A simple heuristic for solving small fixed-charge transportation problems

The fixed-charge transportation problem is an extension of the classical transportation problem in which a fixed cost is incurred, independent of the amount transported, along with a variable cost that is proportional to the amount shipped. The introduction of fixed costs in addition to variable costs results in the objective function being a step function. Therefore, fixed-charge problems are usually solved using sophisticated analytical or computer software. This paper deviates from that approach. It presents a simple heuristic algorithm for the solution of small fixed-charge problems. We present numerical examples to illustrate applications of the proposed method.