Minimizing the Cost of Transportation

Read this article. The study employed a transportation model to find the minimum cost of transporting manufactured goods from factories to warehouses. As you read, think of some factors that can greatly increase transportation and logistics time.


The transportation problem is one of the subclasses of linear programming problem where the objective is to transport various quantities of a homogeneous product that are initially stored at various origins, to different destinations in such a way that the total transportation cost is at its minimum. Transportation models or problems are primarily concerned with the optimal (best possible) way in which a product produced at different factories or plants (called supply origins) can be transported to a number of warehouses (called demand destinations). The objective in a transportation problem is to fully satisfy the destination requirements within the operating production capacity constraints at the minimum possible cost. Whenever there is a physical movement of goods from the point of manufacture to the final consumers through a variety of channels of distribution (wholesalers, retailers, distributors etc.), there is a need to minimize the cost of transportation so as to increase the profit on sales. Transportation problems arise in all such cases. It aim at providing assistance to the top management in ascertaining how many units of a particular product should be transported from each supply origin to each demand destinations so that the total prevailing demand for the company's product is satisfied, while at the same time the total transportation costs are minimized.

The cost of shipping from source to destination is directly proportional to the number of units shipped. There is a type of linear programming problem that may be solved using a simplified version of the simplex technique called transportation method. One possibility to solve the optimal problem would be optimization method. The problem is however, formulated so that objective function and all constraints are linear and thus, the problem can be solved.