101

P1 and W1 with shipping cost 3. The column total (i.e. market

requirement) corresponding to this cell is 20 while the row total (Plant
capacity) is 30. So we allocate 20 units to this cell. Not the market
requirement of W1 has been satisfied, we move horizontally in the row
P1 to the cell P1 W2 .
2. The market requirements of column W2 is 20 while a total of 10 units
are left in row P1 . Thus, 10 units are assigned to this cell. With this,
the supply of the row P1 is exhausted.
3. Now, move vertically to the cell P2 W2 . For this cell, the market
requirement remains 10 and the plant capacity being 25, assign 10
units to this cell and exhaust the requirement of marketW2 . Then,
move to the cell P2 W3 and allocate remaining 15 units of plant P2 to
this cell, exhausting the capacity of plant P2 leaving requirement of 20
units for marketW3 .
4. Now capacity of plant P3 is 20 units which will satisfy the
requirement of market W3 so we allocate 20 units to cell P3 W3
exhausting all plant capacities and market requirements.

These assignments are shown in the table below :

Plants Markets Plant capacities

W1 W2 W3

20 10 2
P1 30 / 10 / 0
3 4
2 10 15
P2 25 / 15 / 0
1 5
4 3 20
P3 20 / 0
3
Market 20 / 0 20 / 10 / 0 35 / 20 / 0
requirements

2. The Least-Cost Method

This method involves following steps for finding initial feasible solution :

i) The least cost method starts by making the first allocation to that
cell whose shipping cost per unit is lowest.

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ii) This lowest cost cell is loaded or filled as much as possible in view
of the plant capacity of its row and the market requirements of its column.
In our example, the cell P2 W2 has the least shipping cost, so we allocate
20 units to this cell exhausting the requirements of marketW2 .
iii)We move to the next lowest cost cell and make an allocation in view
of the remaining capacity and requirement of its row and column. In case
there is a tie for the lowest cost cell during any allocation we make an
allocation in the cell which will satisfy either the maximum market
requirement or exhaust the plant capacity. In this example, there is a tie
between cells P1 W3 and the cell P2 W1 . So we choose cell P1 W3 because
it will exhaust maximum capacity i.e. 30 units.
iv)The above procedure is repeated till all rim requirements are
satisfied.

The initial feasible solution of the given problem using the least-
cost method is given in the following table.

Plants Markets Plant capacities

W1 W2 W3

P1 30 30/0
3 4 2

P2 5 20 25/5/0
2 1 5

P3 15 5 20/15/0
4 3 3

Market 20/15/0 20/0 35/5/0

requirements

3. Vogel’s Approximation Method

Various steps involved for finding a initial feasible solution are
given below:

i) For each row of the transportation matrix, calculate difference

between the smallest and the next smallest element. Similarly for
each column of the matrix, compute the difference of the smallest and
next smallest element of the column.
ii) Identify the row or column with largest difference. If a tie occurs, use
a row or column which will either exhaust the maximum plant
capacity or satisfy the maximum market requirements. In the given
example, the largest difference is 2, thus the column designated as
W2 is selected.

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iii) Allocate the maximum feasible quantity in the box corresponding to

the smallest cost in that row or column. Eliminate that row or column
where an allocation is made. The lowest cost in column W2 is 1,
hence the cell P2 W2 is selected for allocation, 20 units are assigned
to this cell and column W2 is deleted as the requirement of market
W2 is satisfied.
iv) Re-compute row and column differences for the reduced
transportation table. The above procedure is repeated until all the rim
requirements are satisfied. The assignments made by VAM are given
in the following table.

Plants Markets Plant Diff.

capacity
W1 W2 W3
3 4 30
P1 30/0 1/1/1
2
5 20 5
P2 25/5/0 1/3
2 1
15 3 5
P3 20/15/0 0/1/1
4 3

Market 20/15/0 20/0 35/5/0

requirements

Diff. 1/1/1 2 1/1/1

The minimum total transportation cost associated with this solution is

Total cost = (3 × 8 + 4 × 4 + 6 × 1 + 4 × 4 + 6 × 2 + 6 × 3) × 10 = Rs. 920

6.4 CHECK YOUR PROGRESS

Determine an initial basic feasible solution to the following

transportation problems using (a) north-west corner method and (b)
Vogel’s method.
1.
Destination
E E F G Supply
A 11 13 17 14 250
Source B 16 18 14 10 300
C 21 24 13 10 400
Demand 200 225 275 250

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2. Consider the transportation problem having the following cost and

requirements table :

Destination
1 2 3 4 Supply
1 5 8 3 6 30
Source 2 4 5 7 4 50
3 6 2 4 5 40
Demand 30 20 40 30

6.5 STEPS OF MODI METHOD (TRANSPORTATION

ALGORITHM)

The steps to evaluate unoccupied cells are as follows :

Step 1 For an initial basic feasible solution with m + n -1 occupied cells,
calculate ui and vj for rows and columns. The initial solution can be
obtained by any of the three methods discussed earlier.

To start with, any one of uj’s or vj’s is assigned the value zero. It is
better to assign zero for a particular ui or vj where there are maximum
number of allocation in a row or column respectively, as it will reduce
arithmetic work considerably. Then complete the calculation of ui’s and
vj’s for other rows and columns by using the relation
cij = ui + vj for all occupied cells (i, j).

Step 2 For unoccupied cells, calculate opportunity cost (the difference that
indicates the per unit cost reduction that can be achieved by an allocation
in the unoccupied cell) by using the relationship
dij = cij - (ui + vj) for all i and j.

Step 3 Examine sign of each dij

i) If dij > 0, then current basic feasible solution is optimal.

ii) If dij = 0, then current basic feasible solution will remain unaffected
but an alternative solution exists.
iii)If one or more dij < 0, then an improved solution can be obtained by
entering unoccupied cell (i, j) in the basis. An occupied cell having the
largest negative value of dij is chosen for entering into the solution mix
(new transportation schedule).

Step 4 Construct a closed-path (or loop) for the unoccupied cell with
largest negative opportunity cost. Start the closed path with the selected
unoccupied cell and mark a plus sign (+) in this cell, trace a path along the
rows (or column) to an occupied cell, mark the corner with minus sign (-)
and continue down the column (or row) to an occupied cell and mark the

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corner with plus (+) sign and minus sign (-) alternatively. Close the path
back to the selected unoccupied cell.

Step 5 Select the smallest quantity amongst the cell marked with minus
sign on the corners of closed loop. Allocate this value to the selected
unoccupied cell and add it to other occupied cells marked with plus sign
and subtract it from the occupied cells marked with minus sign.

Step 6 Obtain a new improved solution by allocating units to the

unoccupied cell according to Step 5 and calculate the new total
transportation cost.

Step 7 Test the revised solution further for optimality. The procedure
terminates when all d ij  0 , for unoccupied cells.

Remarks :

1. The closed-loop (path) starts and ends at the selected unoccupied cell.
It consists of successive horizontal and vertical (connected) lines
whose end points must be occupied cells, except for an end point
associated with entering unoccupied cell. This means that every corner
element of the loop must be an occupied cell.

It is immaterial whether the loop is traced in a clockwise or anti-

clockwise direction and starting up, down, right or left (but never
diagonally). However, for a given solution only one loop can be
constructed for each unoccupied cell.
2. There can be only one plus (+) sign and only one minus (-) sign in any
row or column.

3. The closed path indicates changes involved in reallocating the

shipments.
6.6 DEGENERACY AND ITS RESOLUTION

A basic feasible solution for the general transportation problem

must consist of exactly m + n -1 (number of rows + number of columns -
1) positive allocations in independent positions in the transportation table.
A solution will be called degenerate when the number of occupied cells is
less than the required number, m + n - 1. In such cases, the current
solution cannot be improved because it is not possible to draw a closed
path for every occupied cell. Also, the values of dual variables ui and vj
which are used to test the optimality cannot be computed. Thus, we need
to remove the degeneracy to improve the given solution. The degeneracy
in the transportation problems may occur at two stages :

a) When obtaining an initial basic feasible solution we may have less

than m + n - 1 allocations.

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b) At any stage while moving towards optimal solution. This happens

when two or more occupied cells with the same minimum allocation
become unoccupied simultaneously.

Case 1 Degeneracy at the initial solution :

To resolve degeneracy at the initial solution, we proceed by
allocating a very small quantity close to zero to one or more (if needed)
unoccupied cells so as to get m + n -1 number of occupied cells. This
amount is denoted by a Greek letter  (epsilon) or  (delta). This quantity
would not affect the total cost as well as supply and demand values. In a
minimization transportation problem it is better to allocate  to
unoccupied cells that have lowest transportation costs, whereas in
maximization problems it should be allocated to a cell that has a high
payoff value. In some cases,  must be added in one of those unoccupied
cells which makes possible the determination of ui and vj uniquely.

The quantity  is considered to be so small that if it is transferred

to an occupied cell it does not change the quantity of allocation. That is,

xij    xij    xij

    0; 
0    ; k 
It is also then obvious that  does not affect the total transportation
cost of the allocation. Hence, the quantity  is used to evaluate
unoccupied cells and to reduce the number of improvement cycles
necessary to reach an optimal solution. Once purpose is over,  can be
removed from the transportation table.
The minimum total transportation cost associated with this solution is
Total cost = (3 × 8 + 4 × 4 + 6 × 1 + 4 × 4 + 6 × 2 + 6 × 3) × 10 =
Rs. 920
Cost 2 Degeneracy at subsequent iterations :
To resolve degeneracy which occurs during optimality test, the
quantity may be allocated to one or more cells which have become
unoccupied recently to have m + n - 1 number of occupied cells in the new
solution.

6.7 ADDITIONAL PROBLEM

Example 6.3
A manufacturer wants to ship 22 loads on his product as shown
below. The matrix gives the kilometers from sources of supply to the
destinations.

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Destination
D1 D2 D3 D4 D5 Supply
S1 5 8 6 6 3 8
Source S2 4 7 7 6 5 5
S3 8 4 6 6 4 9
Demand 4 4 5 4 8 22
25

Shipping cost is Rs. 0 per load per km. What shipping schedule should be
used to minimize total transportation cost?

Solution :
Since the total destination requirement of 25 units exceeds the total
resource capacity of 22 by 3 units, the problem is unbalanced. The excess
requirement is handled by adding a dummy plant, Sexcess with a capacity
equal to 3 units. We use zero unit transportation cost to the dummy plant.
The modified transportation table is shown in Table 6.3.1.
Initial solution 6.3.1
D1 D2 D3 D4 D5 Supply
S1 5 8 6 6 3 8 u1  0
5 3

S2 4 7 7 6 5 5
u2 
4 1

S3 8 4 6 6 4 9
u3 
4 5

Sexcess 0 0 0 0 3 0 3
u4 
Demand 4 4 5 4 8 25
v1  v2  v3  v4  v5 

The initial solution is obtained by using Vogel’s approximation

method as shown in Table 6.3.1. Since the solution includes 7 occupied
cells, therefore, the initial solution is degenerate. In order to remove
degeneracy we assign  to unoccupied cell S 2 ,D5  which has minimum
cost among unoccupied cells as shown in Table 6.3.2.

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Table 6.3.2

D1 D2 D3 D4 D5 Supply ui
S1 5 8 6 6 3 8 u1 = 0
5 3
+3 +5 (-) +2 (+)
S2 4 7 7 6 5 5 u2 = 2
4 1 
+2 -1 (+) (-)
S3 8 4 6 6 4 9 u3 = 1
4 5
+5 -1 +1
Sexcess 0 0 0 0 0 3 u4 = - 4
3
+2 +1 (+) -2 (-) -7
Demand 4 4 5 4 8 25
vj v1 = 2 v2 = 3 v3 = 6 v4 = 4 v5 = 3

Determine ui and vj for occupied cells as shown in Table 6.3.2.

Since opportunity cost in the cell (Sexcess, D3) is largest negative, it must
enter the basis and the cell (S2, D5) must leave the basis. The new solution
is shown in Table 6.3.3.

Table 6.3.3

D1 D2 D3 D4 D5 Supply ui
S1 5 8 6 6 3 8 u1 = 0
5 3
+3 +5 (-) +2 (+)
S2 4 7 7 6 5 5 u2 = 0
4 1
+4 +1 +2
S3 8 4 6 6 4 9 u3 = 1
4 ( ) 5
+
+3 -1 -1 (-)
Sexcess 0 0 0 0 0 3 u4 = - 6
 3
+2 +3 (+) (-) +3
Demand 4 4 5 4 8 25
vj v1 = 4 v2 = 3 v3 = 6 v4 = 6 v5 = 3

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Repeat the procedure of testing optimality of the solutions given in

Table 6.33. The optimal solution is shown in Table 6.3. 4

Table 6.3. 4
D1 D2 D3 D4 D5 Supply
S1 5 8 6 6 3 8 8

S2 4 7 7 6 5 5
4 1

S3 8 4 6 6 4 9
4 2 3

Sexcess 0 0 0 3 6 0 3

Demand 4 4 5 4 8 25

The minimum total transportation cost associated with this solution

is

Total cost = (3 × 8 + 4 × 4 + 6 × 1 + 4 × 4 + 6 × 2 + 6 × 3) × 10 =
Rs. 920

Example 6.4
Solve the following transportation problem for minimum cost:
Destina ions A Ori ins D Requirements
t gB C
1 7 4 3 4 15
2 3 2 7 5 25
3 4 4 3 7 20
4 9 7 5 3 40
Availabilities 12 8 35 25

Solution
Since this is an unbalanced transportation problem, introduce a
dummy activity E with availability of 20 units. Apply vogel’s method to
find initial feasible solution.

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A B C D E Requirement 1 2 3 4 5 6

1 7 4 15 4 0 15 3 1 1 1 1 1
0
3
2 12 8 7 5 0 25 2 1 2 2 2 2
17
3 2 5
12

3 4 4 20 7 0 20 3 1 1 1 4 -
0
3
4 9 7 5 20 20 40 3 2 2 - - -
20
3 0
0

12 8 35 25 20 100
Availability 0 0 15 5 0
0 0
1 2 0 1 0
Differene
1 2 0 1 0
1 - 0 1 -
1 - 0 1 -
- - 0 1 -
- 4 1 -

The initial feasible solution is given below :

A B C D E
Requirements
7 4 15 4 0
1 15
3
12 8 7 5 0
2 25
3 2 5
4 4 20 7 0
3 20
3
9 7 5 20 20
4 40
3 0

Availability 12 8 35 25 20

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This solution is tested for optimality. Since there are 7 allocations we

place a small entity (e) in the cell (E, 1). Assuming u1  0,ui and v j are
computed below :

A B C D E
ui
7 4 15 4 e
1 0
3 0
12 8 7 5 0
2 2
3 2 5
4 4 20 7 0
3 0
3
9 7 5 20 20
4 0
3 0

vj 1 0 3 3 0

6 4 1
2 -2
3 4 4 0
8 7 2
ij matrix
Since one of the ij is -ve including the most-negative marginal
cost cell (E,2) in the loop and test the solution for optimality.

15 e
7 4 4 0
12 8 5
0
3 2 7 - 5 +
20   min 5  , 20   
4 4 3 7 0
5

20 + 20 -
9 7 5 3 0

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Assume ui 0 ui and v j are calculated below : ui

7 4 15 4 0
3 0
e

0
7 5
12 8 5
0
3 2 0
4 4 7 0
20 3
0

9 7 5 25 15
vj 3 2 3 3 0
3 0
4 2 1
4 2
1 2 4 0
6 5 2

ij matrix
Since all ij  0, this is optimal solution and the allocation is given by

FROM C A B E C D E
TO 1 2 2 2 3 4 4
QTY. 15 12 8 5 20 25 15
COST 45 36 16 0 60 75 0 = 232 Total Cost

Example 6.5

Consider the following transportation cost table. The costs are

given in Rupees, the supply and demand are in units. Determine an
optimal solution.

Destination 1 2 3 4 5 Supply

Source
I 40 36 26 38 30 160
II 38 28 34 34 198 280
III 36 38 24 28 30 240
Demand 160 160 200 120 240

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Solution

Since demand is greater than supply by 200 units, we introduce a

dummy source with a supply of 200 units. We, then, find initial solution
by vogel’s method.

Destination
Source 1 2 3 4 5 Difference

I 40 36 26 38 16 160/0 4 4 4 4 4
0
30

II 38 16 12 34 198 280/120/0 6 6 6 0 164

0 0
28 34

III 36 38 80 12 40 240/120/0 4 4 4 4 6
0
24 28 30

Dummy 16 0 0 0 40 200/40/0 0 0
0
0 0

Demand 160/0 160/0 200/ 120/ 240/

80/0 0 200/
40
Difference 36 28 24 28 30
28 24 28 30
8 2 6 0
2 6 0

Thus the initial solution is given by the table given above. To test
whether the initial solution is optimal, we apply optimality test. If the
solution is not optimal, then we will try to improve the solution to make it
optimal. To test the optimality of the initial solution, we find whether the
number of allocations is equal to m + n – 1 or not. Also, these allocations
should be independent.

Let us introduce the variables ui and v j . To determine the values

of these variables, let u3 0 , the values of other variables are shown in
the following table.

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1 2 3 4 5
i
40 36 26 38 160
I 0
30
38 16 120 34 198
II 10
28 34
36 38 80 120 40
III 0
24 28 30
16 0 0 0 40
Dummy -30
0 0

vj 30 18 24 28 30

Let us now find ij Cij ( ui v j ) for the non basic cells. 1 2

i
3 4 5
10 18 2 10 160
I 0

-2 16 120 -4 158
II 10
- +
  120

III 6 20 80 120 40 0

+ -
Dummy -30
16 12 6 2 40

vj 30 18 24 28 30

Since there are negative ij s this solution is not optimal. Including the
most negative ij in the loop, the next improved solution is given below.
We test this solution for optimality. Since the total number of basic cells is
less than 8 (= m + n – 1), we put e which is a very small quantity in the
least cost independent cell and compute values of i and v j

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Destinations

Source 1 2 3 4 5 i

40 36 26 38 160
I
30 30
38 16 34 120 198
II
28 34 34
36 38 200 28 40
III
24 30 30
16 0 0 e 40
Dummy
0 0 0 0

vj 0 -6 -6 0 0

The values of ij Cij ( ui v j ) are given in the table below :

1 2 3 4 5 i

10 12 2 8 160
I
30
4 16 6 120 164
II
34
6 14 200 -2 + 40
III
- 30

Dummy 16 6 6 e 40
0
- +
vj 0 -6 -6 0 0
Since there is one negative ij this solution is not optimal.
Including this negative value in the loop, the next improved solution is
given below which is tested for optimality.

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Destinations

Source 1 2 3 4 5 i

40 36 26 38 160
I
30 0
38 16 34 120 198
II
28 34 6
36 38 200 e 40
III
24 28 30 0
16 0 0 0 40
Dummy
0 0 - 30

vj 30 22 24 28 30

Now we find ij for non basic cells

Destination

sources 1 2 3 4 5 i

10 14 2 10 160
I
0
2 16 4 120 162
II
6
6 16 200 e 40
III
0
16 8 6 2 40
Dummy
-30

vj 30 22 24 28 30

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Since all ij s are positive, the above table will give optimal
solution. The optimal solution is given below.

From Source To Destination No. of Units Cost per unit Rs.

I 5 160 30
II 2 160 28
II 4 120 34
III 3 200 24
III 5 40 30

and the associated total cost is given by

160 × Rs. 30 + 160 × Rs. 28 + 120 × Rs. 34 + 200 × Rs. 24 + 40 × Rs. 30
= Rs. 19,360.

Example 6.6
Solve the following transportation Problem :
GODOWNS
1 2 3 4 5 6 Stock
Available
F 1 7 5 7 7 5 3 60
A
C 2 9 11 6 11 - 5 20
T
O 3 11 10 6 2 2 8 90
R
Y 4 9 10 9 6 9 12 50
DEMAND 60 20 40 20 40 40

Note : it is not possible to transport any quantity from factory, 2 to

Godown 5. State whether the solution derived by you is unique.

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Solution
The initial solution is found by VAM below :
Factory Godowns Availability Diff.

1 2 3 4 5 6
1 7 20 7 7 5 40 60/40/0 2/4/0
5 3

2 10 11 10 11  5 20/10/0 1/3
9 6

3 11 10 30 20 40 8 90/70/30/0 0/4/2/5

6 2 2

4 50 10 9 6 9 12 50/0 3/0

Demand 60 20 40 20 40 40
50 0 10 0 0 0
0 0

Diff. 2 5 0/1 4 3 2

The initial solution is tested for optimality. Since there are only 8
allocations and we require 9 (m + n – 1 = 9) allocations, we put a small
quantity e in the least cost independent cell (2,6) and apply the optimality
test. Let u3 0 and then we calculate remaining ui and v j

1 2 3 4 5 6 i
1 7 20 5 7 7 5 40 3
-2
2
10 9 11 10 6 11 e 5 0
3
6 2 0
11 10 30 20 40 2 8
4
0
vj 50 9 10 9 6 9 12

9 7 6 2 2 5

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Now we calculate ij Cij ui v j for non basic cells which

given in the table below :

0 3 7 5
4 9
2 3 3
3 3 4 7 7
ij
Since all ij are positive, the initial solution found by VAM is an
optimal solution. The final locations are given below :

Factory to Godown Unit Cost Value

1 2 20 5 100
1 6 40 3 120
2 1 10 9 90
2 3 10 6 60
3 3 30 6 180
3 4 20 2 40
3 5 40 2 80
4 1 50 9 450
Total cost Rs. 1,120

The above solution is not unique because the opportunity cost of

cell (1,2) is zero. Hence alternate solution exists. Students may find that
the alternate solution is as given below :
Factory to Godown Unit Cost Value
1 1 10 7 70
1 2 20 5 100
1 6 30 3 90
2 3 10 6 60
2 6 10 5 50
3 3 30 6 180
3 5 40 2 80
3 4 20 2 40
4 1 50 9 450
Total cost Rs. 1,120
Example 6.7
STRONGHOLD Construction company is interested in taking
loans from banks for some of its projects P, Q, R, S, T. The rates of
interest and the 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 this company as
to how it should tae the loans so to the total interest payable will be the

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least. Are there alternate optimum solutions? If so, indicate one such
solution.

Interest rate in percentage for Max. Credits

PROJECT (in thousands)
Bank P Q R S T
Pvt. Bank 20 18 18 17 17 Any amount
Nationalized Bank 16 16 16 15 16 400
Co-operative Bank 15 15 15 13 14 250
Amount required 200 150 200 125 75
(in thousands)

Solution
The total amount required by five projects is Rs. 750 thousands.
Since private bank can give credit for any amount, we allocate [Rs. 750 –
(Rs. 400 + Rs. 250) = Rs. 100] thousand to private banks. The balanced
problem is given below. The initial solution is found using VAM.

P Q R S T Max. Cred. Diff.

Pvt. Bank 20 10 18 17 17

18
100/0 0/1/0/0

Nationalised 20 50 15 15 16

Bank 16 16 16
400/200/50/0 1/0/0/0

Co-operative 15 15 5 125 7

Bank 15 13 14
250/125/50/0 1/1/0

amount 200 150 200 125 75

required 0 100 150 0 0

0 0
difference 1 1 1 2 2
1 1 1 - 2
1 1 1 - -
4 2 2 - -

Let us test initial solutions for optimality. There

are m + n – 1 = 7 independent allocations.
Let us now introduce ui ,v j ,i 1, 2,3 and j 1, 2,...5.
Let u2 0 and calculate remaining ui i 1,3 and v j ’s j 1, 2,...5
Calculate ij Cij ui v j for non allocated cells.

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P Q R S T ui
Pvt. Bank 2 10 0 1 0
2
18
20 18 17 17

Nationalised Bank 200 50 15 1 1

0
16 16 16
15 16

Co-operative Bank 0 0 50 12 75
-1
15 13 14
15 15

vj 16 16 16 14 15

Since none of the ij is negative, the initial solution obtained as

above is optimal one.
Total interest (as per above allocation)
= 100 × .18 + 200 × .16 + 50 × .16 + 150 × .16 + 50 × .15 + 125 × .13 +
75 × .14
= Rs 116.25 thousands
= Rs. 1,16,250

Further, since some of the ij ’s are zero, therefore the above solution is
not unique. To find out an alternative solution, let us include the cell
(CB,Q) as the basic cell so the new solution is given below :

P Q R S T
Pvt. Bank 20 10 18 17 17

18

Nationalised Bank 200 16 15 15 16

16 16

Co-operative Bank 15 15 50 12 75

15 13 14

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Since there are only 6 allocations, let us introduce e-a small

quantity in the least independent cell (NB,S). We now introduce
ui ,i 1,2,3 and vi , j 1,2,...5. Let u3 u Calculate ij Cij ui v j
for non basic cells.
P Q R S T ui
Pvt. Bank 3 10 1 1 0
3
18
20 18 17 17

Nationalised 200 -1 20 e 0
2
Bank +
16 -
16 16 15 16

Co-operative 1 50 1 12 75
0
Bank
14
15 - 15 +

15 13
vj 14 15 14 13 14

Since ij for cell (NB,Q) is negative, this solution is not optimal.

We include the cell (NB,Q) in the basic cell
0 = [min (50 –  , e –  ) =  ] = e
So the new solution given below is tested for optimality.
P Q R S T ui
Pvt. Bank 2 10 0 1 0
2
18
20 18 17 17

Nationalised Bank 200 e 20 1 1

0
16 16 16
15 16

Co-operative Bank 0 50 0 12 75
-1
15 13 14
15 15

vj 16 16 16 14 15

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Since all ij are non-negative, the above solution is optimal one

and the total cost is

= 100 × 018 + 200 × .16 + 200 × .16 + 50 × .15 + 125 × .13 + 75 × .14 =
Rs. 116.25 thousands = Rs. 1,16,250
Note : The alternative solution can be found by taking any cell with zero
ij as the basic cell.

Example 6.8
Solve the following transportation problem to maximize profit and
give criteria for optimality :
Profit (Rs.) / Unit
destination
Origin Supply
1 2 3 4
A 40 25 22 33 100
B 44 35 30 30 30
C 38 38 28 30 70
Demands 40 20 60 30

Solution

As the given matrix is a profit matrix and the objective is to

maximize profit, we first of all convert the profit matrix into a loss matrix
for solving it by transportation method. This is done by multiplying the
given matrix by minus sign to get the following matrix.

Destination Profit (Rs.) / Unit

destination
Origin Supply
1 2 3 4
A -40 -25 -22 -33 100
B -44 -35 -30 -30 30
C -38 -38 -28 -30 70
Demands 40 20 60 30

Further, the above loss matrix is not a balanced one as (supply >
demand), we will therefore introduce a dummy destination and find the
initial feasible solution using VAM.

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1 2 3 4 Dummy Supply Diff.

- 40 -25 20 30 50

A -22 -33 0
100/70/50/0 7/7/7/1
30 -35 -30 -30 0

B - 44
30/0 9
10 20 40 -30 0

C -38 -38 -28

70/50/40/0 0/0/8/2
Demands 40/10/0 20/0 60/20/0 30/0 50/0
Diff. 4/2/2 3/13 2/6/6/6 3/3 0/0/0/0

The initial feasible solution after introducing the variables ui and

v j is tested for optimality as below :

1 2 3 4 Dummy ui
-8 +7
20 30 50
A
-
- 40 -25 -33 0 0
-22
B 30 4 15 12

- 44 -35 -30
-30 0 -12
C 10 20 40 9 6
+
-
-38 -38 -28 -30 0 -6
Demands 40/10/0 20/0 60/20/0 30/0

Since some of the ij Cij ( ui vi ) for non-allocated cells

shown in the above table are not positive, the solution obtained above is
not an optimal solution. In order to obtain an optimal solution, place a
small assignment  in the cell with most negative value of ij . In the
above table, is placed in the most negative cell (A,1) and a loop is
formed including this cell. Now, the maximum value which can take is
10 units. After putting this value of in the cell (A,1), other allocation
cells in the loop will also get affected as shown in the following table.

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1 2 3 4 Dummy ui
10 7 10 30 50

+ -
- 40 -25 -22 -33 0 0
30 -4 7 4
B 1
- +
- 44 -35 -30 -30 0 -4
8 20 50 + 9 6

-38
-38 -28 -30 0 -6
vj -40 -32 -22 -33 0

Calculate again ij Cij ( ui vi ) after determining the value of

ui and v j for non-allocated cells. Cell (B,3) has most negative value in
the above table. We place a small allocation and determine its value as
described above which comes out to be 10 units. Putting the value of  ,
we get the following table.

1 2 3 4 Dummy ui
20 11 4 30 50
A
- 40 -33 0
-25 -22 0
20 -35 10 7 4
B
- 44 -30
-30 0 -4
4 20 50 5 2
C
-38 -28
-38 -30 0 -2
vj -40 -36 -26 -33 0

In the above table, we find that the values of ij Cij ( ui vi )

are positive for all non-allocated cells. Hence we can say that allocation
shown by the table are optimal. The final allocation after converting the
loss matrix into profit matrix are given below :

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1 2 3 4 Dummy
20 25 22 30 50
A
40 33 0

20 35 10 30 0
B
44 30

38 20 50 30 0
C
38 28

and the profit is given by

Profit = 20 × Rs. 40 + 30 × Rs. 33 + 20 × Rs. 44 + 10 × Rs. 30 + 20 × Rs.

38 + 50 × Rs. 28
= Rs. 800 + Rs. 990 + Rs. 880 + Rs. 300 + Rs. 760 + Rs. 1,400
= Rs. 5,130.
Note : The above problem can also be converted into a minimization
problem by subtracting each element of the given matrix from 44 (the
highest element).

Example 6.9
A manufacturer of jeans is interested in developing an adverting
campaign that will reach four different age groups. Advertising campaigns
can be conducted through TV, Radio and Magazines. The following table
gives the estimated cost in paise per exposure for each age group
according to the medium employed. In addition, maximum exposure
levels possible in each of the media, namely TV, Radio and Magazines are
40, 30 and 20 millions respectively. Also the minimum desired exposures
within each age group, namely 13-18, 19-25, 26-35, 36 and older, are
30,25,15 and 10 millions. The objective is to minimize the cost of
attaining the minimum exposure level in each age group.
Media Age Groups
13-18 19-25 26-35 36 & older
TV 12 7 10 10
Radio 10 9 12 10
Magazines 14 12 9 12

i) Formulate the above as a transportation problem, and find the

optimal solution.
ii) Solve this problem if the policy is to provide at least 4 million
exposures through TV in the 13-18 age group and at least 8 million
exposures through TV in the age group 19-25

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Solution

i) As a first step, let us formulate the given problem as a

transportation problem :

Media Age Groups

13-18 19-25 26-35 36 & older Exposures
available
(in million)
TV 12 7 10 10 40
Radio 10 9 12 10 30
Magazines 14 12 9 12 20
Minimum number of 30 25 15 10 80/90
exposures required (in
millions)

It is apparent from the above that this transportation problem is an

unbalanced on it is balanced by introducing a dummy category before
applying Vogel’s Approximation method.
Media 13-18 19-25 26-35 36 & older Dummy Max. Exp. Penalty
category (in million)
TV 12 2 5 10 0 40/15/0 7/3/0/0/0

7 10 10

Radio 30 9 12 10 0 30/0 9/1/0/0

10

Magazines 14 12 10 12 1 20/10/0 9/3/3

9 0

Min. no. of 30/0 25/0 15/5/0 10/0 10/0 90

Exposures
required
(million)

Penalty 2 2 1 0 0
2 2 1 0 -
2 - 1 0 -
2 - 2 0 - The total cost for
- - 10 10 - this allocation
works out to Rs.
71.5 lakhs

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The solution given by VAM is degenerate since there are only six
assignments. Let us put an E in the least cost independent cell to check for
optimality. Let u1 0 and we calculate remaining ui and v j s .

Media 13-18 19-25 26-35 36 & Dummy

ui
older category
TV 12 25 5 110 0

7 10 10
0
Radio 030 9 12 10 E

10 0
-1
Magazines 14 12 1 12 10

9 0
-1

vj 11 7 10 10 1

Let us not calculate ij Cij ui v j for empty cells.

ij S
1 -1

3 3 1
4 6
Since one of the ij s is negative, the 3solution given above is not
optimal. Let us include the cell with negative ij as a basic cell and try to
improve the solution. The reallocated solution is given below which is
tested for optimality.

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13-18 19-25 26-35 36 & Dummy

ui
older category
TV 12 25 10 110 5

7 10 0
0
Radio 030 9 12 10 E

10 0
0
Magazines 14 12 1 12 5

9 0
0

vj 10 7 9 10 0

Let us calculate ij for empty cells.

2 1
2 3 0
4 5 2

Since all the entries in the last table are non-negative, the second
solution is optimal.

Through TV, 25 million people must be reached in the age group

19-25 and 10 million people in the age group 36 & older.

Through Radio, 30 million people must be reached in the age

group 13-18.

Through Magazines, 15 million people must be reached in the age

group 26-35.

And the total minimum cost of attaining the minimum exposure level is
Rs. 71 lakhs.

Note : since one of ij in the second solution is zero. This solution is not
unique, alternate solution also exists.

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ii) The required solution is given by :

12 25 10 110 5
7 10 0 40
30 9 12 10 0

10 30
14 12 1 12 5
9 0 20

30 25 15 10 10

The total cost for this allotment is 25 × 7 = 175

10 × 10 = 100
15 × 9 = 135
30 × 10 = 300
= 710
i.e. Rs. 71 Lakhs.

Example 6.10
A company wishes to determine an investment strategy for each of
the next four years. Five investment types have been selected, investment
capital has been allocated for each of the coming four years, and
maximum investment levels have been established for each investment
type. An assumption is that amounts invested in any year will remain
invested until the end of the planning horizon of four years. The following
table summarises the data for this problem. The values in the body of the
table represent net return on investment of one rupee upto the end of the
planning horizon. For example, a rupee invested in investment type B at
the beginning of year 1 will grow to Rs. 1.90 by the end of the fourth
years, yielding a net return of Re. 0.90.
Investment made Investment type Rupees
at the beginning available
of year (in 000’s)
A B C D E
NET RETURN DATA
1 0.80 0.90 0.60 0.75 1.00 500
2 0.55 0.65 0.40 0.60 0.50 600
3 0.30 0.25 0.30 0.50 0.20 750
4 0.15 0.12 0.25 0.35 0.10 800
Maximum Rupees 750 600 500 800 1,000
Investment (in
000’s)

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The objective in this problem is to determine the amount to be

invested at the beginning of each year in an investment type so as to
maximize the net rupee return for the four-year period.

Solve the above transportation problem and get an optimal

solution. also calculate the net return on investment for the planning
horizon of four-year period.
Solution
We note that this transportation problem is an unbalanced one and
it is a MAXIMISATION problem. As a first step, we will balance this
transportation problem.
Step 1:
Investment type

Years A B C D E Available Rupees

(in 000’s)
1 Net Return Data (Re.)
0.80 0.90 0.60 0.75 1.00 500
2 0.55 0.65 0.40 0.60 0.50 600
3 0.30 0.25 0.30 0.50 0.20 750
4 0.15 0.12 0.25 0.35 0.10 800
Dummy 0 0 0 0 0 1,000
Maximum rupees 750 600 500 800 1,000 3,650
investment in (‘000)

Step 2:
We shall now convert the above transportation problem (a profit
matrix) into a loss matrix by subtracting all the elements from the highest
value in the table viz. Re. 1.00
Investment type
Years A B C D E Available Rupees
(in 000’s)
1 Net Loss Data (Re.)
0.20 0.10 0.40 0.25 0 500
2 0.45 0.35 0.60 0.40 0.50 600
3 0.70 0.75 0.70 0.50 0.80 750
4 0.85 0.88 0.75 0.65 0.90 800
Dummy 1.00 1.00 1.00 1.00 1.00 1,000
Maximum rupees 750 600 500 800 1,000 3,650
investment in (‘000)

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For convenience, let us express the net loss data in the body of the
above table in paise. Thereafter, we shall apply VAM to get an initial
solution.

Years A B C D E Rs.
available Difference
(000’s)

1 20 10 40 25 500 500/0 10 - - - -
0
2 45 600 60 40 50 600/0 5 5 - - -
35
3 70 75 70 750 80 750/0
20 20 20 - -
50
4 250 88 500 50 90 800/750/
10 10 10 10 10
250/0
85 75 65
Dummy 500 100 100 100 500 100/500/0
0 0 0 0 0
100 100

Maximum 750/ 600/0 500/0 800/ 1000/

rupee 500/0 50/0 500/0
investment
in (000)
differences 25 25 20 15 50
25 40 10 10 30
15 - 5 15 10
15 - 25 35 10
15 - 25 - 10

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The initial solution got above by VAM is given below :

Years A B C D E
1 20 e 40 25 500

10 0
2 45 600 60 40 50

35
3 70 75 70 750 80

50
4 250 88 500 50 90

85 75 65
Dummy 500 100 100 100 500

100 100

We will now test the above solution for optimality.

The total number of allocations should be n1 n 1 9 but there
are only 8 allocations in the above solution which are one less than 9,
hence the initial solution found above is degenerate. We introduce a small
quantity e in an independent least cost cell which is (1, B) in this case t
make the total number of allocations equal to 9. we introduce ui ' s and
v j ' s such that ij Cij ui v j for i, j 1,  5 we assume that
u4 0 and various ui s, v j s and ij ' s are calculated as below.

Years A B C D E
1 20 e - 50 45 500 + u1 85

10
2 20 600 45 35 25 u2 60

35
3 0 -5 10 750 10 u3 15

50
4 250 -7 500 50 5 u4 

85 75 65
Dummy 500 -10 10 20 500 - u5 

100 +
100
u1 85 u2  u3 5 u4  u5 8

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Since some of the ij ' s are negative, the above initial solution is
not optimal. Introducing in the cell (Dummy, B) with most negative ij
an assignment . The value of and the new solution as obtained from
above is shown below. The values of ui s, v j s are also calculated. The
solution satisfies the conditions of optimality. The condition
ij Cij ui v j 0 for non allocated cells is also fulfilled.

Investment Type

Years A B C D E

1 20 10 50 45 500 u1 85

0
2 10 600 35 25 10 u2 50

35
3 0 575 10 750 100 u3 15

50
4 250 3 500 50 5 u4 

85 75 65
Dummy 500 e 10 20 500 u5 

100 100 100

u1 85 u2  u3 5 u4  u5 8

Since all ij are positive, hence, the second solution obtained

above is optimal. The allocation is given below :
In the year Investment type Amount (in 000’s)
1 E 500
2 B 600
3 D 750
4 A 250
4 C 500
4 D 50

The net return on investment for the planning horizon of four years
period is given by :

500 × 1.0 + 600 × 0.65 + 750 × 0.50 + 250 × 0.15 + 500 × 0.25 +
50 × 0.35 = Rs. 1,445 thousands.

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Example 6.11

A leading firm has three auditors. Each auditor can work upto 160
hours during the next month, during which time three projects must be
completed. Project 1 will take 130 hours, project 2 will take 140 hours, the
project 3 will take 160 hours. The amount per hour that can be billed for
assigning each auditor to each project is given in Table 1 :

Auditor Project
1 2 3
Rs. Rs. Rs.
1 1,200 1,500 1,900
2 1,400 1,300 1,200
3 1,600 1,400 1,500

Formulate this as a transportation problem and find the optimal

solution. Also find out the maximum total billings during the next month.

Solution

The given information can be tabulated in following transportation

Example:

Project
Auditor 1 2 3 Time
Rs. Rs. Rs. available (hours)
1 1,200 1,500 1,900 160
2 1,400 1,300 1,200 160
3 1,600 1,400 1,500 160
Time required (hrs) 130 140 160

The given problem is an unbalanced transportation. Introducing a

dummy project to balance it, we get.

Auditor 1 2 3 Dummy Time

Rs. Rs. Rs. (Rs.) available
(hours)
1 1,200 1,500 1,900 0 160
2 1,400 1,300 1,200 0 160
3 1,600 1,400 1,500 0 160
Time required (hrs) 130 140 160 50 480

The objective here is to maximize total billing amount of the

auditors. For achieving this objective, let us convert this maximisation
problem into a minimization problem by subtracting all the elements of
the above payoff matrix from the highest payoff i.e. Rs. 1,900.

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Auditor 1 2 3 Dummy Time

Rs. Rs. Rs. (Rs.) available
(hours)
1 700 400 0 1,900 160
2 500 600 700 1,900 160
3 300 500 400 1,900 160
Time required (hrs) 130 140 160 50 480
Now, let us apply vogel’s Approximation Method to the above
matrix for finding the initial feasible solution.
Project (Figure of payoff’s in Rs. 00’s)
Auditor 1 2 3 Dummy Time Difference
available
1 7 4 160 19 160/0 4/-/-/-

2 5 110 7 5 160/50/0 1/1/13/13

0
6 19
3 13 3 4 19 160/30/0 1/2/14/-

3 5
Time 130/0 140/110/0 160/0 50/0
Required
Difference 2/2/-/- 1/1/1/ 4/-/- 0/0/0

The initial solution is given below. It can be seen that it is a

degenerate solution since the number of allocations is 5. In order to apply
optimality test, the total number of allocations should be 6 (= m + n – 1).
To make the initial solution a non-degenerate, we introduce a very small
quantity in the least cost independent cell which is cell of Auditor 3,
Project 3.
Auditor 1 2 3 Dummy Time
available
1 7 4 160 19 160

2 5 110 7 5 160
0
6 19
3 13 3 e 19 160

3 5 4

Time 130 140 160 50

Required

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Introduce ui ' s and vj 's such that ij Cij ui v j

for i, 1to 3; j 1, 2, 3, dummy . To determine the values of ui ' s and v j
' s , we assume ui 0 , values of other variables i.e. ui ' s , ij s are
calculated as follows :

6.8 LET US SUM UP

Thus The Transportation Problem is a particular case of the Linear

Programming Problem. There are 3 methods of obtaining the initial basic
feasible solution to the transportation problem.
1) The North West Corner Rule (NWCR)
2) The Least Cost Method / The Matrix Minima Method (MMM)
3) Vogel’s Approximation Method (VAM)

The initial basic feasible solution obtained by VAM is very close

to the optimum solution. Further the MODI method is applied to obtain
the optimum solution of the Transportation Problem.
The variations in the Transportation Problem are :
1) The Maximisation Case : Before obtaining the initial basic feasible
solution to the Transportation problem, it is necessary that the objective
function is to minimize. The maximisation Problem can be converted to
the Minimisation Problem by any one of the following method.

i) Multiply all the elements of maximisation variable by - 1.

ii) Subtract all the elements of maximisation variable from the highest
element.
2) The Unbalanced Problem : The Transportation Problem is a
balanced problem when the row total = column total. When it is an
unbalanced Transportation Problem it is necessary to introduce a dummy
row or a dummy column according to the requirement of the problem.
3) Restrictive Allocation.
4) Multiple Optimum Solutions.

6.9 FUTURE REFERENCES

1. Budnick Frank : Mcleavey Dennis

2. Mojena Richard : Principles of Operations Research for Management
: Richard D. Irwin INC.
3. Kapoor V.K : Operations Research Problems and Solutions.
Sultanchand and Sons.
4. Sharma, J.K : Operations Research Theory and Applications
Macmillan India Limited.

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5. Sharma S. D : Operations Research Kedar Nath Ram Nath Publishers.

6. Taha Hamdy A : Operations Research an Introduction Prentice Hall
of India.
7. Verma A. P : Operations Research S. K. Kataria & Sons.
8. Vohra N.D : Quantitative Techniques in Management. Tata McGraw-
Hill Publishing Company Limited, New Delhi.

6.10 UNIT END EXERCISE

1. A steel company has three open hearth furnaces and five rolling
mills. Transportation costs (rupees per quintal) for shipping steel from
furnaces to rolling mills are shown in the following table :
M1 M2 M3 M4 M5 Supply
F1 4 2 3 2 6 8
F2 5 4 5 2 1 12
F3 6 5 4 7 7 14
Demand 4 4 6 8 8

What is the optimal shipping schedule?

2. Consider the following unbalanced transportation problem.

To

I II III Supply
A 5 1 7 10
From B 6 4 6 80
C 3 2 5 15
Demand 75 20 50

Since there is not enough supply; some of the demands at these

destinations may be satisfied. Suppose there are penalty costs for every
unsatisfied demand unit which are given by 5, 3 and 2 for destinations I, II
and III, respectively. Find the optimal solution.
3. A company produces a small component for an industrial product
and distributes it to five wholesalers at a fixed delivered price of Rs. 2.50
per unit. Sales forecasts indicate that monthly deliveries will be 3,000,
3,000, 10,000, 5,000 and 4,000 units to wholesalers I, II, III, IV and V
respectively. The monthly production capacities are 5,000, 10,000 and
12,500 at plants W, X and Y, respectively. Respective direct costs of
production of each unit are Re 1.00, Re 0.90, and Re 0.80 at plants W, X
and Z. Transportation costs of shipping a unit from a plant to a wholesaler
are as follows.

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Wholesaler

I II III IV V
W 0.05 0.07 0.10 0.25 0.15
Plant X 0.08 0.06 0.09 0.12 0.14
Y 0.10 0.09 0.08 0.10 0.15

Find how many components each plant supplies to each wholesaler

in order to maximize its profit.

4. Obtain an optimum basic feasible solution to the following

degenerate transportation problem.

To
A B C Supply
X 7 3 4 2
From Y 2 1 3 3
Z 3 4 6 5
Demand 4 1 5

5. A manufacturer wants to ship 8 loads of his product shown in the

table. The matrix gives the mileage from origin to destination. Shipping
costs are Rs. 10 per load per mile. What shipping schedule should be
used?
D1 D2 D3 Supply
O1 50 30 220 1
O2 90 45 170 3
O3 250 200 50 4
Demand 4 2 2
6. A cement company has three factories which manufacture cement
which is then transported to four distribution centres. The quantity of
monthly production of each factory, the demand of each distribution
centre and the associated transportation cost per quintal are given below :
Factory Distribution centres Monthly production (in
W X Y Z quantals)
A 10 8 5 4 7,000
B 7 9 15 8 8,000
C 6 10 14 8 10,000
Monthly 6,000 6,000 8,000 5,000 25,000
demand
(in
quintals)

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i) Suggest the optimum transportation schedule.

ii) Is there any other transportation schedule which is equally
attractive? If so, write that.
iii) If the company wants that at least 5,000 quintals of cement are
transported from factory C to distribution centre Y, will the transportation
schedule be any different? If so, what will be the new optimum schedule
and the effect on cost?
7. A company has three plants of cement which has to be transported
to four distribution centres. With identical costs of production at the three
plants, the only variable costs involved are transportation costs. The
monthly demand at the four distribution centres and the distance from the
plants to the distribution centres (in kms) are given below :

Factory Distribution centres Monthly production

W X Y Z (tonnes)
A 500 1,000 150 800 10,000
B 200 700 500 100 12,000
C 600 400 100 900 8,000
Monthly 9,000 9,000 10,000 4,000
demand
(tonnes)

The transport charges are Rs. 10 per tonne per kilometer. Suggest
optimum transportation schedule and indicate the total minimum
transportation cost. If, for certain reasons, route from plant C to
distribution centre X is closed down, will the transportation scheme
change? If so, suggest the new schedule and effect on total cost.

8. A company has three factories A, B and C and four distribution

centres W, X, Y and Z. With identical costs of production at the three
factories, the only variable costs involved are transportation costs. The
monthly production at the three factories is 5,000 tonnes, 6,000 tonnes and
2,500 tonne respectively. The monthly demand at the four distribution
centres is 6,000 tonnes, 4,000 tonnes, 2,000 tonnes and 15,000 tonnes,
respectively. The transportation cost per tonne from different factories to
different are given below :

Factory Distribution centres

W X Y Z
A 3 2 7 6
B 7 5 2 3
C 2 5 4 5

i) Suggest the optimum transportation schedule. What will be the

minimum transportation cost?
ii) If the transportation cost from factory C to centre Y increases by
Rs. 2 per tone, will the optimum transportation schedule change? Why?

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iii) If the company wants to transport at least 1,000 tonnes of the

product from factory A to centre Z, will the solution in (i) above change?
If so, what will be the new schedule and the effect on total transportation
cost?

9. A company has three plants and four warehouses. The supply and
demand in units and the corresponding transportation costs are given. The
table below has been taken from the solution procedure of the
transportation problem :

Plant Distribution Centres Supply

I II III IV
A 5 10 10 5 10
4
B 20 8 7 5 25
6 2
C 5 10 5 7 20
4 2 5
Demand 25 10 15 5 55

Answer the following questions, giving brief reasons :

1. Is this solution feasible?

2. Is this solution degenerate?
3. Is this solution optimum?
4. Does this problem have more than one optimum solution? If so, show
all of them?
5. If the cost for the route B-III is reduced from Rs. 7 to Rs. 6 per unit,
what will be the optimum solution?

10. A company has three plants in which it produces a standard

product. It has four agencies in different parts of the country where this
product is sold. The production cost varies from factory to factory and the
selling price from market to market. The shipping cost per unit of the
product from each plant to each of the agencies is known and is stable.
The relevant data are given in the following table :
a) Plant Weekly production capacity Unit production cost
(Units) (in Rs.)
1 400 18
2 300 24
3 800 20

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b) Shipping cost (in Rs.) per unit :

To Agency
1 2 3 4
1 2 5 7 3
From Plant 2 8 4 6 2
3 3 4 4 5
c) Agency Demand (Units) Selling price (Rs.)
1 300 32
2 400 35
3 300 31
4 500 36

Determine the optimum plan so as to maximize the profits.

11. ABC Enterprises is having three plants manufacturing dry-cells,

located at different locations. Production cost differs from plant to plant.
There are five sales offices of the company located in different regions of
the country. The sales prices can differ from region to region. The
shipping cost from plant to each sales office and other data are given by
following table :
PRODUCTION DATA TABLE

Production cost per unit Max. capacity in number of Plant number

units
20 150 1
22 200 2
18 125 3

Shipping costs :

Sales Sales Sales Sales Sales

office 1 office 2 office 3 office 4 office 5
Plant 1 1 1 4 9 4
Plant 2 9 7 8 3 3
Plant 3 4 5 3 2 7

Demand & sales price

Demand 0 100 75 45 125

Sales Price 0 32 31 34 29

Find the production and distribution schedule most profitable to the

company.

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12. A company has seven manufacturing units situated in different

parts of the country. Due to recession it is proposing to close four of these
units and to concentrate production on the three remaining units.
Production in the remaining units will actually be increased from present
levels and will require an increase in the personnel employed in them.
Personnel at the units to be closed have signified a willingness to move to
any of three remaining units and the company is willing to provide them
with removal costs. The technology of production is different to some
degree at each unit and retraining expenses will be incurred on transfer.
Not all existing personnel can be absorbed by transfer and a number of
redundancies will arise. Cost of redundancy is given is a general figure at
each unit to be closed.

Number employed A B C D
Retraining cost : 200 400 300 200
Rs. (thousand) per person
Transfer to: A B C D
Unit E 0.5 0.4 0.6 0.3
Unit F 0.6 0.4 0.6 0.3
Unit G 0.5 0.3 0.7 0.3
Removal costs : Rs. (thousand) per person
Transfer to: A B C D
Unit E 2.5 3.6 3.4 3.7
Unit F 2.4 4.6 3.4 1.7
Unit G 2.5 2.7 3.3 2.7
Redundancy payments : Rs. (thousand) per person
A B C D
6.0 5.0 6.0 7.0
Additional personnel required at E F G
units remaining open :
350 450 200

Use the transportation method to obtain an optimum solution to the

problem of the cheapest (least cost) means to transfer personnel from the
units to be closed to those will be expanded.

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7
ASSIGNMENT PROBLEM

Unit Structure :

1. Objectives
2. Introduction
3. Mathematical Model of Assignment Problem
4. Solution methods of assignment problem
7.3.1 Enumeration method
7.3.2 Simplex method
7.3.3 Transportation method
7.3.4 Hungarian method
4. Check your progress
5. Additional Problems
6. Let us sum up
7. Future References
8. Unit End Exercise

1. OBJECTIVES

After going through this chapter you will be able to :

 Understand what is an assignment problem.

 Distinguish between the transportation problem and an assignment
problem.
 Know the algorithm to solve an assignment problem.
 Formulate an assignment problem.
 Identify different types of assignment problems.
 Solve an assignment problem.

2. INTRODUCTION

An assignment problem is a particular case of transportation

problem where the objective is to assign a number of resources to an equal
number of activities so as to minimize total cost or maximize total profit
of allocation.

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The problem of assignment arises because available resources such

as men, machines, etc., have varying degrees of efficiency for performing
different activities. Therefore, cost, profit or time of performing the
different activities is different. Thus, the problem is : How should the
assignments be made so as to optimize the given objective.

Some of the problems where the assignment technique may be

useful are : Assignment of workers to machines, salesmen to different
sales areas, clerks to various checkout counters, classes to rooms, vehicles
to routes, contracts to bidders, etc.

7.2 MATHEMATICAL MODEL OF AN ASSIGNMENT

PROBLEM

Given n resources (or facilities) and n activities (or jobs), and

effectiveness (in terms of cost, profit, time, etc.) of each resource (facility)
for each activity (job), the problem lies in assigning each resource to one
and only one activity (job) so that the given measure of effectiveness is
optimized. The data matrix for this problem is shown in Table 7.1.

From Table 7.1, it may be noted that the data matrix is the same as
the transportation cost matrix except that supply (or availability) of each
of the resources and the demand at each of the destinations is taken to be
one. It is due to this fact that assignments are made on a one-to-one basis.

Table 7.1 Data Matrix

Resources (workers) J1 Activities (jobs) Jn supply
J2 …
W1 c11 c12 … c1n 1
W2 c 21 c 22 … c 2n 1
. . . . .
. . . . .
. . . . .
Wn c n1 c n2 … c nn 1
Demand 1 1 … 1 n

Let xij denote the assignment of facility i to job j such that

1 if facility i is assigned to job j
x ij  
0 otherwise

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Then, the mathematical model of the assignment problem can be stated as:
n n
Minimize Z   c ij xij subject to the constraints.
i1 j1
n

 xij 1 for all i (resource availability)

j1
n
 xij  1, for all j (activity requirement) and xij  0 or 1,
i1
for all i and j where c ij represents the cost of assignment of resource i to
activity j.

From the above discussion, it is clear that the assignment problem

is a variation of the transportation problem with two characteristics : (i)
the cost matrix is a square matrix, and (ii) the optimal solution for the
problem would always be such that there would be only one assignment in
a given row or column of the cost matrix.

Remark : In an assignment problem if a constant is added to or subtracted

from every element of any row or column in the given cost matrix, an
assignment that minimizes the total cost in one matrix also minimizes the
total cost in the other matrix.

3. SOLUTION METHODS OF ASSIGNMENT

PROBLEM

An assignment problem can be solved by the following four

methods :

 Enumeration method
 Simplex method
 Transportation method
 Hungarian method

7.3.1 Enumeration Method :

In this method, a list of all possible assignments among the given

resources (men, machines, etc.) and activities (jobs, sales areas, etc.) is
prepared. Then an assignment involving the minimum cost (or maximum
profit), time or distance is selected. If two or more assignments have the
same minimum cost (or maximum profit), time or distance, the problem
has multiple optimal solutions.

In general, if an assignment problem involves n workers / jobs,

then there are in total n! possible assignments. For example, for an n = 5
workers/ jobs problem, we have to evaluate a total of 5! or 120

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assignments. However, when n is large, the method is unsuitable for

manual calculations. Hence, this method is suitable only for small n.

2. Simplex Method :

Since each assignment problem can be formulated as a 0 or 1

integer linear programming problem, such a problem can also be solved by
the simplex method. As can be seen in the general mathematical
formulation of the assignment problem, there are n × n decision variables
and n + n or 2n equalities. In particular, for a problem involving 5 workers
/ jobs, there will be 25 decision variables and 10 equalities. It is, again,
difficult to solve manually.

3. Transportation Method :

Since an assignment problem is a special case of the transportation

problem, it can also be solved by transportation methods discussed in
Chapter 6. However, every basic feasible solution of a general assignment
problem having a square payoff matrix of order n should have n + n - 1 =
2n - 1 assignments. But due to the special structure of this problem, any
solution cannot have more than n assignments. Thus, the assignment
problem is inherently degenerate. In order to remove degeneracy, (n-1)
number of dummy allocations (deltas or epsilons) will be required in order
to proceed with the algorithm solving a transportation problem. Thus, the
problem of degeneracy at each solution makes the transportation method
computationally inefficient for solving an assignment problem.

4. Hungarian Assignment Method (HAM) :

It may be observed that none of the three working methods

discussed earlier to solve an assignment is efficient. A method, designed
specially to handle the assignment problems in an efficient way, called the
Hungarian Assignment Method, is available, which is based on the
concept of opportunity cost. It is shown in Table 7.1 and is discussed here.
For a typical balanced assignment problem involving a certain number of
persons and an equal number of jobs, and with an objective function of the
minimization type, the method is applied as listed in the following steps :

Step 1 Locate the smallest cost element in each row of the cost table. Now
subtract this smallest element from each element in that row. As a result,
there shall be at least one zero in each row of this new table, called the
Reduced Cost Table.

Step 2 In the Reduced Cost Table obtained, consider each column and
locate the smallest element in it. Subtract the smallest value from every
other entry in the column. As a consequence of this action, there would be
at least one zero in each of the rows and columns of the second reduced
cost table.

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Step 3 Draw the minimum number of horizontal and vertical lines (not the
diagonal ones) that are required to cover all the ‘zero’ elements. If the
number of lines drawn is equal to n (the number of rows/columns) the
solution is optimal and proceed to step 6. If the number of lines drawn is
smaller than n, go to step 4.

Step 4 Select the smallest uncovered (by the lines) cost element. Subtract
this element from all uncovered elements including itself and add this
element to each value located at the intersection of any two lines. The cost
elements through which only one line passes remain unaltered.

Step 5 Repeat steps 3 and 4 until an optimal solution is obtained.

Step 6 Given the optimal solution, make the job assignments as indicated
by the ‘zero’ elements. This is done as follows :

a)Locate a row which contains only one ‘zero’ element. Assign the job
corresponding to this element to its corresponding person. Cross out the
zero’s, if any, in the column corresponding to the element, which is
indicative of the fact that the particular job and person are no more
available.

b)Repeat (a) for each of such rows which contain only one zero.
Similarly, perform the same operation in respect of each column
containing only one ‘zero’ element, crossing out the zero(s), if any, in the
row in which the element lies.

c)If there is row or column with only a single ‘zero’ element left, then
select a row/column arbitrarily and choose one of the jobs (or
persons) and make the assignment. Now cross the remaining zeros in the
column and row in respect of which the assignment is made.
d) Repeat steps (a) through (c) until all assignment are made.
e) Determine the total cost with reference to the original cost table.
Example 7.1
Solve the assignment optimal solution using HAM.

Table 7.1 Time Taken (in minutes) by 4 workers

A B Job C D
Worker

1 45 40 51 67
2 57 42 63 55
3 49 52 48 64
4 41 45 60 55

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The solution to this problem is given here in a step-wise manner.

Step 1 The minimum value of each row is subtracted from all elements in
the row. It is shown in the reduced cost table, also called Opportunity Cost
Table, given in Table 7.2.
Table 7.2 Reduced Cost Table 1
A B Job C D
Worker

1 5 0 11 27
2 15 0 21 13
3 1 4 0 16
4 0 4 19 14

Step 2 For each column of this table, the minimum value is subtracted
from all the other values.

Obviously, the columns that contain a zero would remain unaffected by

this operation. Here only the fourth column values would change. Table
7.3 shows this.

Table 7.3 Reduced Cost Table 2

Job
Worker
A B C D
1 5 0 11 14
2 15 0 21 0
3 1 4 0 3
4 0 4 19 1

Step 3 Draw the minimum number of lines covering all zeros. As a

general rule, we should first cover those rows/columns which contain
larger number of zeros. Table 7.3 is reproduced in Table 7.4 and the lines
are drawn.
Table 7.4 Reduced Cost Table 3
Job
Worker
A B C D
1 5 0 11 14
2 15 0 21 0
3 1 4 0 3
4 0 4 19 1
Step 4 Since the number of lines drawn is equal to 4 (=n), the optimal
solution is obtained. The assignments are made after scanning the rows
and columns for unit zeros. Assignments made are shown with squares, as
shown in Table 7.5

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Table 7.5 Assignment of Jobs

Job
Worker
A B C D
1 5 0 11 14
2 15 21
0 0
3 1 4 3
0
4 0 4 19 1

Assignments are made in the following order. Rows 1, 3 and 4

contain only one zero each. So assign 1-B, 3-C and 4-A. Since worker 1
has been assigned job B, we cross the zero in the second column of the
second row. After making these assignments, only worker 2 and job D are
left for assignment. The final pattern of assignments is 1-B, 2-D, 3-C and
4-A, involving a total time of 40 + 55 + 48 + 41 = 184 minutes. This is the
optimal solution to the problem - the same as obtained by enumeration and
transportation methods.
Example 7.2
Using the following cost matrix, determine (a) optimal job
assignment, and (b) the cost of assignments.
Machinist Job
1 2 3 4 5
A 10 3 3 2 8
B 9 7 8 2 7
C 7 5 6 2 4
D 3 5 8 2 4
E 9 10 9 6 10

Iteration 1 Obtain row reductions.

Table 7.6 Reduced Cost Table 1
Machinist Job
1 2 3 4 5
A 8 1 1 0 6
B 7 5 6 0 5
C 5 3 4 0 2
D 1 3 6 0 2
E 3 4 3 0 4

Iteration 2 Obtain column reductions and draw the minimum number

of lines to cover all zeros.

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