Stochastic transportation problem

This paper deals with the stochastic transportation problem with rectangular demands. The cost function and its mean, variance and also the bounds for the variance are obtained. Variance is found to be considerably large for the policy which minimizes the expected cost. A linear combination of the expected and standard deviation of the cost function is considered as an objective function to balance out the first two moments and to have meaningful interpretation. A heuristic algorithm is developed for minimizing this newly defined objective function. Examples are given to illustrate the procedure.