Corn Co-product Logistics – an Application of Linear Programming

The purpose of this thesis is not to explore new ways to apply or to study the general field of linear programming. Rather the emphasis is on applying a particular type of linear programming to a specific problem. In this thesis the classic case of Linear Programing - the transportation problem – is used to optimize corn co-product logistics between six ethanol producing facilities. At the core, the problem of corn germ logistics lies in transporting products from areas of excess supply to areas with excess demand. The challenge of optimizing corn germ logistics lies in managing transportation between producing facilities that lack processing capacity and must ship corn germ to a facility with excess capacity by utilizing either rail or truck method of transportation. The purpose is the application of economic modeling and interpretation of the solution to aid in managing a real world transportation network. An empirical application of the transportation problem is presented along with sensitivity analysis interpretation that illustrates the usefulness of the model in business decision making. Results of the model reveal ways to optimize transportation network and save on transportation costs. The concluding section presents an outlook for future expansion of the model and emphasizes the real power of the model lies in the ability to quickly adjust the recommended shipping logistics if conditions change. Advisor: Jeffrey R. Stoke