Network

Models
1
Chapter 4
4.1 Introduction
2
A network problem is one that can be
represented by...
Nodes
Arcs
10
Function on Arcs
4.1 Introduction
Many business problems lend themselves to a network
formulation.
Optimal solutions of network problems are guaranteed
integer solutions, because of special mathematical
structures. No special restrictions are needed to
ensure integrality.
Network problems can be efficiently solved by compact
algorithms due to their special mathematical structure,
even for large scale models.
3
The importance of network models
Network Terminology
Flow
the amount sent from node i to node j, over an arc that connects
them. The following notation is used:
X
ij
= amount of flow

U
ij
= upper bound of the flow
L
ij
= lower bound of the flow
Directed/undirected arcs
when flow is allowed in one direction the arc is directed (marked
by an arrow). When flow is allowed in two directions, the arc is
undirected (no arrows).
Adjacent nodes
a node (j) is adjacent to another node (i) if an arc joins node i to
node j.
4
Network Terminology
Path / Connected nodes
Path :a collection of arcs formed by a series of adjacent
nodes.
The nodes are said to be connected if there is a path
between them.
Cycles / Trees / Spanning Trees
Cycle : a path starting at a certain node and returning to
the same node without using any arc twice.
Tree : a series of nodes that contain no cycles.
Spanning tree : a tree that connects all the nodes in a
network
( it consists of n -1 arcs).
5
4.2 The Transportation
Problem
Transportation problems arise when a cost-
effective pattern is needed to ship items from
origins that have limited supply to destinations
that have demand for the goods.
6
The Transportation Problem
Problem definition

There are m sources. Source i has a supply capacity of
S
i
.


There are n destinations. The demand at destination j
is D
j
.

Objective:
Minimize the total shipping cost of supplying the
destinations with the required demand from the
available
supplies at the sources.
7
CARLTON PHARMACEUTICALS
Carlton Pharmaceuticals supplies drugs and other
medical supplies.

It has three plants in: Cleveland, Detroit,
Greensboro.

It has four distribution centers in:
Boston, Richmond, Atlanta, St. Louis.

Management at Carlton would like to ship cases of a
certain vaccine as economically as possible.
8
CARLTON PHARMACEUTICALS
Data
Unit shipping cost, supply, and demand





Assumptions
Unit shipping costs are constant.
All the shipping occurs simultaneously.
The only transportation considered is between sources and
destinations.
Total supply equals total demand.
9
To
From Boston Richmond Atlanta St. Louis Supply
Cleveland $35 30 40 32 1200
Detroit 37 40 42 25 1000
Greensboro 40 15 20 28 800
Demand 1100 400 750 750
CARLTON PHARMACEUTICALS
Network presentation
10
11
Boston
Richmond
Atlanta
St.Louis
Destinations
Sources
Cleveland
Detroit
Greensboro
S
1
=1200
S
2
=1000
S
3
= 800
D
1
=1100
D
2
=400
D
3
=750
D
4
=750
CARLTON PHARMACEUTICALS
Linear Programming Model
The structure of the model is:
Minimize Total Shipping Cost
ST
[Amount shipped from a source] [Supply at that source]
[Amount received at a destination] = [Demand at that destination]

Decision variables
X
ij
= the number of cases shipped from plant i to warehouse j.
where: i=1 (Cleveland), 2 (Detroit), 3 (Greensboro)
j=1 (Boston), 2 (Richmond), 3 (Atlanta), 4(St.Louis)
12
13
Boston
Richmond
Atlanta
St.Louis
D
1
=1100
D
2
=400
D
3
=750
D
4
=750
The supply constraints
Cleveland
S
1
=1200
X11
X12
X13
X14
Supply from Cleveland X11+X12+X13+X14 = 1200
Detroit
S
2
=1000
X21
X22
X23
X24
Supply from Detroit X21+X22+X23+X24 = 1000
Greensboro
S
3
= 800
X31
X32
X33
X34
Supply from Greensboro X31+X32+X33+X34 = 800
CARLTON PHARMACEUTICAL
The complete mathematical model
14
Minimize 35X11+30X12+40X13+ 32X14 +37X21+40X22+42X23+25X24+
40X31+15X32+20X33+38X34
ST
Supply constrraints:
X11+ X12+ X13+ X14 1200
X21+ X22+ X23+ X24 1000
X31+ X32+ X33+ X34 800
Demand constraints:
X11+ X21+ X31 1000
X12+ X22+ X32 400
X13+ X23+ X33 750
X14+ X24+ X34 750
All Xij are nonnegative




=
=
=
=
Total shipment out of a supply node
cannot exceed the supply at the node.
Total shipment received at a destination
node, must equal the demand at that node.
CARLTON PHARMACEUTICALS
Spreadsheet
15
=SUM(B7:E9)
Drag to cells C11:E11
=SUMPRODUCT(B7:E9,B15:E17)
=SUM(B7:E7)
Drag to cells
G8:G9
CARLTON PHARMACEUTICALS
Spreadsheet
16
MINIMIZE Total Cost
SHIPMENTS
Demands are met
Supplies are not
exceeded
CARLTON PHARMACEUTICALS
Spreadsheet - solution
17
SOLUTION
MINIMUM COST 84000
BOSTON RICHMOND ATLANTA ST. LOUIS SHIPPED
CLEVELAND 850 350 1200
DETROIT 250 750 1000
GREENSBORO 50 750 800
RECEIVED 1100 400 750 750
INPUT
BOSTON RICHMOND ATLANTA ST. LOUIS SUPPLY
CLEVELAND 35 30 40 32 1200
DETROIT 37 40 42 25 1000
GREENSBORO 40 15 20 28 800
DEMAND 1100 400 750 750
CARLTON PHARMACEUTICALS
COST (PER CASE)
SHIPMENTS (CASES)
CARLTON PHARMACEUTICALS
Sensitivity Report
18
Adjustable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$7 CLEVELAND BOSTON 850 0 35 2 5
$C$7 CLEVELAND RICHMOND 350 0 30 5 17
$D$7 CLEVELAND ATLANTA 0 5 40 1E+30 5
$E$7 CLEVELAND ST. LOUIS 0 9 32 1E+30 9
$B$8 DETROIT BOSTON 250 0 37 5 2
$C$8 DETROIT RICHMOND 0 8 40 1E+30 8
$D$8 DETROIT ATLANTA 0 5 42 1E+30 5
$E$8 DETROIT ST. LOUIS 750 0 25 9 1E+30
$B$9 GREENSBORO BOSTON 0 20 40 1E+30 20
$C$9 GREENSBORO RICHMOND 50 0 15 17 5
$D$9 GREENSBORO ATLANTA 750 0 20 5 1E+30
$E$9 GREENSBORO ST. LOUIS 0 20 28 1E+30 20
Reduced costs
The unit shipment cost between Cleveland and
Atlanta must be reduced by at least $5, before it
would become economically feasible to utilize it
If this route is used, the total cost will increase
by $5 for each case shipped between the two
cities.

CARLTON PHARMACEUTICALS
Sensitivity Report
19
Adjustable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$7 CLEVELAND BOSTON 850 0 35 2 5
$C$7 CLEVELAND RICHMOND 350 0 30 5 17
$D$7 CLEVELAND ATLANTA 0 5 40 1E+30 5
$E$7 CLEVELAND ST. LOUIS 0 9 32 1E+30 9
$B$8 DETROIT BOSTON 250 0 37 5 2
$C$8 DETROIT RICHMOND 0 8 40 1E+30 8
$D$8 DETROIT ATLANTA 0 5 42 1E+30 5
$E$8 DETROIT ST. LOUIS 750 0 25 9 1E+30
$B$9 GREENSBORO BOSTON 0 20 40 1E+30 20
$C$9 GREENSBORO RICHMOND 50 0 15 17 5
$D$9 GREENSBORO ATLANTA 750 0 20 5 1E+30
$E$9 GREENSBORO ST. LOUIS 0 20 28 1E+30 20
Allowable Increase/Decrease
This is the range of optimality.
The unit shipment cost between Cleveland and
Boston may increase up to $2 or decrease up to
$5 with no change in the current optimal
transportation plan.

CARLTON PHARMACEUTICALS
Sensitivity Report
Shadow prices
For the plants, shadow prices
convey the cost savings
realized for each extra case of
vaccine produced.
For each additional unit
available in Cleveland the
total cost reduces by $2.
20
Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$G$7 CLEVELAND SHIPPED 1200 -2 1200 250 0
$G$8 DETROIT SHIPPED 1000 0 1000 1E+30 0
$G$9 GREENSBORO SHIPPED 800 -17 800 250 0
$B$11 RECEIVED BOSTON 1100 37 1100 0 250
$C$11 RECEIVED RICHMOND 400 32 400 0 250
$D$11 RECEIVED ATLANTA 750 37 750 0 250
$E$11 RECEIVED ST. LOUIS 750 25 750 0 750
CARLTON PHARMACEUTICALS
Sensitivity Report
21
Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$G$7 CLEVELAND SHIPPED 1200 -2 1200 250 0
$G$8 DETROIT SHIPPED 1000 0 1000 1E+30 0
$G$9 GREENSBORO SHIPPED 800 -17 800 250 0
$B$11 RECEIVED BOSTON 1100 37 1100 0 250
$C$11 RECEIVED RICHMOND 400 32 400 0 250
$D$11 RECEIVED ATLANTA 750 37 750 0 250
$E$11 RECEIVED ST. LOUIS 750 25 750 0 750
Shadow prices
For the warehouses demand, shadow
prices represent the cost savings for
less cases being demanded.
For each one unit decrease in
demanded in Boston, the total cost
decreases by $37.
Modifications to the transportation problem


Cases may arise that require modifications to the basic
model.
Blocked routes - shipments along certain routes are prohibited.
Remedies:
Assign a large objective coefficient to the route (C
ij
= 1,000,000)
22
Modifications to the transportation problem


Cases may arise that require modifications to the basic
model.
Blocked routes - shipments along certain routes are prohibited.
Remedies:
Assign a large objective coefficient to the route (C
ij
= 1,000,000)
Add a constraint to Excel solver of the form X
ij
= 0
23
Shipments on
a Blocked
Route = 0
Modifications to the transportation problem


Cases may arise that require modifications to the basic
model.
Blocked routes - shipments along certain routes are prohibited.
Remedies:
Assign a large objective coefficient to the route (C
ij
= 1,000,000)
Add a constraint to Excel solver of the form X
ij
= 0
Do not include the cell representing the rout in the Changing cells
24
Only Feasible Routes
Included in Changing Cells
Cell C9 is NOT Included
Shipments from Greensboro
to Cleveland are prohibited
Modifications to the transportation problem


Cases may arise that require modifications to the basic
model.
Minimum shipment - the amount shipped along a certain route must
not fall below a pre-specified level.
Remedy: Add a constraint to Excel of the form X
ij
B
Maximum shipment - an upper limit is placed on the amount
shipped along a certain route.
Remedy: Add a constraint to Excel of the form X
ij
B

25
MONTPELIER SKI COMPANY
Using a Transportation model for production
scheduling
Montpelier is planning its production of skis for the months of
July, August, and September.
Production capacity and unit production cost will change from
month to month.
The company can use both regular time and overtime to
produce skis.
Production levels should meet both demand forecasts and
end-of-quarter inventory requirement.
Management would like to schedule production to minimize
its costs for the quarter.
26
MONTPELIER SKI COMPANY
Data:
Initial inventory = 200 pairs
Ending inventory required =1200 pairs
Production capacity for the next quarter = 400 pairs in regular time.
= 200 pairs in overtime.
Holding cost rate is 3% per month per ski.

Production capacity, and forecasted demand for this quarter
(in pairs of skis), and production cost per unit (by months)
27
Forecasted Production Production Costs
Month Demand Capacity Regular Time Overtime
July 400 1000 25 30
August 600 800 26 32
September 1000 400 29 37
MONTPELIER SKI COMPANY
Analysis of demand:
Net demand in July = 400 - 200 = 200 pairs

Net demand in August = 600
Net demand in September = 1000 + 1200 = 2200 pairs

Analysis of Supplies:
Production capacities are thought of as supplies.
There are two sets of supplies:
Set 1- Regular time supply (production capacity)
Set 2 - Overtime supply
28
Initial inventory
Forecasted demand
In house inventory
MONTPELIER SKI COMPANY
29
Analysis of Unit costs
Unit cost = [Unit production cost] +
[Unit holding cost per month][the number of months stays in
inventory]
Example: A unit produced in July in regular time and sold in
September costs 25+ (3%)(25)(2 months) = $26.50
Network representation
30
25
25.75
26.50
30
30.90
31.80
+M
26
26.78
+M

32

32.96

+M

+M

29
+M


+M



37
Production
Month/period
Month
sold
July
R/T
July
O/T
Aug.
R/T
Aug.
O/T
Sept.
R/T
Sept.
O/T
July
Aug.
Sept.
1000
500
800
400
400
200
200
600
300
2200
D
e
m
a
n
d

P
r
o
d
u
c
t
i
o
n

C
a
p
a
c
i
t
y

July
R/T
MONTPELIER SKI COMPANY - Spreadsheet
31
MONTPELIER SKI COMPANY
Summary of the optimal solution
In July produce at capacity (1000 pairs in R/T, and 500 pairs in O/T).
Store 1500-200 = 1300 at the end of July.
In August, produce 800 pairs in R/T, and 300 in O/T. Store additional
800 + 300 - 600 = 500 pairs.
In September, produce 400 pairs (clearly in R/T). With 1000 pairs
retail demand, there will be
(1300 + 500) + 400 - 1000 = 1200 pairs available for shipment to Ski
Chalet.
32
Inventory + Production - Demand
4.3 The Capacitated Transshipment
Model
Sometimes shipments to destination nodes
are made through transshipment nodes.
Transshipment nodes may be
Independent intermediate nodes with no
supply or demand
Supply or destination points themselves.
Transportation on arcs may be bounded by
given bounds
33
The Capacitated Transshipment Model
The linear programming model of this problem
consists of:
Flow on arcs decision variables
Cost minimization objective function
Balance constraints on each node as follows:
Supply node net flow out does not exceed the supply
Intermediate node flow into the node is equal to the flow
out
Demand node net flow into the node is equal to the demand
Bound constraints on each arc. Flow cannot exceed the
capacity on the arc
34
DEPOT MAX
A General Network Problem

Depot Max has six stores located in the
Washington D.C. area.
35
DEPOT MAX
36
5
6
DATA:
-12
-13
The stores in Falls Church (FC) and Bethesda (BA)
are running low on the model 5A Arcadia workstation.
FC
BA
DEPOT MAX
37
1
2
5
6
DATA:
-12
-13
+10
+15
The stores in Alexandria (AA) and Chevy Chase (CC)
have an access of 25 units.
FC
BA
AA
CC
DEPOT MAX
38
1
2
5
6
DATA:
-12
-13
+10
+15
The stores in Fairfax and Georgetown are transshipment
nodes with no access supply or demand of their own.
FC
BA
AA
CC
FX
GN
Depot Max wishes to transport the available
workstations to FC and BA at minimum total cost.
4
3
DEPOT MAX
39
5
10
20
6
15
12
7
15
11
7
1
2
FC
BA
DATA:
-12
-13
+10
+15
The possible routes and the shipping unit costs are shown.
FC
BA
AA
CC
FX
GN
4
3
DEPOT MAX
Data
There is a maximum limit for quantities
shipped on various routes.
There are different unit transportation costs for
different routes.

40
DEPOT MAX Types of constraints
41
5
10
20
6
15
12
7
15
11
7
1
2 4
3 5
6
-12
-13
+10
+15
Supply nodes:
Net flow out of the node] = [Supply at the node]
X
12
+ X
13
+ X
15
- X
21
= 10 (Node 1)
X
21
+ X
24
- X
12
= 15 (Node 2)
Intermediate transshipment nodes:
[Total flow out of the node] = [Total flow into the node]
X
34
+X
35
= X13 (Node3)
X
46
= X
24
+ X
34
(Node 4)
7
Demand nodes:
[Net flow into the node] = [Demand for the node]
X
15
+ X
35
+X
65
- X
56
= 12 (Node 5)
X
46
+X
56
- X
65
= 13 (Node 6)
DEPOT MAX
The Complete mathematical model
Min 5X
12
+ 10X
13
+ 20X
15
+ 6X
21
+ 15X
24
+ 12X
34
+ 7X
35
+ 15X
46
+ 11X
56
+
7X
65

S.T. X
12
+ X
13
+ X
15
X
21

10
- X
12
+ X
21
+ X
24

17
X
13
+ X
34
+ X
35
= 0
X
24
X
34
+ X
46
= 0

X
15
X
35
+ X
56
- X
65

= -12
-X
46
X
56
+ X
65
= -13
X
12

3; X
15

6; X
21

7; X
24

10; X
34

8; X
35

8; X
46

17; X
56

7; X
65

5
All variables are non-negative
42
DEPOT MAX - spreadsheet
43
SOLUTION
TOTAL
COST=
645
NODE NAME NODE # SUPPLY DEMAND FROM TO COST CAPACITY FROM TO FLOW
SLACK 100 2
Alexandria 1 10 1 2 5 3 1 2
Chevy Chase 2 17 1 3 10 100000 1 3 9
Fairfax 3 1 5 20 6 1 5 6
Georgetown 4 2 1 6 7 2 1 5
Falls Church 5 12 2 4 15 10 2 4 10
Betheda 6 13 3 4 12 8 3 4 1
3 5 7 8 3 5 8
4 6 15 17 4 6 11
5 6 11 7 5 6 2
6 5 7 5 6 5
NODE INPUT ARC INPUT
4.4 The Assignment Problem
Problem definition
m workers are to be assigned to m jobs

A unit cost (or profit) C
ij
is associated with worker i
performing job j.

Minimize the total cost (or maximize the total profit) of
assigning workers to job so that each worker is
assigned a job, and each job is performed.
44
BALLSTON ELECTRONICS
Five different electrical devices produced on five
production lines, are needed to be inspected.

The travel time of finished goods to inspection areas
depends on both the production line and the
inspection area.

Management wishes to designate a separate
inspection area to inspect the products such that
the total travel time is minimized.
45
BALLSTON ELECTRONICS
Data: Travel time in minutes from assembly
lines to inspection areas.
46
Inspection Area
A B C D E
1 10 4 6 10 12
Assembly 2 11 7 7 9 14
Lines 3 13 8 12 14 15
4 14 16 13 17 17
5 19 17 11 20 19
BALLSTON ELECTRONICS-
NETWORK REPRESENTATION
47
48
1
2
3
4
5
Assembly Line Inspection Areas
A
B
C
D
E
S
1
=1
S
2
=1
S
3
=1
S
4
=1
S
5
=1
D
1
=1
D
2
=1
D
3
=1
D
4
=1
D
5
=1
BALLSTON ELECTRONICS
The Linear Programming Model
Min 10X
11
+ 4X
12
+ + 20X
54
+ 19X
55

S.T. X
11
+ X
12
+ X
13
+ X
14
+ X
15
= 1
X
21
+ X
22
+ + X
25
= 1

X
51
+ X
52
+ X
53
+ X
54
+ X
55
= 1
All the variables are non-negative
49
BALLSTON ELECTRONICS
Computer solutions

A complete enumeration is not an efficient
procedure even for moderately large
problems (with m=8,
m! > 40,000 is the number of assignments
to enumerate).
The Hungarian method provides an
efficient solution procedure.
50
BALLSTON ELECTRONICS
Transportation spreadsheet
51
=SUM(B7:F7)
Drag to cells H8:H12
=SUMPRODUCT(B7:F11,B17:F217)
=SUM(B7:B11)
Drag to cells C13:F13
BALLSTON ELECTRONICS
Transportation spreadsheet
52
Each Area is Served
Each Line is Assigned
BALLSTON ELECTRONICS
Assignment spreadsheet
53
The Assignments Model - Modifications
Unbalanced problem: The number of supply
nodes and demand nodes is unequal.
Prohibitive assignments: A supply node should
not be assigned to serve a certain demand node.
Multiple assignments: A certain supply node can
be assigned for more than one demand node .
A maximization assignment problem.
54
55
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