An Algorithm to Decide Shipment Plan of Homogeneous Goods with Stochastic Demand and Availability

Abstract

The decision of transporting homogeneous goods is not only based on unit transportation cost but also depends on many factors such as order size, total shipment-cost, profit, distance, man-power, etc. For each shipment link, these factors are treated as inputs and outputs variables. Such transportation problem with multiple inputs and outputs per shipment link is considered as Extended Transportation Problem. In the transportation problem, the distribution depends on the demand and the availability of homogeneous goods. Demand and Availability of goods may not be known to decision maker. Under this situation, the problem is known as Extended Stochastic Transportation Problem (ESTP). In this paper, we assume that the demand and availability are random variables with some known probability distribution. We proposed a method based on data envelopment analysis to decide optimal shipment plan for ESTP. The hypothetical illustration is considered to check the applicability of the proposed approach.