CASE: Shipping Wood to Market
Option 1: Continue shipping exclusively by rail
Decision Variables:
Xij = Woods Shipped from Source i to Market j where (i = 1,2,3; j = 1,2,3,4,5)
Objective
Minimize Z = 61 X11 + 72 X12 + 45 X13 + 55 X14 + 66 X15 + 69 X21 + 78 X22 + 60 X23 + 49 X24 +56 X25
+ 59 X31 + 66 X32 + 63 X33 + 61 X34 + 47 X35
Constraints
Supply: x11 + x12 + x13 + x14 + x15 ≤ 15
x21 + x22 + x23 + x24 +x25 ≤ 20
x31 + x32 + x33 + x34 + x35 ≤ 15
Demand: x11 + x21 + x31 ≥ 11
x12 + x22 + x32 ≥ 12
x13 + x23 + x33 ≥ 9
x14 + x24 + x34 ≥ 10
x15 + x25 + x35 ≥ 8
Other xij ≥ 0, for i = 1,2,3; j = 1,2,3,4,5
Transportation table
Cost Matrix
Unit Cost By Rail ($1,000’s)
Source 1 2 3 4 5
1 61 72 45 55 66
2 69 78 60 49 56
3 59 66 63 61 47
Solution Matrix
Source 1 2 3 4 5
1 6 0 9 0 0 15 = 15
2 2 0 0 10 8 20 = 20
3 3 12 0 0 0 15 = 15
11 12 9 10 8
= = = = =
11 12 9 10 8
Total Cost 2816
Option 2: Shipping exclusively by water
Decision Variables:
Xij = Woods Shipped from Source i to Market j where (i = 1,2,3; j = 1,2,3,4,5)
Objective
Minimize Z = sum of all (cij + 0.1 Yij) where (i = 1,2,3; j = 1,2,3,4,5)
Constraints
Supply: x11 + x12 + x13 + x14 + x15 ≤ 15
x21 + x22 + x23 + x24 +x25 ≤ 20
x31 + x32 + x33 + x34 + x35 ≤ 15
Demand: x11 + x21 + x31 ≥ 11
x12 + x22 + x32 ≥ 12
x13 + x23 + x33 ≥ 9
x14 + x24 + x34 ≥ 10
x15 + x25 + x35 ≥ 8
Other xij ≥ 0, for i = 1,2,3; j = 1,2,3,4,5
Note for X14 and X31 rail will be used due to unavaibality of water way
Transportation table
Cost Matrix
Unit Cost By Ship ($1,000’s)
Source 1 2 3 4 5
1 31 38 24 55 35
2 36 43 28 24 31
3 59 33 36 32 26
Annual Investment for Ship ($1,000’s)
Source 1 2 3 4 5
1 27.5 30.3 23.8 0 28.5
2 29.3 31.8 27 25 26.5
3 0 28.3 27.5 26.8 24
Solution Matrix
Source 1 2 3 4 5
1 11 0 4 0 0 15 = 15
2 0 0 5 10 5 20 = 20
3 0 12 0 0 3 15 = 15
11 12 9 10 8
= = = = =
11 12 9 10 8
Total cost 2772.8
Option 3: Either by rail or water
Decision Variables:
Xij = Woods Shipped from Source i to Market j where (i = 1,2,3; j = 1,2,3,4,5)
Sij = Amount of Woods by Ship from Source i to Market j (i = 1,2,3; j = 1,2,3,4,5)
Objective
Minimize Z = sum of all (Min[Xij Dij; Sij (Cij + 0.1Yij)])
Constraints
Supply: x11 + x12 + x13 + x14 + x15 + s11 + s12 + s13 + s14 + s15 ≤ 15
x21 + x22 + x23 + x24 +x25 +s21 + s22 + s23 + s24 +s25 ≤ 20
x31 + x32 + x33 + x34 + x35 +s31 + s32 + s33 + s34 + s35 ≤ 15
Demand: x11 + x21 + x31 +s11 + s21 + s31 ≥ 11
x12 + x22 + x32 +s12 + s22 + s32 ≥ 12
x13 + x23 + x33 + s13 + s23 + s33 ≥ 9
x14 + x24 + x34 + s14 + s24 + s34 ≥ 10
x15 + x25 + x35 + x15 + x25 + x35 ≥ 8
Other: x15 + x25 + x35 + x15 + x25 + x35 ≥ 8
Transportation table
Cost Matrix
Unit Cost By Ship ($1,000’s)
Source 1 2 3 4 5
1 31 38 24 55 35
2 36 43 28 24 31
3 59 33 36 32 26
Annual Investment for Ship ($1,000’s)
Source 1 2 3 4 5
1 27.5 30.3 23.8 0 28.5
2 29.3 31.8 27 25 26.5
3 0 28.3 27.5 26.8 24
Unit Cost By Rail ($1,000’s)
Source 1 2 3 4 5
1 61 72 45 55 66
2 69 78 60 49 56
3 59 66 63 61 47
Minimum cost By Rail/Ship ($1,000’s)
Source 1 2 3 4 5
1 58.5 68.3 45 55 63.5
2 65.3 74.8 55 49 56
3 59 61.3 63 58.8 47
Solution Matrix
Source 1 2 3 4 5
1 6 0 9 0 0 15 = 15
2 5 0 0 10 5 20 = 20
3 0 12 0 0 3 15 = 15
11 12 9 10 8
= = = = =
11 12 9 10 8
Total cost 2729.1
So to conclude the best way to transport is Exclusively by Ship