A three-stage mathematical model for handling and transporting stochastically generated materials

The transportation costs of materials of low value per unit volume can become a major portion of the total distribution cost. A three-stage general stochastic dynamic mixed-integer linear program (SDMILP) of a transportation model containing intermediate processing stations between suppliers and demand centers (end users) has been developed. In at least one case, use of the SDMILP has been found to reduce total transportation costs by 39% over standard models. The model selects a set of intermediate processing stations and a location for the primary demand center from among several possible predetermined sites. It includes costs of environmental constraints and the stochastic (e.g., seasonal) nature of the supply.