TOPIC 5: NETWORK MODELING
LAN JIANG
MIS 665 Prescriptive Analytics and Advanced Topics
Agenda
• Chapter 14: Optimization Problems
• Transportation Problem
– Example 14.3 Shipping Cost from Plants to Regions
• Other Logistics Models
– Example 14.4 RedBrand Excel Demonstration
• Week 5 Cengage Assignment Overview
• Week 5 Case Study Discussion
Chapter 14 Optimization Models
Business Analytics
Data Analysis and Decision
Making (7e)
S. Christian Albright
Wayne L. Winston
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TRANSPORTATION PROBLEM – EXAMPLE 14.3
Transportation Models
 In a transportation problem, the only possible shipments are those
directly from an origin to a destination.
 A typical transportation problem requires three sets of numbers:
 Capacities indicate the most each plant can supply in a given amount of time
under current operating conditions.
 Customer demands typically estimated from some type of forecasting model.
 Unit shipping costs come from a transportation cost analysis.
 The unit “shipping” cost can also include the unit production cost at each plant.
General Problem Statement
The Transportation Problem was one of the original applications of linear
programming models. The story goes like this. A firm produces products at m
different supply centers. Label these as i=1, … ,m. The supply produced at
supply center i is