5 Optimization Basics for Supply Chains Free Online FlashCards

What is optimization?

Optimization systematically selects decisions that best meet a defined goal while respecting limits.

What do decision variables represent?

Decision variables represent choices the model can make, such as how many units to ship from each warehouse to each store.

When is an optimization solution feasible?

A solution is feasible if it satisfies every constraint in the model.

What defines a linear program?

A linear program has a linear objective and linear constraints, with continuous decision variables.

What shipment plan achieves the example's minimum cost?

The minimum-cost plan ships 20 units from Supplier 1 to Center A, 20 from Supplier 1 to Center B, and 30 from Supplier 2 to Center B; its cost is $\$150$.

How should a model express demand that must be met exactly?

If demand must be met exactly, model it with an equality constraint, such as $x_{1A}+x_{2A}=20$ for Center A.

What unit check helps prevent a poorly formulated model?

Check that every decision variable has a clear unit and that each cost or capacity uses a compatible unit.

What proportional and additive assumptions does basic LP make?

Basic LP assumes proportional, additive relationships: doubling shipment on a route doubles its modeled cost, and total cost sums route costs.

Why might basic LP be unsuitable for whole-truckload decisions?

Basic LP allows fractional quantities unless integrality is specified, so it suits divisible flows but may not suit whole-truckload decisions.

When might an integer or mixed-integer model be needed?

Integer or mixed-integer models use integer or binary variables for choices such as opening a warehouse, selecting a carrier, or dispatching whole truckloads.

How should teams handle uncertainty in optimization inputs?

Validate the recommended plan, test how it changes under different assumptions, and account for service and risk—not just the numerical objective.

What does an objective function do?

An objective function measures the goal to minimize or maximize, such as total cost, delivery time, or profit.