The transshipment problem is an extension of the transportation problem in which the commodity can be transported to a particular destination through one or more intermediate or transshipment nodes.
Each of these nodes in turn supply to other destinations. The objective of the transshipment problem is to determine how many units should be shipped over each node so that all the demand requirements are met with the minimum transportation cost.
Considering a company with its manufacturing facilities situated at two places, Coimbatore and Pune. The units produced at each facility are shipped to either of the company’s warehouse hubs located at Chennai and Mumbai. The company has its own retail outlets in Delhi, Hyderabad, Bangalore and Thiruvananthapuram. The network diagram representing the nodes and transportation per unit cost is shown in Figure 4.11. The supply and demand requirements are also given.