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Thursday, May 26, 2011

Transportation Models in Operations Management from

Transportation Models in Operations Management

Transportation Models in Operations Management is a special case of linear programming that deals with the issue of shipping commodities from multiple sources to multiple destinations. The objective is to determine the shipping schedule that minimizes the total shipping cost while satisfying supply and demand constraints.

Transportation models are a special form of linear program. They address a common business problem of where to get supplies when there is a choice of suppliers all with a limited capacity. The basic idea is very simple.

To solve transportation problems you need to know the capacity requirements of the sources and the destinations and an estimation of the costs of transport between the sources and destinations. Once this data is available, a number of techniques can be applied to find a low-cost solution.

For example if a corporation has 3 manufacturing units and 10 regional distribution centers, then there are 2 ×10 = 20 possible routes. Given the transportation cost per load of each of 20 routes between the manufacturing plants and regional distribution centers and supply and demand constraints, how many loads can be transported through different routes so as to maximize transportation costs, is one of the concerns.

Various permutations and combinations relating to selecting the best routes in the process of creating a useful transportation models is often observed. If there are many routes possible then the best route would be the one which is the shortest in length. But, this is not the only criteria. There are different other things to be considered. A transport model is developed to take all possible situations into consideration and plan accordingly.

The uses of transportation models in decision making of a manager

Transportation models are used in the following ways.

  • Transportation models help in deciding the transportation of raw materials from various centers to manufacturing plants. In the case of multi-plant company this strategy is highly useful.
  • Transportation models help in deciding transportation of finished goods from different manufacturing plants to the different distribution centers. A very useful strategy in case of a multi-plant company.

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This article is in continuation with our previous articles on Operations Management such as Control Charts, Demand Chase, Enterprise Resource Planning, ABC Analysis

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