Logistics and Tools: Transportation and Transshipment Models

1. Logistics and Tools: Transportation and Transshipment Models

2. Transportation • Rail • low-value, high-density, bulk products, raw materials, intermodal containers • not as economical for small loads, slower, less flexible than trucking • Trucking • main mode of freight transport in U.S. • small loads, point-to-point service, flexible • More reliable, less damage than rails; more expensive than rails for long distance

3. Transportation (cont.) • Air • most expensive and fastest, mode of freight transport • lightweight, small packages <500 lbs • high-value, perishable and critical goods • less theft • Package Delivery • small packages • fast and reliable • increased with e-Business • primary shipping mode for Internet companies

4. Transportation (cont.) • Water • low-cost shipping mode • primary means of international shipping • U.S. waterways • slowest shipping mode • Intermodal • combines several modes of shipping-truck, water and rail • key component is containers • Pipeline • transport oil and products in liquid form • high capital cost, economical use • long life and low operating cost

5. Internet Transportation Exchanges • Bring together shippers and carriers • Initial contact, negotiations, auctions • Examples • www.nte.com • www.freightquote.com

6. Transportation Model • A transportation model is formulated for a class of problems with the following characteristics • a product is transported from a number of sources to a number of destinations at the minimum possible cost • each source is able to supply a fixed number of units of product • each destination has a fixed demand for product • Solution Methods • stepping-stone • modified distribution • Excel’s Solver

7. Transportation Method: Example

8. Transportation Method: Example

9. Problem Formulation Using Excel Total Cost Formula

10. Using Solver from Tools Menu

11. Solution

12. Modified Problem Solution

13. Transshipment Model

14. Transshipment Model: Solution