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Transporation Model

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The transportation model attempts to find the lowest cost means of shipping from several origins to several destinations. Assume that you are the manager of a multinational manufacturing organization. You have production plants in the United States and Germany. Product A is made in the United States and Product B is made in Germany. Product C is made in both these locations. You currently have distribution centers that ship products to customers in the United States as well as Germany. You want to expand your distribution network by adding a distribution center in Asia.

What are some of the factors you need to consider in determining a location? What are the possible pitfalls that should be avoided when deciding on a location? How would you decide the production plant to ship Product C from?

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Some factors to consider in determining a location include whether or not there is an adequate pool of potential workers for the facility, as well as the ability to access railways, roads, and or waterways, from the facility for the transportation of products. It is also very important to consider the political aspects of ...

Solution Summary

The factors to consider for transportation destinations are provided. How you would decide the production plant to ship Product C from is determined.

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Case Study on Transportation Model Using Minimization Method

The Martin Company is in the process of planning for new production facilities and developing a more efficient distribution system design. At present, it has one plant at St.Louis with a capacity of 30000 units. Because of increased demand, management is considering four potential new plant sites: Detroit, Denver, Toledo and Kansas City. The below table summarizes the projected plant capacities, the cost per unit of shipping from each plant to each destination, and the demand forecasts over a 1-year planning horizon.

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