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Operations Management

Operations Management. Module C – Transportation Models. PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 6e Operations Management, 8e . © 2006 Prentice Hall, Inc. Transportation Models.

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Operations Management

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  1. Operations Management Module C – Transportation Models PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 6e Operations Management, 8e © 2006 Prentice Hall, Inc.

  2. Transportation Models • Want to ship items from origins to destinations within our existing distribution system • Want to do this at the lowest cost • Sources have fixed supply • Destinations have fixed demand

  3. Transportation Modeling • Need to know • The origin points and the capacity or supply per period at each • The destination points and the demand per period at each • The cost of shipping one unit from each origin to each destination

  4. Example – Arizona Plumbing Table C.1

  5. Boston (200 units required) Cleveland (200 units required) Des Moines (100 units capacity) Albuquerque (300 units required) Evansville (300 units capacity) Fort Lauderdale (300 units capacity) Transportation Problem Figure C.1

  6. Des Moines capacity constraint Factory capacity To Albuquerque Boston Cleveland From $5 $4 $3 100 Des Moines Cell representing a possible source-to-destination shipping assignment (Evansville to Cleveland) $8 $4 $3 300 Evansville $9 $7 $5 300 Fort Lauderdale Warehouse requirement 300 200 200 700 Cost of shipping 1 unit from Fort Lauderdale factory to Boston warehouse Clevelandwarehouse demand Total demand and total supply Transportation Matrix Figure C.2

  7. Solution Methodology • The book shows you two ways to solve these problems by hand • We will NOT do this • We will use the OM transportation macro and Solver which is an add-in for MS Excel • As usual, you will need to know how to interpret the results derived from using Excel

  8. Factory capacity To Albuquerque Boston Cleveland From $5 $4 $3 100 Des Moines $8 $4 $3 300 Evansville $9 $7 $5 300 Fort Lauderdale Warehouse requirement 300 200 200 700 Arizona Plumbing Answer 0 0 100 100 200 0 200 0 100 Total Cost = 100($5) + 200($4) + 100($3) + 200($9) + 100($5) = $3,900

  9. Special Issues in Modeling • Demand not equal to supply • Called an unbalanced problem • Common situation in the real world • Two Cases: • Supply is greater than demand • No Problem – Let Solver figure it out !! • See next slide for an example

  10. Factory capacity To (A) Albuquerque (B) Boston (C) Cleveland From $5 $4 $3 250 (D) Des Moines $8 $4 $3 300 (E) Evansville $9 $7 $5 300 (F) Fort Lauderdale Warehouse requirement 850 300 200 200 New Des Moines capacity Supply Greater Than Demand

  11. Factory capacity To (A) Albuquerque (B) Boston (C) Cleveland From $5 $4 $3 250 250 (D) Des Moines 0 0 $8 $4 $3 300 100 200 0 (E) Evansville $9 $7 $5 300 0 100 (F) Fort Lauderdale 50 Warehouse requirement 850 300 200 200 Supply Greater Than Demand Total Cost = 250($5) + 200($4) + 100($3) + 50($9) + 100($5) + 150(0) = $3,300

  12. Special Issues in Modeling • Second Case: • Demand is greater than Supply • Add a “dummy” origin • Supply at dummy origin = Total Demand – Total Supply • See next slide for an example

  13. Albuquerque Boston Cleveland Factory Capacity To From Des Moines $5 $4 $3 100 Evansville $8 $4 $3 300 Fort Lauderdale $9 $7 $5 300 Add a Dummy origin node with a supply of 100 Dummy $0 $0 $0 100 Warehouse Demand 300 300 200 800 800 Boston’s Demand increased to 300 bathtubs Demand Greater Than Supply

  14. Albuquerque Boston Cleveland Factory Capacity To From Des Moines $5 $4 $3 100 0 0 100 Evansville $8 $4 $3 300 0 0 300 Fort Lauderdale $9 $7 $5 300 0 200 100 Dummy $0 $0 $0 100 0 100 0 Warehouse Demand 300 300 200 800 800 Demand Greater Than Supply Total Cost = 100($5) + 300($4) + 100($9) + 200($5) + 100(0) = $3,600

  15. Transportation Variant • What if we can no longer supply a warehouse from a certain factory? • We want to block an origin-destination pair • We are minimizes costs • So what could we do?

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