11.12 Key Terms
Key Terms
- Balanced Transportation Model: A transportation model where total supply equals total demand.
- Basic Feasible Solution: A starting solution obtained through methods like NWCM, LCM, or VAM, satisfying supply and demand but not necessarily optimal.
- Center of Gravity Method: A location strategy for finding the optimal position of a DC to minimize transportation costs.
- Cost Minimization: The primary objective in transportation models is to reduce total shipping cost while meeting all constraints.
- Decision Variable: Represents the quantity of goods to be transported from a specific supply point to a demand point.
- Degeneracy: Occurs when the number of positive allocations in a basic solution is less than (rows + columns − 1), potentially complicating optimization.
- Demand Point: A destination location (e.g., market or retail outlet) where goods are needed.
- Dummy Demand Point: An artificial demand point added to balance excess supply, with zero transportation cost.
- Dummy Supply Point: An artificial supply point added to balance excess demand, with zero transportation cost.
- Least Cost Method (LCM): An initial solution method that allocates units to the cell with the lowest transportation cost.
- Linear Programming (LP): A mathematical approach to optimize a linear objective function subject to constraints.
- Modified Distribution Method (MODI): Also called the UV method, this optimization technique calculates opportunity costs using dual variables.
- North-West Corner Method (NWCM): A basic method for finding an initial feasible solution that starts in the top-left cell of the tableau.
- occupied cell (i.e., a cell with a positive allocation)
- Opportunity Cost: The potential increase or decrease in total cost associated with reallocating supply.
- Optimal Solution: The allocation of goods that results in the lowest total transportation cost.
- Stepping Stone Method: An iterative technique for improving an initial solution by evaluating potential cost-saving re-routes using loops.
- Supply Point: A source location (e.g., factory or distribution center) from which goods are shipped.
- Transportation Cost: The cost per unit to transport goods from a supply point to a demand point.
- Transportation Model: A type of linear programming problem focused on minimizing the cost of shipping goods from multiple supply points to multiple demand points.
- Transportation Network: A configuration of multiple supply and demand points connected through shipping routes.
- Transportation Tableau: A matrix used to represent transportation problems, showing supply, demand, and costs.
- Unbalanced Transportation Model: A model where total supply does not equal total demand; requires adjustment through dummy points.
- Vogel’s Approximation Method (VAM): A heuristic that uses penalties (opportunity costs) to guide initial allocations and often yields near-optimal solutions.
