Each Node:

Total Supply > Total Demand Inflow-Outflow >= Supply or Demand

Total Supply < Total Demand Inflow-Outflow <=Supply or Demand
Total Supply = Total Demand Inflow-Outflow = Supply or Demand

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 Defining the Constraints
 In the BMC problem:
Total Supply = 500 cars (Supply >= Demand)
Total Demand = 480 cars
 For each node we need a constraint like this:
Inflow - Outflow >= Supply or Demand
 Constraint for node 1:
–X12 – X14 >= – 200 (Note: there is no inflow for node 1!)

 This is equivalent to:

+X12 + X14 <= 200

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 Defining the Constraints
 Constraint for Node 1
Inflow-Outflow >= Supply or Demand
(0) – (X12 + X14) >= -200
-X12-X14 >= -200

 Constraint for Node 2

Inflow-Outflow >= Supply or Demand
X12 – X23 >= +100
12
 Defining the Constraints
 Constraint for Node 3
Inflow-Outflow >= Supply or Demand
X23 + X53 – X35 >= +60
 Constraint for Node 4
Inflow-Outflow >= Supply or Demand
X14 + X74 + X54 – 0 >= +80
X14 + X74 + X54 >= +80
 Constraint for Node 5
Inflow-Outflow >= Supply or Demand
X75+X35+X65-X53-X54-X56>= +170
13
 Defining the Constraints
 Constraint for Node 6
Inflow-Outflow >= Supply or Demand
+ X56 + X76 – X65 >= +70
 Constraint for Node 7
Inflow-Outflow >= Supply or Demand
–X74 – X75 – X76 >= –300

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 Defining the Constraints
 Flow constraints
–X12 – X14 >= –200 } node 1
+X12 – X23 >= +100 } node 2
+X23 + X53 – X35 >= +60 } node 3
+ X14 + X54 + X74 >= +80 } node 4
+ X35 + X65 + X75 – X53 – X54 – X56 >= +170 } node 5
+ X56 + X76 – X65 >= +70 } node 6
–X74 – X75 – X76 >= –300 } node 7
 Non-negativity conditions
Xij >= 0 for all ij

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Optimal Solution to the BMC Problem
+100

Boston $30
$50 2 Newark -200
120 1
20
Columbus 80
+60
3 $40
$40

40 Richmond
+80
Atlanta 4
+170 5

$45
210
70
+70 Mobile
6 J'ville -300
$50 7

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 A Transportation Problem: Tropic
sun
 Tropic sun is a leading grower and distributor of fresh citrus
products with three large citrus groves scattered around
central Florida in the cities of Mt. Dora, Eustis, and Clermont.
 Tropic sun currently has 275,000 bushels of citrus at the
grove in Mt. Dora, 400,000 bushels at the grove in Eustis,
and 300,000 bushels at the grove in Clermont.
 Tropic sun has citrus processing plants in Ocala, Orlando,
and Leesburg with processing capacities to handle 200,000,
600,000, and 225,000 bushels, respectively.
 Tropic sun contracts with a local trucking company to
transport its fruit from the groves to the processing plants.
 The trucking company charges a flat rate for every mile that
each bushel of fruit must be transported.
 Each mile a bushel of fruit travels is known as a bushel-
mile.
 A Transportation Problem: Tropic
sun
The following table summarizes the distances (in miles)
between the groves and processing plants:

Tropic sun wants to determine how many bushels to ship from each
grove to each processing plant in order to minimize the total number of
bushel-miles the fruit must be shipped.

7-18
 Transportation
& Assignment Problems
 Some network flow problems don’t have trans-
shipment nodes; only supply and demand nodes.
Processing
Groves Distances (in miles) Plants
Supply Capacity
Mt. Dora 21 Ocala
275,000 200,000
1 50 4
40

35
Eustis 30 Orlando
400,000 600,000
2 5
22

55
Clermont 20 Leesburg
300,000 225,000
3 25 6
 Defining the Decision Variables

 Xij = # of bushels shipped from node i to node j

Specifically, the nine decision variables are:

X14 = # of bushels shipped from Mt. Dora (node 1) to Ocala (node

4)
X15 = # of bushels shipped from Mt. Dora (node 1) to Orlando
(node 5)
X16 = # of bushels shipped from Mt. Dora (node 1) to Leesburg
(node 6)
X24 = # of bushels shipped from Eustis (node 2) to Ocala (node 4)
X25 = # of bushels shipped from Eustis (node 2) to Orlando (node
5)
X26 = # of bushels shipped from Eustis (node 2) to Leesburg
(node 6)
 Defining the Objective Function
The goal in this problem is to determine how many
bushels to ship from each grove to each processing
plant while minimizing the total distance (or total
number of bushel miles) the fruit must travel. The
objective function for this problem is represented by:

Minimize the total number of bushel-

miles.
MIN: 21X14 + 50X15 + 40X16 + 35X24 +
The term 30X 25 +
21X14 in22X + 55Xreflects
this 26function 34 + 20X
the + that
35 fact
25X
each bushel shipped
36 from Mt. Dora (node 1) to Ocala
(node 4) must travel 21 miles. The remaining terms in
the function express similar relationships for the other
shipping routes.
 Defining the Constraints
 Capacity constraints
X14 + X24 + X34 <= 200,000 } Ocala
X15 + X25 + X35 <= 600,000 } Orlando
X16 + X26 + X36 <= 225,000 } Leesburg
 Supply constraints
X14 + X15 + X16 = 275,000 } Mt. Dora
X24 + X25 + X26 = 400,000 } Eustis
X34 + X35 + X36 = 300,000 } Clermont
 Non-negativity conditions
Xij >= 0 for all i and j