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MIDTERM 2 - MIDTERM 2 CHAPTER 8S The Transportation Model...

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MIDTERM 2 CHAPTER 8S The Transportation Model Transportation Problem Involves finding the lowest-cost plan for distributing stocks of goods or supplies from multiple origins to multiple destinations that demand the goods. Transportation Model: Applications The transportation model has numerous applications: Location decisions Compare location alternatives in terms of their impact cost on the total distribution costs for the system Involves working through a separate model for each location being considered Production planning Capacity planning Transshipment Transportation Problem Shipping (supply) points Any place from which good are sent Factories Warehouses Departments Destinations Any point that receives goods Factories Warehouses Departments Model: Information Requirements Information requirements A list of the origins and each one’s capacity or supply quantity per period A list of the destinations and each one’s demand per period The unit cost of shipping items from each origin to each destination Model: Assumptions Transportation model assumptions The items to be shipped are homogeneous Shipping cost per unit is the same regardless of the number of units shipped There is only one route or mode of transportation being used between each origin and destination Transportation Table Transportation Table Transportation Problem: Formulation Transportation: Computer Solution Transportation problems can be solved manually in a straightforward manner Except for very small problems, solving the problem manually can be very time consuming For medium to large problems, computer solution techniques are more practical A variety of software packages are available for solving the transportation model Some require formulating the problem as a general LP model Others allow data entry in a more simple, tabular format
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Chapter 3 Forecasting Forecast – a statement about the future value of a variable of interest We make forecasts about such things as weather, demand, and resource availability Forecasts are an important element in making informed decisions Two Important Aspects of Forecasts Expected level of demand The level of demand may be a function of some structural variation such as trend or seasonal variation Accuracy Related to the potential size of forecast error Features Common to All Forecasts 1. Techniques assume some underlying causal system that existed in the past will persist into the future 2. Forecasts are not perfect 3. Forecasts for groups of items are more accurate than those for individual items 4. Forecast accuracy decreases as the forecasting horizon increases Elements of a Good Forecast The forecast should be timely should be accurate should be reliable should be expressed in meaningful units should be in writing
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