Trans-Shipment Logistics

Generic Situation:

A manufacturer, importer, etc., has inventory waiting in various locations. Demand for the product as well as shipping costs are different for each of numerous distributors and the least costly shipping schedule is desired.

Example:

Yucatan Importers LLC. currently has 200 units of Mexican manufactured VW Bugs sitting in a warehouse at Dock N in Portland and 300 at Dock J in San Francisco. Yucatan has 5 distributors in various cities designated A, B, C, R, and M. The number of units needed by various distributors along with the shipping cost per unit are summarized in the graph below. The dollar amount in the box next to the arrows is the transportation cost per unit, the red number within each distributor's circle is the demand for VW's.







Profit Maximizing Solution:

The optimal shipping schedule (i.e. the least costly way to fulfill the distributors demands) is summarized in the graph below. The bold blue boxed numbers are the number of units sent between locations.