Transportion Problem

Real Life Application of Transportation Problem

Submitted to:
Prof. Hitesh Arora

Submitted by:
Abhay Sawhney (201055)
Executive Summary
Transportation Problem involves distribution of a certain commodity from several origins to a number of destinations. The aim in the whole process is to minimize the costs involved.
A necessary condition for the solving of the transportation problem is that the problem must be balanced, i.e the demand for the product at the destinations must equal the capacity of the suppliers.

Problem
The Texago Corporation is a large, fully integrated petroleum company
based in the United States. The company produces most of its oil in its
own oil fields and then imports the rest of what it needs from the
Middle East. An extensive distribution network is used to transport the
oil to the company’s refineries and then to transport the petroleum
products from the refineries to Texago’s distribution centers.

Table 1.1 The location of the facilities of Texago Corporation
Type of Facility | Location |
Oil Fields |     * Texas   * California   * Alaska |
Refineries |     * New Orleans, Louisana   * Charleston, South Carolina   * Seattle, Washington |
DistributionCentres |     * Pittsburg, California   * Atlanta, Georgia   * Kansas City, Missouri   * San Francisco, California |

Texago is a growing organization & so is its market share. The Board of Directors have therefore decided to add another Refinery to expand the output. The three prospective Refineries are Los Angeles, Galveston & St. Louis, Missouri. The addition of the new refinery will have a great impact on the operation of the entire distribution system, including decisions on how much crude oil to transport from each of its Oil Fields to each refinery (including the new one) and how much finished product to ship from each refinery to each distribution center. Therefore, the three key factors for management’s decision on the location of the new... [continues]

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