TRANSPORTATION MODEL

MAHESH CAISUCAR
 TRANSPORTATION MODEL
Problem Definition and Data
P1 20
A dairy farm has three plants located throughout the P2 28
state. Daily milk production at each plant is as follows: P3 17

W1 21
Each day the firm must fulfill the needs of its three W2 25
warehouses. Milk requirement at each warehouse is W3 19
as follows:
W1 W2 W3
Cost of shipping one unit of milk from 7 6 9
P1
each plant to each warehouse is given in 5 7 3
the following table in rupees: P2

4 5 8
P3

Find the shipment from each milk plant to each warehouse so that the total cost of
shipment is minimum.
 TRANSPORTATION MODEL
Problem Definition and Data
Minimize Z = 7 X11+ 6 X12+ 9 X13+ 5 X21+ 7 X22+ 3 X23+ 4 X31+ 5 X32+ 8 X33

Subject to:
W1 W2 W3 SUPPLY X11+ X12+ X13 = 20
X21+ X22+ X23 = 28
7 6 9
P1 20
X31+ X32+ X33 = 17
X11 X12 X13
5 7 3 X11 + X21 +X31 = 21
P2 28 X12 + X22 + X32 = 25
X21 X22 X23
X13 + X23 + X33 =19
4 5 8
P3 17
X31 X32 X33
DEMAND 21 25 19 65 And non negativity
constraint
 TRANSPORTATION MODEL
DESTINATIONS

W1 W2 …….. Wn SUPPLY Si : number of units being supplied by

C11 C12 C 1n source i
P1 S1
X11 X12 …….. X1n
Dj : number of units being received by
C21 C22 C 2n destination j
P2 S2
SOURCES

X21 X22 …….. X2n

Cij : cost per unit distributed from source i
…… …….. ……… …….. ……… …….. to destination j

C31 C32 Cmn Xij : amount distributed from source i to

Pm ……… Sm destination j
Xm1 Xm2 Xmn
DEMAND D1 D2 ……… Dn
 TRANSPORTATION MODEL
DESTINATIONS
Min Z =
W1 W2 …….. Wn SUPPLY
C11 C12 C 1n
P1 S1
X11 X12 …….. X1n
C21 C22 C 2n
Subject to:
P2 S2
SOURCES

X21 X22 …….. X2n

…… …….. ……… …….. ……… ……..

C31 C32 Cmn

Pm ……… Sm
Xm1 Xm2 Xmn
DEMAND D1 D2 ……… Dn
and Xij ≥0 ,for all i and j
TRANSPORTATION MODEL
 Simplex algorithm can be used to solve the above problem

 However as a large number of variables are involved, computations

required will be much more.

 The following points may be noted in a transportation model:

 All supply and demand constraints are of equality type
 They are expressed in terms of only one kind of unit
 Each variable occurs only once in the supply constraints and only
once in the demand constraints
 Each variable in the constraints has unit coefficient only.
TRANSPORTATION MODEL
 Therefore Transportation model is a special case of general
Linear programming model wherein the above four
conditions hold good and can be solved by a special
technique called the transportation technique which is
easier and shorter than the simplex technique.
 The solution involves:
 Making a transportation model
 Finding a feasible solution
 Performing optimality test
 Iterating towards optimal solution if required
TRANSPORTATION MODEL
ASSUMPTIONS IN THE TRANSPORTAION MODEL
 Total quantity of item available at different sources is equal to the
total requirement at different destinations.
 Item can be conveniently transported from all sources to destinations.
 The unit transportation cost of the item from all sources to
destinations is known
 The unit transportation cost on a given route is directly proportional to
the number of units shipped on that route.
 The objective is to minimize the total transportation cost for the
organization as a whole and not for the individual supply and
distribution centers.
TRANSPORTAION MODEL
 INITIAL FEASIBLE SOLUTION
 North West Corner Method
 Least Cost Cell Method
 Vogel’s Approximation Method

 OPTIMAL SOLUTION
 Stepping Stone Method
 Modified Distribution Method (MODI)
 TRANSPORTATION MODEL
NORTH WEST CORNER METHOD
 Start in the upper left-hand cell (or North West
corner) of the table and allocate units to shipping
routes as follows:
1. Exhaust the supply (factory capacity) of each row
before moving down to the next row
2. Exhaust the (warehouse) requirements of each
column before moving to the next column
3. Check to ensure that all supplies and demands
are met
 TRANSPORTATION MODEL
NORTH WEST CORNER METHOD

W1 W2 W3 SUPPLY

7 6 9
P1 20 20

5 7 3 02
P2 28
01 25 02 27
4 5 8
P3 17
17

DEMAND 01 21 25 1917 65

Transportation cost = 20*7+1*5+25*7+2*3+17*8 = Rs 462/-

 TRANSPORTATION MODEL
Feasible Solution : A feasible solution to a transportation problem is a set
of non negative allocation, Xij that satisfies the row and column
restriction.
Basic Feasible Solution: A feasible solution to a transportation problem is
said to be a basic feasible solution if it contains no more than m+n-1
non negative allocations, where m is number of rows and n is number
of columns.
Optimal Solution: A feasible solution( not necessarily basic) that
minimizes(maximizes) the transportation cost (profit) is called an
Optimal solution
Degenerate : A basic feasible solution in which the total number of non-
negative allocations is less than m+n-1 is called degenerate basic
feasible solution
 TRANSPORTATION MODEL
LEAST COST CELL METHOD
1. Identify the cell with the lowest cost

2. Allocate as many units as possible to that cell without

exceeding supply or demand; then cross out the row or
column (or both) that is exhausted by this assignment

3. Find the cell with the lowest cost from the remaining
cells

4. Repeat steps 2 and 3 until all units have been allocated

 TRANSPORTATION MODEL
LEAST COST CELL METHOD

W1 W2 W3 SUPPLY

7 6 9
P1 20
20
5 7 3
P2 04 05 19 05 28 09

4 5 8
P3 17
17

DEMAND 21 04 25 05 19 65

Transportation Cost = 20*6+4*5+5*7+19*3+17*4 = Rs 300 /-

 TRANSPORTAION MODEL
VOGELS APPROXIMATION METHOD (VAM)

 For each row and column remaining under consideration, calculate

its difference, which is defined as the arithmetic difference between
the smallest and next-to-the-smallest unit cost Cij still remaining in
that row or column.

 In that row or column having the largest difference, select the

variable having he smallest remaining unit cost.

 Use up the remaining supply in its row or the remaining demand in

its column (whichever is smaller).

 Eliminate that row or column. Repeat the procedure.

 TRANSPORTAION MODEL
VOGELS APPROXIMATION METHOD (VAM)

W1 W2 W3 SUPPLY

7 6 9
P1 20 1 1 1
20
5 7 3
P2 28 2 2
09 19 9
4 5 8
1 1 1
P3
12 05 5 17

DEMAND 12 21 25 19 65

1 1 5
1 1
3 1

Transportation Cost = 20*6+9*5+19*3+12*4+5*5 = Rs 295 /-

TRANSPORTAION MODEL

DISTRIBUTION CENTERS
SUPPLY
D1 D2 D3 D4

P1 2 3 11 7 6

PLANTS P2 1 0 6 1 1

P3 5 8 15 9 10

DEMAND 7 5 3 2
 TRANSPORTAION MODEL
LEAST COST CELL METHOD

DISTRIBUTION CENTERS
SUPPLY
D1 D2 D3 D4

P1 2(6) 3 11 7 6

PLANTS P2 1 0(1) 6 1 1

P3 5(1) 8(4) 15(3) 9(2) 10

DEMAND 7 5 3 2

TRANSPORTATION COST = Rs 112

 TRANSPORTAION MODEL
VAM METHOD

DISTRIBUTION CENTERS
SUPPLY
D1 D2 D3 D4

P1 2(1) 3(5) 11 7 6

PLANTS P2 1 0 6 1(1) 1

P3 5(6) 8 15(3) 9(1) 10

DEMAND 7 5 3 2

TRANSPORTATION COST = Rs 102

 TRANSPORTATION MODEL
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
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.
 TRANSPORTATION MODEL
STEPPING STONE METHOD

W1 W2 W3 DEMAND

P1
7 + 6 - 9
20
20

P2
5
- 7 + 3
28
4 5 19
4 5 8
P3 17
17
SUPPLY 21 25 19 65

P1W1 = + 7 – 6 + 7 - 5 = +3
 TRANSPORTATION MODEL
STEPPING STONE METHOD

W1 W2 W3 DEMAND

P1
7 6
- 9 +
20
20

P2
5 7
+ 3
- 28
4 5 19
4 5 8
P3 17
17
SUPPLY 21 25 19 65

P2W2 = + 9 – 3 + 7 – 6 = + 7
 TRANSPORTATION MODEL
STEPPING STONE METHOD

W1 W2 W3 DEMAND

7 6 9
P1 20
20
5 + 7 3 -
P2 28
4 5 19

P3
4
- 5 8
+ 17
17
SUPPLY 21 25 19 65

P3W3 = + 8 – 4 + 5 -3 =+6
 TRANSPORTATION MODEL
STEPPING STONE METHOD

W1 W2 W3 DEMAND

7 6 9
P1 20
20
5 + 7 - 3
P2
4 5 19
28 09 -
4 5 8
+ 12 05
P3 -
17
17

SUPPLY 21 25 19 65

P3W2 = + 5 - 4 + 5 – 7 =-1
 TRANSPORTATION MODEL
STEPPING STONE METHOD

W1 W2 W3 DEMAND

7 6 9
P1 20
20
5 7 3
P2 28
9 19
4 5 8
P3 17
12 5
SUPPLY 21 25 19 65

TRANSPORTATION COST = 20*6+9*5+19*3+12*4+5*5 = 295

 W1 W2 W3 DEMAND
P1W1= +7-6+5-4= +2

P1
7 6
- 9 +
20 P2W2= +7-5+4-5= +1
20

P2
5
+ 7 3
- 28 P3W3= +8-4+5-3= +6
9 19
4
- 5
+ 8 P1W3= +9-3+5-4+5-6= +6
P3 17
12 5
SUPPLY 21 25 19 65

The above solution is the Optimal solution

Transportation cost = Rs 295 /-
 TRANSPORTATION MODEL
MODIFIED DISTRIBUTION METHOD
 In this method we introduce dual variables corresponding to supply and demand constraints.
If there are m rows and n columns, there will be m + n dual variables

 Let Ui ( i= 1,2….m) and Vj (j=1,2….n) be the dual variables corresponding to supply and
demand constraints.

 Variables Ui and Vj are such that Ui + Vj = Cij for all occupied cells.

 Since the number of unknown is m+n (dual variables) and there are m+n-1 of these equations,
one of these dual variables can be assigned a value arbitrarily without violating the
equations.The choice of this one variable and its value does not affect the solution.

 For the unoccupied cells ,as per COMPLEMENTARY SLACKNESS THEOREM if all Cij –Ui - Vj ≥ 0,
then the corresponding solution is the optimal solution.If any Cij –Ui - Vj < 0, the solution is
not optimal.

 Cij –Ui-Vj is called as the evaluation of the cell or the opportunity cost of the cell
 TRANSPORTATION MODEL
MODIFIED DISTRIBUTION METHOD

For Occupied Cells

Ui
W1 W2 W3
Cij = Ui + Vj
DEMAND

7 6 9
P1 20 U1
20 C12 = U1 + V2 = 6
5 7 3
P2
9 19
28 U2 C21 = U2 + V1 = 5
4 5 8 C23 = U2 + V3 = 3
P3 17 U3
12 5
C31 = U3 + V1 = 4
SUPPLY 21 25 19
C32 = U3 + V2 = 5
VJ V1 V2 V3
Assume U2 = 0

V1 = 5 ; V2 = 6 ; V3 = 3 ; U1 = 0 ;U2= 0 ; U3 = -1
 TRANSPORTATION MODEL
MODIFIED DISTRIBUTION METHOD

For Unoccupied Cells

W1 W2 W3 DEMAND Ui
Cost Change = Cij - Ui -Vj
7 6 9
P1 20 U1 = 0
20 P1W1 = 7 – 5 – 0 = + 2
5 7 3
P2 28 U2 = 0 P1W3 = 9 – 3 – 0 = + 6
9 19
4 5 8 P2W2 = 7 – 6 – 0 = + 1
P3 17 U3 = -1
12 5
P3W3 = 8 – 3 + 1 = + 6
SUPPLY 21 25 19

VJ V1 = 5 V2 = 6 V3 = 3
 SPECIAL CASES IN TRANSPORTATION MODEL
Demand not equal to supply
 Unbalanced Transportation Model

 Common situation in the real world

 Resolved by introducing dummy sources or

dummy destinations as necessary, with cost
coefficients of zero
 SPECIAL CASES IN TRANSPORTAION MODEL
Demand not equal to supply
A product is produced by four factories A, B, C and D. The unit production
cost in them are Rs 2, Rs 3, Re 1 and Rs 5 respectively. Their production
capacities are : factory A – 50 units, B – 70 units, C – 30 units and D – 50
units. These factories supply the product to four stores, demands of which
are 25, 35, 105 and 20 units respectively. Unit transport cost in rupees from
each factory to each store is given in the table below:
S1 S2 S3 S4
A 2 4 6 11
B 10 8 7 5
C 13 3 9 12
D 4 6 8 3
Determine the extent of deliveries from each of the factories to each of the
stores so that the total production and transportation cost is minimum.
 SPECIAL CASES IN TRANSPORTAION MODEL
Demand not equal to supply
S1 S2 S3 S4
A 4 6 8 13 50
B 13 11 10 8 70
C 14 4 10 13 30
D 9 11 13 8 50
25 35 105 20
S1 S2 S3 S4 Du
A 4 6 8 13 0 50
B 13 11 10 8 0 70
C 14 4 10 13 0 30
D 9 11 13 8 0 50
25 35 105 20 15
SPECIAL CASES IN TRANSPORTAION MODEL
Demand not equal to supply
S1 S2 S3 S4 Du

A 4(25) 6(5) 8(20) 13 0 50

B 13 11 10(70) 8 0 70

C 14 4(30) 10 13 0 30

D 9 11 13(15) 8(20) 0(15) 50

25 35 105 20 15

Total Cost = Rs 1465

 SPECIAL CASES IN TRANSPORTAION MODEL
MAXIMIZATION PROBLEM
 It may be converted in to a minimization problem, by
subtracting all profits from the highest profit in the matrix.
The problem can then be solved by usual method.

 It may be solved as a maximization problem itself.

However, while finding the initial basic feasible solution,
allocations are to be made in the highest profit cells, rather
than in lowest cost cells. Also solution will be optimal when
all cell evaluations are non positive ( ≤ 0 )
 SPECIAL CASES IN TRANSPORTAION MODEL
MAXIMIZATION PROBLEM
 A company has three factories manufacturing the same product and 5 sales agencies in
different parts of the country. Production cost differs from factory to factory and the sales
prices from agency to agency. The shipping cost per unit product from factory to each
agency is known. Given the following data, find the production and distribution schedules
most profitable to the company.
Factory 1 2 2 6 10 5

Max. Factory 2 10 8 9 4 7
Production
Capacity
Factory cost/ unit
(no of
Factory 3 5 6 4 3 8
(Rs)
units) Agency 1 2 3 4 5
1 18 140
Demand 74 94 69 39 119
2 20 190
Sales
3 16 115 35 37 36 39 34
Price(Rs)
 SPECIAL CASES IN TRANSPORTAION MODEL
MAXIMIZATION PROBLEM
A1 A2 A3 A4 A5 A6 S

35-18-2 37-18-2
F1 12 11 11 0 140
= 15 =17

35-20-10
F2 9 7 15 7 0 190
=5

35-16-5 34-16-8
F3
=14
15 16 20 =10
0 115

D 74 94 69 39 119 50
 SPECIAL CASES IN TRANSPORTAION MODEL
MAXIMIZATION PROBLEM
A1 A2 A3 A4 A5 A6 S

F1 5(46) 3(94) 8 9 9 20 140

F2 15 11 13 5(39) 13(101) 20(50) 190

F3 6(28) 5 4(69) 0 10(18) 20 115

D 74 94 69 39 119 50

A1 A2 A3 A4 A5 A6 S

F1 5(46) 3(94) 8 9 9 20 140

F2 15 11 13 5(21) 13(119) 20(50) 190

F3 6(28) 5 4(69) 0(18) 10 20 115

D 74 94 69 39 119 50
 SPECIAL CASES IN TRANSPORTAION MODEL
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
 In a degenerate tableau, all the stepping-stone paths or
MODI equations cannot be developed.
 To rectify a degenerate tableau, an empty cell must
artificially be treated as an occupied cell
SPECIAL CASES IN TRANSPORTAION MODEL
DEGENERACY

x2A: 7 - 11 + 10 - 6 = 0
x2b: 11 - 11 + 10 - 8 = + 2
x3B: 5 - 8 + 6 - 4 = - 1
x3C: 12 - 10 + 6 - 4 = + 4
SPECIAL CASES IN TRANSPORTAION MODEL
DEGENERACY
EXAMPLES
WAREHOUSE
A company that specializes in non ferrous FOUNDRY
A B C Supply
castings currently has 3 warehouses and
two casting foundry factories. The 1 17 10 6 30
transportation cost , factory capacity and 2 7 12 14 20
warehouse capacity are summarized in
Demand 25 10 40
the following table:
Business conditions have been good and the company will build a new foundry to
meet future business requirements. They are considering two locations: KOLHAPUR
and BELGAUM. The new foundry will be designed to produce 25 non ferrous castings
per month. The new foundry will be shipping their product to the current
warehouses. The accounting department has determined the shipping costs from
Kolhapur and Belgaum to the existing warehouses and summarized them in the table
below: WAREHOUSE
Which location should they choose? Kolhapur or
NEW FOUNDRY A B C
Belgaum
KOLHAPUR 10 8 15

BELGAUM 12 13 5
EXAMPLES
A company manufacturing air coolers has two plants located at Mumbai and
Kolkata with a capacity of 200 units and 100 units per week respectively. The
company supplies the air coolers to its four show rooms situated at Ranchi,
Delhi, Lucknow and Kanpur which have a maximum demand of 75, 100, 100
and 30 units respectively. Due to difference in raw material cost and
transportation cost, the profit per unit in rupees differs which is shown in the
table below. Plan the production programme so as to maximize the profit.

Ranchi Delhi Lucknow Kanpur

Mumbai 90 90 100 110

Kolkata 50 70 130 85
EXAMPLES
A construction company is interested in taking loans from banks for some of its
projects P, Q, R, S and T. The rates of interest and lending capacity differ from bank to
bank. All these projects are to be completed. The relevant details are provided in the
following table. Assuming the role of a consultant, advise the company as to how it
should take the loans so that the total interest payable will be the least. Are there
alternate optimal solutions? If so indicate one such solutions.
Interest rates in % for Project Max Credit (‘000 of
Bank
P Q R S T rupees)

Private Banks 20 18 18 17 17 Any amount

Nationalised Banks 16 16 16 15 16 400
Cooperative Banks 15 15 15 13 14 250
Amount required
200 150 200 125 75
(‘000 of rupees)