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Example of Transshipment Model

The transshipment model is an extension of the classical transportation model that allows items to be shipped from sources to destinations through intermediate points to reduce costs. A company example shows inventory being redistributed among stores, with some stores acting as sources and others as sinks, and inventory passing through intermediate transshipment points. The transshipment problem can be converted to a standard transportation problem by adding fictitious sources and destinations at each location and extending the transportation table to include costs between all points.

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134 views3 pages

Example of Transshipment Model

The transshipment model is an extension of the classical transportation model that allows items to be shipped from sources to destinations through intermediate points to reduce costs. A company example shows inventory being redistributed among stores, with some stores acting as sources and others as sinks, and inventory passing through intermediate transshipment points. The transshipment problem can be converted to a standard transportation problem by adding fictitious sources and destinations at each location and extending the transportation table to include costs between all points.

Uploaded by

Analyn C. Bejasa
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© © All Rights Reserved
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7/5/2015

TransshipmentModel

TransshipmentModel
Inatransportationproblem,consignmentsarealwaystransportedfromanorigintoa
destination.But,therecouldbeseveralsituationswhereitmightbeeconomicaltotransport
itemsviaoneormoreintermediatecentres(orstages).Inatransshipmentproblem,the
availablecommodityisnotsentdirectlyfromsourcestodestinations,i.e.,itpassesthrough
oneormoreintermediatepointsbeforereachingtheactualdestination.Forinstance,a
companymayhaveregionalwarehousesthatdistributetheproductstosmallerdistrict
warehouses,whichinturnshiptotheretailstores.Succinctly,thetransshipmentmodelisan
extensionoftheclassicaltransportationmodelwhereanitemavailableatpointiisshipped
todemandpointjthroughoneormoreintermediatepoints.

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Thetransshipmentmodelhelpsthemanagementofacompanyin
decidingtheoptimalnumberandlocationofitswarehouses.

ExampleofTransshipmentModel
Acompanyhasninelargestoreslocatedinseveralstates.Thesalesdepartmentisinterestedin
reducingthepriceofacertainproductinordertodisposeallthestocknowinhand.But,before
thatthemanagementwantstorepositionitsstockamongtheninestoresaccordingtoitssales
expectationsateachlocation.

Theabovefigureshowsthenumberednodes(9stores).Apositivevaluenexttoastore
representstheamountofinventorytoberedistributedtotherestofthesystem.Anegative
valuerepresentstheshortageofstock.Thus,stores1and4haveexcessstockof10&2items
respectively.Stores3,6&8need3,1,and8moreitemsrespectively.Theinventorypositions
ofstores2,5&7aretoremainunchanged.
Anitemmaybeshippedthroughstores2,4,5,6,7&8.Theselocationsareknownas
transshipmentpoints.Eachremainingstoreisasourceifithasexcessstock,andasinkifit
needsstock.Intheabovefigure,store1isasourceandstore3isasink.
Thevaluecijisthecostoftransportingitems.Totransportanitemfromstore1tostore3,the
totalshippingcostis
c12+c23
Inthefollowingexample,youwilllearnhowtoconvertatransshipmentproblemtoastandard
transportationproblem.

Example
Consideratransportationproblemwheretheoriginsareplantsanddestinationsaredepots.The
unittransportationcosts,capacityattheplants,andtherequirementsatthedepotsare
indicatedbelow:
Table1
Plant
X
A
B

1
3
150

Depot
Y

3
5
150

15
25
150

150
300
450

Wheneachplantisalsoconsideredadestinationandeachdepotisalsoconsideredanorigin,
therearealtogetherfiveoriginsandfivedestinations.Someadditionalcostdataarealso
necessary.ThesearepresentedinthefollowingTables.
Table2

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7/5/2015

TransshipmentModel

UnitTransportationCostfromPlanttoPlant
FromPlant
To
PlantA
PlantB
A
0
65
B
1
0

Table3
UnitTransportationCostfromDepottoDepot
FromDepot
To
DepotX DepotY DepotZ
X
0
23
1
Y
1
0
3

65

Table4
UnitTransportationCostfromDepottoPlant
Depot
Plant
A
B
X
3
15
Y
25
3
Z
45
55

Solution.
FromTable1,Table2,Table3andTable4weobtainthetransportationformulationofthe
transshipmentproblem.
Table5

A
B
X
Y
Z
Requirement

0
1
3
25
45
450

65
0
15
3
55
450

TransshipmentTable
Y

1
3
0
1
65
150+450=600

3
5
23
0
3
150+450=600

Capacity

15
25
1
3
0
150+450=600

150+450=600
300+450=750
450
450
450
2700

Thetransportationmodelisextendedandnowitincludesfivesupplypoints&demandpoints.
Tohaveasupplyanddemandfromallthepoints,afictitioussupplyanddemandquantity
(bufferstock)of450isaddedtobothsupplyanddemandofallthepoints.Aninitialbasic
feasiblesolutionisobtainedbytheVogel'sApproximationmethodandisshowninthefinal
table.
FinalTable

TransshipmentTable
B
X
Y

65

15

25

45

55

65

450

600

600

Requirement 450

Capacity

15

600

25

750

23

450
3

450
450

600

2700

Thetotaltranshipmentcostis:
0X150+1X300+3X150+1X300+0X450+0X300+1X150+0X450+0X450=
1200
Thetransportationproblemisaspecialtypeoflinearprogrammingprobleminwhichtheobjectiveisto
transportahomogeneousproductmanufacturedatseveralplants(origins)toanumberofdifferent
destinationsataminimumtotalcost.Inthischapter,youlearnedseveraldifferenttechniquesfor
computinganinitialbasicfeasiblesolutiontoatransportationproblemsuchasnorthwestcornerrule,
matrixminimummethodandvogelapproximationmethod.Further,youlearnedhowtocomputean
optimalsolutionwiththehelpofMODI&steppingstonemethod.Intheendofthechapter,wediscussed
thetransshipmentmodel,whichisanextensionoftheclassicaltransportationmodelwhereanitem
availableatpointiisshippedtodemandpointjthroughoneormoreintermediatepoints.

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