Widgetco manufactures widgets at two factories, one in Memphis and one in Denver. The Memphis factory can produce as many as 150 widgets per day, and the Denver factory can produce as many as 200 widgets per day. Widgets are shipped by air to customers in Los Angeles and Boston. The customers in each city require 130 widgets per day. Because of the deregulation of airfares, Widgetco believes that it may be cheaper to first fly some widgets to New York or Chicago and then fly them to their final destinations. The costs of flying a widget are shown in Table 58. Widgetco wants to minimize the total cost of shipping the required widgets to its customers.

In this problem, Memphis and Denver are supply points, with supplies of 150 and 200 widgets per day, respectively. New York and Chicago are transshipment points. Los Angeles and Boston are demand points, each with a demand of 130 widgets per day. A graphical representation of possible shipments is given in Figure 9.
We now describe how the optimal solution to a transshipment problem can be found by solving a transportation problem. Given a transshipment problem, we create a balanced transportation problem by the following procedure (assume that total supply exceeds total demand):

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TABLE 58 Shipping Costs for Transshipments To ($) From Memphis Denver N.Y. Chicago LA. Boston Memphis 0 8 Denver 15 N.Y. Chicago L.A. Boston 22LHO | 3260 596|| - 25 26 16 14 0 23760 28 25 17 16