A two-stage stochastic transportation problem with fixed handling costs and a priori selection of the distribution channels

Abstract

In this paper, a transportation problem comprising stochastic demands, fixed handling costs at the origins, and fixed costs associated with the links is addressed. It is assumed that uncertainty is adequately captured via a finite set of scenarios. The problem is formulated as a two-stage stochastic program. The goal is to minimize the total cost associated with the selected links plus the expected transportation and fixed handling costs. A prototype problem is initially presented which is then progressively extended to accommodate capacities at the origins and multiple commodities. The results of an extensive set of computational tests are reported and discussed.