Transportation problem is a particular class of linear programming, which is associated with day-to-day activities in our real life and mainly deals with logistics. It helps in solving problems on distribution and transportation of resources from one place to another. The goods are transported from a set of sources (e.g., factory) to a set of destinations (e.g., warehouse) to meet the specific requirements. In other words, transportation problems deal with the transportation of a single product manufactured at different plants (supply origins) to a number of different warehouses (demand destinations). The objective is to satisfy the demand at destinations from the supply constraints at the minimum transportation cost possible. To achieve this objective, we must know the quantity of available supplies and the quantities demanded. In addition, we must also know the location, to find the cost of transporting one unit of commodity from the place of origin to the destination. The model is useful for making strategic decisions involved in selecting optimum transportation routes so as to allocate the production of various plants to several warehouses or distribution centers.
Suppose there are more than one centers, called ‘origins’ , from where the goods need to be transported to more than one places called ‘destinations’ and the costs of transporting or shipping from each of the origin to each of the destination being different and known. The problem is to transport the goods from various origins to different destinations in such a manner that the cost of shipping or transportation is minimum.
Thus, the transportation problem is to transport various amounts of a single homogenous commodity, which are initially stored at various origins, to different destinations in such a way that the transportation cost is minimum.
The objective of the transportation model is to determine the amount to be shipped from each source to each destination so as to maintain the supply and demand requirements at the lowest transportation cost.
For example: A tyre manufacturing concern has m factories located in m different cities. The total supply potential of manufactured product is absorbed by n retail dealers in n different cities of a country. Then, transportation problem is to determine the transportation schedule that minimizes the total cost of transporting tyres from various factory locations to various retail dealers.
The transportation model can also be used in making location decisions. The model helps in locating a new facility, a manufacturing plant or an office when two or more number of locations is under consideration. The total transportation cost, distribution cost or shipping cost and production costs are to be minimized by applying the model.