Article 15: The Application of Linear Programming by the General Elecric Company to

Efficiently Allocate Routes to Trucking Companies

Literature Review

GEAL or known as the General Electric Company consist many electrical appliances and
lighting. Its cost for transportation annually can reach up to 9 millions dollars where it is a huge
amount of cost incur on the company. GEAL also made comparison with a few logistic company
to compare their pricing for shipment. Hence ,it is important to save up cost by optimizing it in a
more effective way. For this case, an optimal allocation for transportation vehicles are essential
in minimizing the cost. Thus trucking of consumer product between the manufacturing
plants,warehouses and customer’s home is the main concern for logistics faced by the company.
In this case, many methods are used to find the optimal solution.

Optimization model

Model 1: Model 2:

Min Z1 = ∑𝑹𝒊=𝟏 ∑𝒋∈𝑺𝒊 𝑪𝒊𝒋 𝑿𝒊𝒋 Min Z2 = ∑𝑹𝒊=𝟏 ∑𝒋∈𝑺𝒊 𝑪𝒊𝒋 𝑿𝒊𝒋

Subject to Subject to

∑𝒋∈𝑺𝒊 𝑿𝒊𝒋 = 𝑵𝒊 , i=1,2…R ∑𝒋∈𝑺𝒊 𝑿𝒊𝒋 = 𝑵𝒊 , i=1,2…R

1 ≤ 𝑿𝒊𝒋 ≤ 𝑵𝒊 – (CARD (Ti)+1, i=1,2…R, 𝒋 ∈ 𝑺𝒊 𝑿𝒊𝒋 ≥ 0 , i=1,2…R, 𝒋 ∈ 𝑺𝒊

𝑿𝒊𝒋 ≥ 0 , i=1,2…R, 𝒋 ∈ 𝑺𝒊

Model 3: Model 3a:

Min Z3 = ∑𝑹𝒊=𝟏 ∑𝑴
𝒋=𝟏 𝑪𝒋 𝒅𝒊 𝑿𝒊𝒋 Min Z3a = ∑𝑹𝒊=𝟏 ∑𝑴
𝒋=𝟏 𝑪𝒋 𝒅𝒊 𝑿𝒊𝒋

∑𝑴
𝒋=𝟏 𝑿𝒊𝒋 = 𝑵𝒊 , i=1,2…R ∑𝑴
𝒋=𝟏 𝑿𝒊𝒋 = 𝑵𝒊 , i=1,2…R
∑𝑹𝒊=𝟏 𝑿𝒊𝒋 ≤ 𝑲𝒋 , j=1,2…M ∑𝑹𝒊=𝟏 𝑿𝒊𝒋 ≤ 𝑲𝒋 , j=1,2…M

𝑿𝒊𝒋 ≥ 0, i=1,2…R, j=1,2…M 𝑿𝒊𝒋 ≥ 0 , i=1,2…R, 𝒋 ∈ 𝑺𝒊

𝑿𝒊𝒋 = 0 , i=1,2…R, 𝒋 ∉ 𝑺𝒊

𝑿𝒊𝒋 ≥ 0, i=1,2…R, j=1,2…M

Model 4: Model 4a:

Min Z4 = ∑𝑹𝒊=𝟏 ∑𝑴
𝒋=𝟏 𝑪𝒋 𝒅𝒊 𝑿𝒊𝒋 Min Z4a = ∑𝑹𝒊=𝟏 ∑𝑴
𝒋=𝟏 𝑪𝒋 𝒅𝒊 𝑿𝒊𝒋

∑𝑴
𝒋=𝟏 𝑿𝒊𝒋 = 𝑵𝒊 , i=1,2…R ∑𝑴
𝒋=𝟏 𝑿𝒊𝒋 = 𝑵𝒊 , i=1,2…R

𝑿𝒊𝒋 ≥ 0, i=1,2…R, j=1,2…M 𝑿𝒊𝒋 ≥ 0 , i=1,2…R, 𝒋 ∈ 𝑺𝒊

𝑿𝒊𝒋 = 0 , i=1,2…R, 𝒋 ∉ 𝑺𝒊

𝑿𝒊𝒋 ≥ 0, i=1,2…R, j=1,2…M

Model 5: Model 5a:

Min Z5 = ∑𝑹𝒊=𝟏 ∑𝑴
𝒋=𝟏 𝑪𝒊𝒋 𝑿𝒊𝒋 Min Z5a = ∑𝑹𝒊=𝟏 ∑𝑴
𝒋=𝟏 𝑪𝒊𝒋 𝑿𝒊𝒋

∑𝑴
𝒋=𝟏 𝑿𝒊𝒋 = 𝑵𝒊 , i=1,2…R ∑𝑴
𝒋=𝟏 𝑿𝒊𝒋 = 𝑵𝒊 , i=1,2…R

𝑿𝒊𝒋 ≥ 0 , i=1,2…R, 𝒋 ∈ 𝑺𝒊 ∑𝑹𝒊=𝟏 𝑿𝒊𝒋 ≤ 𝑲𝒋 , j=1,2…M

𝑿𝒊𝒋 = 0 , i=1,2…R, 𝒋 ∉ 𝑺𝒊 𝑿𝒊𝒋 ≥ 0 , i=1,2…R, 𝒋 ∈ 𝑺𝒊

𝑿𝒊𝒋 ≥ 0, i=1,2…R, j=1,2…M 𝑿𝒊𝒋 = 0 , i=1,2…R, 𝒋 ∉ 𝑺𝒊

𝑿𝒊𝒋 ≥ 0, i=1,2…R, j=1,2…M

Results and analysis

By calculations, it was found that the total current cost is $9,167,791.It has shown that all
linear programming model used had succeed in minimizing the cost for transportation. From the
result, it has shown that the Model 4 reduces around 40.79% of the cost which is $3,739,095.

Conclusion

The most effective model is Model 4 which reduces 40.79% of the transportation cost
which is around $3,739,095 followed by Model 3, and then followed by Model 3a and Model 4a.
Model 5a had saved 15.59% of the transportation cost followed by Model 5, Model 2 and Model
1. Model 1 with the least changes 4.3% had succesfully saved $ 394,437. Hence, it has shown that
with different sugguestion of model is able to produce different effiency of goods

Reference

1) Yang.X, Heragu S.S, Evans, G.W.,Shirkness and Coats,A. (2013) ‘The application
of linear programming by the General Electric Company to efficiently allocate
routes to trucking companies’,European J.Industrial Engineering ,Vol.7 , No.
1 ,pp38-54.