Shipping cost to the total shipping cost of the trading company. Sensitivity technique is employed to analyze the impact of uncertainty of unit Of poly vinyl chloride polymer from four supply points to four demand destinations. Programming and spreadsheet are used to determine the minimum shipping cost The case of a transportation problem of a Malaysian trading company. Representation, mathematical formulation and spreadsheet model and analysis Solutions ( Reeb and Leavengood, 2000) to name a few.Īgainst this background, the objective of this study is to establish a network Operations were established using the graphical method ( ReebĪnd Leavengood, 1998a), simplex method ( Reeb and Leavengood,ġ998b) and duality and sensitivity analysis to interpret linear programming The most favorable solutions to the business To many transportation problems ( Phillips et al., 1987 Quantitative analyses have been successfully applied in obtaining optimal solution The greatest contribution to the company. To the right place, at the right time and in the desired condition, while making The aim is getting the right quantity of products Takes up almost 50% of the total distribution cost ( ReebĪnd Leavengood, 2002). Generally, distribution cost ranges from nine percent to 14 percent of sales.Īmong others, it includes all logistics related expenses such as warehousing, To better service levels ( Mandel, 2004 Reeb Furthermore, improvement in transportation usually leads Research has shown that a five percent reduction in transportationĬost has similar impact as a 30 percent increase in sales. Improvement in the transportation plan has significant impact to a companysīottom-line. While every supply location operates within its capacity ( Mandel, The purpose is to minimize the cost of shipping goodsįrom one location to another so that the needs of each arrival area are met The right and most economical means of transportation are widely referred toĪs transportation problem. The choice of the quantity to be supplied, the location to be delivered and The same everywhere, leaving delivered price to vary with the distance between In a very competitive businessĮnvironment, the conversion cost and ex-factory price of the products are almost Products in relation to the cost of transportation. As such, company seeks to optimize their distribution plan for their To the market at the lowest possible cost leads to huge potential of cost savingĪnd consequently maximize the companys profit ( Mandel,Ģ004).
To points of demand is crucial for any businesses. Journal of Applied Sciences, 12: 2430-2435.Įffective and efficient movement of products or services from point of supply Optimal Solution of Transportation Problem Using Linear Programming: A Case of a Malaysian Trading Company. Total shipping cost of the trading company. Technique in analyzing the impact of uncertainty of unit shipping cost to the Transportation plan that leads to the lowest transportation cost of polymerįrom four plants to four demand destinations. That facilitate managers in a Malaysian Trading Company in determining the optimum This study highlights the application of linear programming and spreadsheet Minimizing cost of transportation isįundamental for companies in the midst of highly competitive business environment. The task of deciding the optimum plan for distributing goods at the The final step is to revise the solution until the optimum solution is obtained.Managers regularly make decisions pertaining to the effectiveĪnd efficient allocation of resources to various activities in meeting organizational There are two methods used for testing the optimality: Once the feasible solution is obtained, the next step is to check whether it is optimum or not. Testing the optimality of the initial feasible solution.Note: It is to be ensured that the number of cells occupied should be equal to m+n-1, where “m” is the number of rows while “n” is the number of columns. There are several methods through which the initial feasible solution can be obtained these are: Obtaining the initial feasible solution, which means identifying the solution that satisfies the requirements of demand and supply.
For solving the transportation problem, the following steps are to be systematically followed: Here origin means the place where the product is originated or manufactured for the ultimate sales while the places where the product is required to be sold is called destination.
how efficiently the product from different sources of production is transported to the different destinations, such as the total transportation cost is minimum. The Transportation Method of linear programming is applied to the problems related to the study of the efficient transportation routes i.e.