Transportation Problem
By :Deepika Bansal(14MBA5012)
Aim of Transportation Model
To find out optimum
transportation schedule keeping in
mind cost of transportation to be
minimized.
Transportation Problem
Boston
Cleveland (200 units
(200 units required)
Des Moines required)
(100 units
capacity)
Albuquerque
(300 units
required) Evansville
(300 units
capacity)
Fort Lauderdale
(300 units
Figure C.1 capacity)
What is a Transportation Problem?
• The transportation problem is a special type
of LPP where the objective is to minimize the cost
of distributing a product from a number of
sources or origins to a number of destinations.
• Because of its special structure the usual
simplex method is not suitable for solving
transportation problems. These problems
require special method of solution.
CONT……
• The problem of finding the minimum-cost
distribution of a given commodity
from a group of supply centers (sources) i=1,
…,m to a group of receiving centers
(destinations) j=1,…,n
• Each source has a certain supply (si)
• Each destination has a certain demand (dj)
• The cost of shipping from a source to a
destination is directly proportional to the number
of units shipped
IN SIMPLE LANG……
• “The transportation problem is to transport
various amounts of a single homogenous
commodity, which are initially stored at
various origins , to different destinations in
such a way that the total transportation cost
is a minimum”.
Assumptions of the Model
• Availability of the quantity.
• Transportation of items.
• Cost per unit.
• Independent cost.
• Objective.
Application of Transportation Problem
Minimize shipping costs
Determine low cost location
Find minimum cost production schedule
TERMINOLOGY USED IN
TRANSPORTATIONAL MODEL
Feasible solution: Non negative values of xij where i=1,
2……….m and j=1, 2,…n which satisfy the constraints of supply and
demand is called feasible solution.
Basic feasible solution: If the no of positive allocations are (m+n-1).
Optimal solution: A feasible solution is said to be optimal solution if
it minimizes the total transportation cost.
Balanced transportation problem: A transportation problem
in which the total supply from all sources is equal to the total
demand in all the destinations.
Unbalanced transportation problem: Problems which are
not
balanced are called unbalanced.
Matrix terminology: In the matrix, the squares are called cells and
form columns vertically and rows horizontally.
Degenerate basic feasible solution: If the no. of allocation in basic
feasible solutions is less than (m+n-1).
Two Types of Transportation Problem
• Balanced Transportation Problem
where the total supply equals total demand
• Unbalanced Transportation Problem
where the total supply is not equal to
the total demand
Steps to solve a Transportation Model
• Formulate the problem and setup in the
matrix form.
• Obtain the Initial Basic Feasible solution.
• Test the initial solution for optimality.
• Updating the solution.
GENERAL CONEPTS
ROW
COLUM
N
CONT…………
• To solve the transportation problem, it is
required that the sum of the supplies at the
sources equal the sum of the demands at the
destinations. If the total supply is
greater than the total demand, a dummy
destination is added with demand
equal to the excess supply, and shipping costs
from all sources are zero. Similarly, if total
supply is less than total demand, a dummy
source is added.
Phases of Solution of Transportation
Problem
• Phase I- obtains the initial basic feasible
solution
• Phase II-obtains the optimal basic
solution
Initial Basic Feasible
Solution
North West Corner Rule (NWCR)
Least Cost Method
Vogle Approximation Method (VAM)
North- West Corner Method (NWCM)
• The simplest of the procedures, used to
generate an initial feasible solution is, NWCM.
It is so called because we begin with the North
West or upper left corner cell of our
transportation table.
North-West Corner Method
Step1: Select the upper left (north-west) cell of the
transportation matrix and allocate the maximum
possible value to X11 which is equal to min(a1,b1).
Step2:
• If allocation made is equal to the supply available at
the first source (a1 in first row), then move vertically
down to the cell (2,1).
• If allocation made is equal to demand of the first
destination (b1 in first column), then move horizontally
to the cell (1,2).
• If a1=b1 , then allocate X11= a1 or b1 and move to cell
(2,2).
Step3: Continue the process until an allocation is made
in the south-east corner cell of the transportation table.
Example: Solve the Transportation Table to find Initial Basic
Feasible Solution using North-West Corner Method.
Total Cost =19*5+30*2+30*6+40*3+70*4+20*14
= Rs. 1015
D1 D2 D3 D4 Supp
ly
S1 19 30 50 10 7
5 2
S2 70 30 40 60 9
6 3
S3 40 8 70 20 18
4 1
4
Dema 5 8 7 14 34
nd
Least-Cost Method
• Least-Cost Method consist in allocating as
much as possible in the lowest cost cell and
then further allocation is done in th cell with
second lowest cost cell and so on.
Least-Cost Method
Step1: Select the cell having lowest unit cost in the entire
table and allocate the minimum of supply or demand
values in that cell.
Step2: Then eliminate the row or column in which supply
or demand is exhausted. If both the supply and demand
values are same, either of the row or column can be
eliminated.
In case, the smallest unit cost is not unique, then select the
cell where maximum allocation can be made.
Step3: Repeat the process with next lowest unit cost and
continue until the entire available supply at various sources
and demand at various destinations is satisfied.
D1 D2 D3 D4 Supply
S1 19 30 50 10 7
S2 70 30 40 60 9
S3 40 8 70 20 18
8
Demand 5 8 7 14 34
D1 D2 D3 D4 Supply
S1 19 30 50 10 7
S2 70 30 40 60 9
S3 40 8 70 20 18
8
Demand 5 8 7 14 34
D1 D3 D4 Supply D1 D3 D4 Suppl
S1 19 50 10 7 y
7 S2 70 40 60 9
S2 70 40 60 9
S3 40 70 20 10
S3 40 70 20 10
7
Deman 5 7 14 34 Dema 5 7 7 34
d nd
D1 D3 Suppl D1 Supply
y S2 70 2
S2 70 40 9
2
7
S3 40 3
S3 40 70 3
3
Demand 5 34
Dema 5 7 34
nd
• The total transportation cost obtained by
this method
= 8*8+10*7+20*7+40*7+70*2+40*3
= Rs.814
Here, we can see that the Least Cost
Method involves a lower cost than the
North-West Corner Method.
Vogel’s Approximation Method (VAM)
• In this method, each allocation is made on the
basis of the opportunity (or penalty or extra)
cost that would have been incurred if
allocations in certain cells with minimum unit
transportation cost were missed. In this
method allocations are made so thet the
penalty cost is minimized.
Vogel’s Approximation Method (VAM)
Step1: Calculate penalty for each row and column by taking the
difference between the two smallest unit costs. This penalty or
extra cost has to be paid if one fails to allocate the minimum unit
transportation cost.
Step2: Select the row or column with the highest penalty and select
the minimum unit cost of that row or column. Then, allocate the
minimum of supply or demand values in that cell. If there is a tie,
then select the cell where maximum allocation could be made.
Step3: Adjust the supply and demand and eliminate the satisfied row
or column. If a row and column are satisfied simultaneously, only of
them is eliminated and the other one is assigned a zero value.Any
row or column having zero supply or demand, can not be used in
calculating future penalties.
Step4: Repeat the process until all the supply sources and
demand destinations are satisfied.
D1 D2 D3 D4 Supply Row Diff.
S1 19 30 50 10 7 9
S2 70 30 40 60 9 10
S3 40 8 70 20 18 12
8
Demand 5 8 7 14 34
Col.Diff. 21 22 10 10
D1 D3 D4 Supply Row Diff. D3 D4 Supply Row Diff.
S1 19 50 10 7 9 S1 50 10 2 40
5
S2 70 40 60 9 20 S2 40 60 9 20
S3 40 70 20 10 20 S3 70 20 10 50
10
Demand 5 7 14 34 Demand 7 14 34
Col.Diff. 21 10 10 Col.Diff. 10 10
D3 D4 Supply Row Diff.
D3 D4 Suppl Row Diff.
S1 50 10 2 40 y
2 S2 40 60 9 20
S2 40 60 9 20 7 2
Demand 7 2 34
Demand 7 4 34
Col.Diff.
Col.Diff. 10 50
The total transportation cost obtained by this method
= 8*8+19*5+20*10+10*2+40*7+60*2
= Rs.779
Here, we can see that Vogel’s Approximation Method
involves the lowest cost than North-West Corner
Method and Least Cost Method and hence is the most
preferred method of finding initial basic feasible solution.
Optimum Basic Solution
Stepping Stone Method
Modified Distribution Method a.k.a. MODI Method
Optimum Basic Solution:
Stepping-Stone Method
1. Select any unused square to evaluate
2. Beginning at this square, trace a closed path
back to the original square via squares that
are currently being used
3. Beginning with a plus (+) sign at the unused
corner, place alternate minus and plus signs
at each corner of the path just traced
Stepping-Stone Method
4. Calculate an improvement index by first
adding the unit-cost figures found in each
square containing a plus sign and subtracting
the unit costs in each square containing a
minus sign
5. Repeat steps 1 though 4 until you have
calculated an improvement index for all
unused squares. If all indices are ≥ 0, you have
reached an optimal solution.
Problem Illustration
FROM TO A. B. C. FACTORY
ALBUQUERQUE BOSTON CLEVELAND CAPACITY
D. DES MOINES 5 4 3 100
E. EVANSVILLE 8 4 3 300
F. FORT 9 7 5 300
LAUDERDALE
WAREHOUSE 300 200 200 700
DEMAND
Initial Feasible Solution using
Northwest Corner Rule
FROM TO A. B. C. FACTORY
ALBUQUERQUE BOSTON CLEVELAND CAPACITY
D. DES MOINES 5 4 3 100
100
E. EVANSVILLE 8 4 3 300
200 100
F. FORT 9 7 5 300
LAUDERDALE 100 200
WAREHOUSE 300 200 200 700
DEMAND
IFS= DA + EA +EB + FB + FC = 100(5) + 200(8) + 100(4) + 100(7) + 200(5)
= 500 + 1600 + 400 + 700 + 1000 = 4200
Optimizing Solution using
Stepping-Stone Method
To (A) (B) (C) Factory
Albuquerque Boston Cleveland capacity
From
$5 $4 $3 Des Moines-
(D) Des Moines 100 100
- + Boston index
200 $8 $4 $3
(E) Evansville 300 = $4 - $5 + $8 -
+
$9 - $7 $5 $4
(F) Fort Lauderdale 100
100 200 300
Warehouse = +$3
requirement 300 200 200 700
99 $5 1 $4
100
- +
+ -
201 $8 99 $4
Figure C.5 200 100
Stepping-Stone Method
To (A) (B) (C) Factory
From Albuquerque Boston Cleveland capacity
$5 $4 Start $3
(D) Des Moines 100 100
- +
$8 $4 $3
(E) Evansville 200 100 300
+ -
$9 $7 $5
(F) Fort Lauderdale 100 300
+ -
200
Warehouse
requirement 300 200 200 700
Des Moines-Cleveland index
= $3 - $5 + $8 - $4 + $7 - $5 = +$4
Figure C.6
Stepping-Stone Method
To (A) (B) (C) Factory
From Albuquerque Boston Cleveland capacity
$5 $4 $3
(D) Des Moines 100 100
$8 $4 $3
(E) Evansville 200 100 300
$9 $5
(F) Fort Lauderdale 100 200 300
$7
Warehouse = $3 - $4 + $7 - $5 = +$1
requirement 300 200index
Evansville-Cleveland 200 700
(Closed path = EC - EB + FB - FC)
Fort Lauderdale-Albuquerque index
= $9 - $7 + $4 - $8 = -$1
(Closed path = FA - FB + EB - EA)
Stepping-Stone Method
1. If an improvement is possible, choose the
route (unused square) with the largest
negative improvement index
2. On the closed path for that route, select the
smallest number found in the squares
containing minus signs
3. Add this number to all squares on the closed
path with plus signs and subtract it from all
squares with a minus sign
Stepping-Stone Method
To (A) (B) (C) Factory
From Albuquerque Boston Cleveland capacity
$5 $4 $3
(D) Des Moines 100 100
$8 $4 $3
(E) Evansville 200 100 300
- +
$9 $7 $5
(F) Fort Lauderdale 100 200 300
+ -
Warehouse
requirement 300 200 200 700
1. Add 100 units on route
2.
FA Subtract 100 from routes FB
3. Add 100 to route EB
4. Subtract 100 from route EA
Figure C.7
Stepping-Stone Method
To (A) (B) (C) Factory
From Albuquerque Boston Cleveland capacity
$5 $4 $3
(D) Des Moines 100 100
$8 $4 $3
(E) Evansville 100 200 300
$9 $7 $5
(F) Fort Lauderdale 100 200 300
Warehouse
requirement 300 200
200 700
Total
Cost = $5(100) + $8(100) + $4(200) + $9(100) + $5(200)
= $4,000
Figure C.8
Special Issues in Modeling
Demand not equal to supply
Called an unbalanced problem
Common situation in the real world
Resolved by introducing dummy sources
or dummy destinations as necessary with
cost coefficients of zero
Total Special Issues
= 250($5) + 50($8) + 200($4)in Modeling
+ 50($3) + 150($5) +
Cost 150(0)
= $3,350
To (A) (B) (C) Factory
Dummy capacity
From Albuquerque Boston Cleveland
$5 $4 $3 0
(D) Des Moines 250 250
$8 $4 $3 0
(E) Evansville 50 200 50 300
$9 $7 $5 0
(F) Fort Lauderdale 150 150 300
Warehouse
requirement 300 200 200 150 850
New
Figure C.9 Des Moines
capacity
Special Issues in Modeling
Degeneracy
To use the stepping-stone methodology,
the number of occupied squares in any
solution must be equal to the number of
rows in the table plus the number of
columns minus 1
If a solution does not satisfy this rule it is
called degenerate
Special Issues in Modeling
To Customer Customer Customer Warehouse
From 1 2 3 supply
$8 $2 $6
Warehouse 1 100 100
$10 $9 $9
Warehouse 2 0 100 20 120
$7 $10 $7
Warehouse 3 80 80
Customer
demand 100 100 300
100
Initial solution is degenerate
Figure C.10 Place a zero quantity in an unused square
and proceed computing improvement indices
• It is sed to save the time over stepp i g sto e
method
• It provides a new means of finding the
unused oute with t e argest negative
'"mprovement ndex .
• Once largest index identif ied :we are required
to trace only one p ath j ust as w ith th e stepp · g
stone approac t ·s helps to determ 1ine the
maxim u m n um ber of un it that can be sh ipped
by t e best unused route .
STEPS
1. Construct a transportation table with the given
cost of transportation and rim requirement.
2.Determine IBFS.
3.For current basic feasible solution check
degeneracy
and non-degeneracy.
rim requirement=stone square(non-degeneracy)
rim requirement != stone square(degeneracy)
4.Find occupied matrix.
5.Find unoccupied matrix.
Steps (contd…)
6.Find opportunity cost of unoccupied cells using
formula:
opportunity cost =actual cost-implied cost
dij= cij - (ri+kj)
7.Unoccupied cell evaluation:
(a) if dij>0 then cost of transportation
unchanged.
(b) if dij=0 then cost of transportation
unchanged.
(c) if dij<0 then improved solution can be
obtain and
go to next step.
STEPS(contd…)
8. Select an unoccupied cell with largest –ve
opportunity cost among all unoccupied cell.
9.Construct closed path for the occupied cells
determined in step 8.
10.Assign as many as units as possible to
the unoccupied cell satisfying rim
conditions.
11.Go to step 4 and repeat procedure until
All dij>=0 i.e reached to the optimal solution.
SPECIAL CASES
• Balanced problem
• Unbalanced problem
• Non -degeneracy
• Degeneracy :occurs in two cases
1. Degeneracy occurs in initial basic solution.
2. Degeneracy occurs in during the test of
optimality.
• Profit maximization
PROBLEM1:Shipping costs are Rs. 10 per kilometer.. What shipping schedule should be used.
if
the matrix given below the kilometers from source to destination.
availability
.
a destination c
b
x 50 30 220 1
y 90 45 170 3
z 50 200 50 4
Requirement 3 3 2 8
IBFS BY USING METHOD
AVAM B C P1 P2 P3 P4
50 1 2
30 30 220 220
X 20 20 20 20
90 45 33 170
Y 45 45 45 _
50 200 50
Z 22 22 150 150 _
_
P1 40 15 120
P2 40 15 _
P3 40 15 _
IBFS BY USING METHOD
AVAM B C P1 P2 P3 P4
50 1 2
30 30 220 220
X 20 20 20 20
90 45 33 170
Y 45 45 45 _
50 200 50
Z 22 22 150 150 _
_
P1 40 15 120
P2 40 15 _
P3 40 15 _
IBFS BY USING METHOD
AVAM B C P1 P2 P3 P4
50 1 2
30 30 220 220
X 20 20 20 20
90 45 33 170
Y 45 45 45 _
50 200 50
Z 22 22 150 150 _
_
P1 40 15 120
P2 40 15 _
P3 40 15 _
STONE SEQUARE =4 DEGENERACY
RIM REQUIREMENT =M+N-1=3+3-1=5
30 30 220
1 E
90 45 3 170
50 2 2 0 50 2
0
NOW STONE SEQUARE NON –DEGENERACY
=5 RIM REQUIREMENT =5
OCCUPIED MATRIX UNOCCUPIED MATRIX
50 0
170
3
0 50
45 25 105
15 65 65
50 50 170
30
0
50 30 50
OPTIMUL SOLUTION
XA 50*1=50
XB 30*E=_
YB 45*3=135
ZA 50*2=100
ZC 50*2=100
385 *10=3850
PROBLEM2:DETERMINE THE OPTIMUM SOLUTION FOR THE COMPANY OF
TRASPOTATION PROBLEM(USING NWCM AND MODI METHOD)
WAREHOUSE
CAPACIT
W1 W2 W3 Y
8 8 5
F1
1 120
FACTORY
15 10 17
F2
80
3 9 0
F3 1 80
REQUIREMENT 150 80 50
IBFS WITH NWCM
W1 W2 W3
8 8 15
F1
120
120
15 10 17
F2 30 50 80
3 9 10
F3 30 50
80
150 80 50
OCCUPIED MATRIX UNOCCUPIED MATRIX
8 5 11
-7 3 4 -7
15 10 6
0 11 0
-11
9 10
14 -1
-1
15 10 11 15 10 11
LOOP CONSTRUCT
8 120 8 E 15
8 8 15
120
15 10 17
15 10 + 17
_
30 50 80
3 3 1 9 10
9 10
0
30 50 30 50
+ _
DEGENERACY OCCUAR
STONE SEQUARE=RIM REQUIREMENT
OCCUPIED MATRIX UNOCCUPIED MATRIX
8 8 0
15
5 5
10 5 0
10 17
7 7
3 10 6
3
0 0
3 3 10 3 3 10
OPTIMUM SOLUTION
F1 W1 8*120
=960 F1 W2 8*E
= _ F2 W2
10*80 =800 F3
W1 3*30= 90
F3 W3 10*50
=500
2,350 RS
