Lecture on

Transportation Problem

Transportation problem

The transportation problem is a special type of linear programming problem

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 a special method of solution.
The origin of a transportation problem is the location from which shipments are
dispatched. The destination of a transportation problem is the location to which
shipments are transported. The unit transportation cost is the cost of
transporting one unit of the delivery from an origin to a destination.
Types of Transportation problems:
Balanced: When both supplies and demands are equal then the problem is said
to be a balanced transportation problem.
Unbalanced: When the supply and demand are not equal then it is said to be an
unbalanced transportation problem. In this type of problem, either a dummy row
or a dummy column is added according to the requirement to make it a balanced
problem. Then it can be solved similar to the balanced problem.

Example of transportation problem:

A cold drink manufacturing concern has m plants located in m different cities of
a country. The total supply potential of the manufactured product is observed by
n retail shops in n different cities of the country. Determine the transportation
schedule that minimizes the total cost of transporting cold drinks from various
plant locations to various retail shops.

Mathematical Formulation of the Problem

Show that transportation problem (T.P) is a special case of Linear Programming
Problem. A transportation problem can be stated mathematically as a linear
programming problem as below
m n
z =  xij cij
Minimize
i =1 j =1

Subject to the constraints:

Where,
ai = Quantity of commodity available at origin i,
bj = Quantity of commodity needed at destination j,

cij = Cost of transporting one unit of commodity

from origin i to destination j

xij = Quantity transportation from origin i to

destination j
Basic structure of transportation problem:
[

Here, D1, D2, D3 and D4 are the destinations where the products are to be delivered
from different sources O1, O2, O3 and O4. Si is the supply from the source Oi. dj is
the demand of the destination Dj. Cij is the cost when the product is delivered from
source Si to destination Dj.

Transportation Table
Transportation table is an especially designed table which is constructed to
solve the transportation problem symbolically.
Destination
1 2  n Supply
x11 x12 x1n

1
 a1
c11 c12 c1n

x 21 x 22 x 2n

Origin 2
 a2
c 21 c 22 c 2n

     

m x m1 x m2  x mn am
 c m1 c m2 c mn

Demand b1 b2  bn

This is the sample of the transportation table with m origins and n destinations.
The transportation table represents a matrix within a matrix. The one is the cost
matrix representing unit transportation cost cij , indicating the cost of shipping a

unit from the ith origin to the jth destination. Another is xij is the amount of

transported commodity from origin i to destination j . Right and bottom sides of

the transportation table point out the amounts of supplies ai available at source
i and the amounts of demanded b j at destination j .

Methods for finding the initial basic feasible solution for a Transportation
Problem (TP)

For finding the initial basic feasible solution, the following methods to be used
➢ The North-West Corner Method (NWCM)
➢ The Row-Minima Method (RMM)
➢ The Column Minima Method (CMM)
➢ The Matrix Minima Method (MMM)/Least Cost Method
➢ The Vogel’s Approximation Method (VAM)

Among the different methods, Matrix Minima Method (MMM) or Least Cost
Method is appropriate:
The steps of MMM or LCM is as:
Step-1:
Determine the smallest cost in the cost matrix of the transportation table. Let it
be . Allocate in the cell .
Step-2:
If cross off the row of the transportation table and decrease by
. Go to Step-3.
If cross off the column of the transportation table and decrease
by . Go to Step-3.
If cross off either row or column of the transportation
table but not both.

Step-3:
Repeat Steps 1 and 2 for the resulting reduced transportation table until all the
rim requirements are satisfied. Whenever the minimum cost is not unique, make
an arbitrary choice among the minima.

Problem
Obtain an initial basic feasible solution to the following TP using MMM/LCM

1 2 3 4 6 Capacity
4 3 2 0 8
0 2 2 1 10
4 6 8 6 24
Demand
Solution:
The transportation table of the given transportation table has 12 cells. Following
MMM, the first allocation (a tie) and we arbitrarily made in the cell , the
magnitude being . This satisfies the requirement at
destination and thus we cross off the first column from the table and yield
Table.1
1 2 3 4 6
4 3 2 0 8
0 2 2 1 6
6 8 6
Table.1
The second allocation is made in the cell and the magnitude
. Cross off the fourth column of the table and this yield
Table-2

1 2 3 4 6
4 3 2 0 2
0 2 2 1 6
6 8
Table.2
There is again a tie for the for the third allocation. We choose arbitrarily the cell
and allocation , therefore, we cross off either the
second column or the first row. We choose to cross off the first row of the table
and becomes Table-3
1 2 3 4
4 3 2 0 2
0 2 2 1 6
6 8
Table-3
The next allocation of magnitude is made in the cell and cross
off the second column and getting Table-4.
1 2 3 4
4 3 2 0 2
0 2 2 1 6
8
Table-4
We choose arbitrarily again, to make the next allocation in cell of
magnitude . Cross of the second row and yields Table-5.
1 2 3 4
4 3 2 0
0 2 2 1 6
6
Table-5
The last allocation of magnitude is made in the cell
and yields Table-6.
1 2 3 4 6
4 3 2 0 8
0 2 2 1 10
4 6 8 6 24
Table-6
Now, all the rim requirements have been satisfied and hence an initial feasible
solution has been determined. The solution is displayed is transportation Table-7.
1 2 3 4 6
4 3 2 0 8
0 2 2 1 10
4 6 8 6 24
Table-7
Therefore, the transportation cost according to the above route is given by:

Use the solver in Excel to find the number of units to ship from each factory to
each customer that minimizes the total cost.

Formulate the Model

1. To formulate this TP, answer the following three questions.

a. What are the decisions to be made? For this problem, we need Excel to find
out how many units to ship from each factory to each customer.
b. What are the constraints on these decisions? Each factory has a fixed supply
and each customer has a fixed demand.
c. What is the overall measure of performance for these decisions? The overall
measure of performance is the total cost of the shipments, so the objective is to
minimize this quantity.
2. To make the model easier to understand, create the following named ranges.
Range Name Cells
UnitCost C4:E6
Shipments C10:E12
TotalIn C14:E14
Demand C16:E16
TotalOut G10:G12
Supply I10:I12
TotalCost I16

3. Insert the following functions.

Explanation: The SUM functions calculate the total shipped from each factory
(Total Out) to each customer (Total In). Total Cost equals the sumproduct of
UnitCost and Shipments.

Trial and Error

With this formulation, it becomes easy to analyze any trial solution. For
example, if we ship 100 units from Factory 1 to Customer 1, 200 units from
Factory 2 to Customer 2, 100 units from Factory 3 to Customer 1 and 200 units
from Factory 3 to Customer 3, Total Out equals Supply and Total In equals
Demand. This solution has a total cost of 27800.

**It is not necessary to use trial and error. We shall describe next how the Excel
Solver can be used to quickly find the optimal solution.

Solve the Model

To find the optimal solution, execute the following steps.
1. On the Data tab, in the Analyze group, click Solver.

Note: can't find the Solver button? Click here to load the Solver add-in. Enter the solver
parameters (read on). The result should be consistent with the picture below.
You have the choice of typing the range names or clicking on the cells in the
spreadsheet.

2. Enter TotalCost for the Objective.

3. Click Min.
4. Enter Shipments for the Changing Variable Cells.
5. Click Add to enter the following constraint.
6. Click Add to enter the following constraint.

7. Check 'Make Unconstrained Variables Non-Negative' and select 'Simplex

LP'.
8. Finally, click Solve.
Result:
The optimal solution:

Conclusion:
It is optimal to ship 100 units from Factory 1 to Customer 2, 100 units from
Factory 2 to Customer 2, 100 units from Factory 2 to Customer 3, 200 units
from Factory 3 to Customer 1 and 100 units from Factory 3 to Customer 3. This
solution gives the minimum cost of 26000. All constraints are satisfied.