Introduction to

Management Science
with Spreadsheets
Stevenson and Ozgur
First Edition

Part 2 Deterministic Decision Models

Chapter 8

Network Optimization
Models

McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
 Learning Objectives

After completing this chapter, you should be able to:

1. State why network models are important tools for

problem solving.
2. Describe the kinds of problems that can be solved
using the shortest-route algorithm and use the
algorithm to solve typical shortest-route problems.
3. Formulate the shortest-route problem as a linear
programming problem.
4. Solve the shortest-route problem using Excel.

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 Learning Objectives (cont’d)

After completing this chapter, you should be able to:

5. Describe the kinds of problems that can be solved

using the minimal-spanning-tree algorithm and use
the algorithm to solve typical minimal-spanning-tree
problems.
6. Describe the kinds of problems that can be solved
using the maximal-flow algorithm and use the
algorithm to solve typical maximal-flow problems.
7. Formulate the maximal-flow problem as a linear
programming problem.
8. Solve the maximal-flow problem using Excel.

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 Networks
• Network
–A set of nodes and connecting arcs or branches. Can
be useful in representing various systems, such as
distribution systems, production systems, and
transportation systems.
• Network models are an important approach for
problem solving because:
–They can be used to model a wide range of problems.
–They are relatively simple to work with
–They provide a visual portrayal of a problem.

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 Frequently Used Algorithms
• Shortest-Route Algorithm
–Used for determining the shortest time, distance, or
cost from an origin to a destination through a network.
• Minimum Spanning Tree Algorithm
–Used in determining the minimum distance (cost, time)
needed to connect a set of locations into a single
system.
• Maximal Flow Algorithm
–Used for determining the greatest amount of flow that
can be transmitted through a system in which various
branches, or connections, have specified flow capacity
limitations.

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 Figure 8–1 A Simple Network Diagram

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 Example 8-1

Labeling Procedure
A label is developed for each node. The labels
consist of two numbers separated by a comma:
The first number refers to the distance from Node
1 to the labeled node along a certain path, while
the second number refers to the node that
immediately precedes this node along that path.

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 Example 8-1 (cont’d)

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 Example 8-1 (cont’d)

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 Figure 8–2 Network for Tri-State Shipping Company Shortest-Route
Problem

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 Exhibit 8-1 Input Worksheet for the Tri-State Shipping Company Shortest-
Route Problem (Beginning Node 1, Ending Node 7)

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 Exhibit 8-2 Parameter Specification Screen for the Tri-State Shipping
Company Shortest-Route Problem (Beginning Node 1, Ending
Node 7)

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 Exhibit 8–3 Output Worksheet for the Tri-State Shipping Company
Shortest-Route Problem (Beginning Node 1, Ending Node 7)X

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 Exhibit 8–4 Output Worksheet for the Tri-State Shipping Company
Shortest-Route Problem (Beginning Node 1, Ending Node 6)

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 Exhibit 8–5 Parameter Specification Screen for the Tri-State Shipping
Company Shortest-Route Problem (Beginning Node 1, Ending
Node 6)

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 Figure 8–3 Network for Oil Pipeline Problem

Note: Arc lengths are not precisely proportional to the distances shown on the arcs.

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 Example 8-3

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 Example 8-3 (cont’d)

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 Example 8-3 (cont’d)

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 Figure 8–4 A Flow Network

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 Figure 8–5 Updated Flow Network

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 Figure 8–6 Second Revision of the Network

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 Figure 8–7 Third Revision of Flow Network

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 Figure 8–8 Final Solution for Flow Network Example

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 Figure 8–9 Flow Network for Demonstration of Reverse Flow

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 Figure 8–10 Flow Network for Demonstration of Reverse Flow

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 Figure 8–11 Revised Flow Network

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 Table 8–1 Branches of the Network and Flow Capacities of the Branches
for the Turkmen Oil Ltd. Maximal Flow Problem

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 Figure 8–12 Network Diagram for the Maximal Flow Problem for Turkmen
Oil Ltd.

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 Exhibit 8–6 Input Worksheet for the Turkmen Oil Ltd. Maximal Flow Problem

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 Exhibit 8–7 Parameter Specification Screen for the Turkmen
Oil Ltd. Maximal Flow Problem

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 Exhibit 8–8 Output Worksheet for the Turkmen Oil Ltd. Maximal Flow
Problem

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 Table 8–2 Summary of the Optimal Flow Quantities for Turkmen Old Ltd.

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 Exhibit 8–9 Worksheet for Solved Problem 1, the Shortest-Route Problem
(Beginning Node 1, Ending Node 5)

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 Exhibit 8–10 Parameter Specification Screen for Solved Problem 1, the Shortest-
Route Problem (Beginning Node 1, Ending Node 5)

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 Exhibit 8–11 Worksheet for Solved Problem 3, the Maximal Flow Problem

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 Exhibit 8–12 Parameter Specification Screen for Solved Problem 3, the
Maximal Flow Problem

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