Transportation Model

I thought about proposing an exercise of Transportation Model because it is needed the use of Solver (that is an Excel analysis tool). I used it before but I can remember that was not easy for me to understand how it works but what is true is that once you know how it works it is an extremely useful tool that can help you when you have to solve linear programming problems.

The transportation Model it is a logistic strategy that its main purpose is to minimize the total transportation costs. To understand it better I propose an exercise that I invite you to compute it:

A company has 4 factories F1, F2, F3 and F4 whose monthly total production is of 14,000, 20,000, 21,000 and 12,500 units. These are distributed on five stores A1, A2, A3, A4 and A5, which must hold a stock of units sufficient to meet a monthly demand of 8,000, 11,000, 13,500, 5,000 and 30,000 units. Transportation costs per unit of output are:

A1 A2 A3 A4 A5
F1 5 7 8 3 9
F2 4 6 7 2 11
F3 3 6 5 1 7
F4 4 5 7 3 8

Formulate the problem as a transportation problem and calculate the optimal distribution program that minimizes transportation costs using Excel.

Here you can download the Excel and check how to solve the exercice: Transportation Model

By: Andrea Da Silva

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