Transportation Problems

Description
A transportation problem basically deals with the
problem, which aims to find the best way to fulfill the
demand of ‘n’ demand points using the capacities of
‘m’ supply points. While trying to find the best way,
generally a variable cost of transferring the product
from one supply point to a demand point or a similar
constraint should be taken into consideration.
Introduction

 It is a particular class of LPP. In a T.P we

have few factories/origins/ sources which
manufacture homogenous products which
are to be distributed to various warehouses/
destinations.
 Each factory has its own independent
capacity denoted by “ai”, similarly each
warehouse has its independent requirements
denoted by “bj”.
Objective

 A Transportation problem is formulated and

solved to find out the schedule of
transportation, i.e. which factory should
transport to which warehouse or warehouses
or which warehouse should get its demand
fulfilled from which factory or factories so that
the overall transportation cost is minimum.
In T.P if,
 Total capacity=total requirement,

 Then it is called a balanced T.P.

 Number factories are denoted by ‘m’ and

number of destinations by ‘n’.

 Cost of transportation is denoted by ‘cij’

 ‘m’ may be equal to or less than ‘n’

Solution of T.P

 It is divided into two parts

1. Initial basic Feasible solution

2. Test of Optimality or Optimal
Solution
IFBS (Initial Basic Feasible
Solution)
 North West Corner Method (NWCM)
 South East corner method (SECM)
 Least cost method (LCM)
 Vogel’s approximation method (VAM)
OS (Optimal Solutions)

 Modified Distribution Method ( MODI)

or U-V Method

 Stepping Stone Method

General Transportation Table
factory Warehouse

W1 W2 W3 W4 Supply
(Availibity)

F1 x11 x12 x13 x14 s1

F2 x21 x22 x23 x24 s2
F3 x31 x32 x33 x34 s3
Fn xm1 xm2 xm3 xm4 sm

Demand d1 d2 d3 D4--
(Requirement dn
s)
Transportation tableau
A transportation problem is specified by the
supply, the demand, and the shipping costs.
So the relevant data can be summarized in a
transportation tableau. The transportation
tableau implicitly expresses the supply and
demand constraints and the shipping cost
between each demand and supply point.
Table 1. Costs, Supply, and Demand for a
ABC co. Example

factory Warehouse
W1 W2 W3 W4 Supply

F1 6 5 1 3 100
F2 4 8 7 2 125
F3 6 3 9 5 75
Demand 70 90 80 60

Transportation
Solution
1. Decision Variable:
Since we have to determine how much units are
sent from each factory to each warehouse;

Xij = Amount of units produced at factory i and sent

to warehouse j

X14 = Amount of units produced at factory 1 and sent

to warehouse 4
2. Objective function

Since we want to minimize the total cost of units from

Factories to warehouses;

Minimize Z = 6X11+5X12+1X13+3X14+
4X21+8X22+7X23+2X24+
6X31+3X32+9X33+5X34
3. Supply Constraints
Since each supply point has a limited production
capacity;

X11+X12+X13+X14 <= 100

X21+X22+X23+X24 <= 125
X31+X32+X33+X34 <= 75
4. Demand Constraints
Since each supply point has a limited production
capacity;

X11+X21+X31 >= 70
X12+X22+X32 >= 90
X13+X23+X33 >= 80
X14+X24+X34 >= 60
5. Sign Constraints
Since a negative amount of units can not be transferred
all Xij’s must be non negative;

Xij >= 0 (i= 1,2,3; j= 1,2,3,4)

LP Formulation of ABC co.’s
Problem
Min Z=
6X11+5X12+1X13+3X14+4X21+8X22+7X23+2X24+6X31+3X32+9X33+5X34

Sub. to.: X11+X12+X13+X14 <= 100 (Supply Constraints)

X21+X22+X23+X24 <= 125
X31+X32+X33+X34 <= 75

X11+X21+X31 >= 70 (Demand Constraints)

X12+X22+X32 >= 90
X13+X23+X33 >= 80
X14+X24+X34 >= 60

Xij >= 0 (i= 1,2,3; j= 1,2,3,4)

General Description of a
Transportation Problem
1. A set of m supply points from which a good is
shipped. Supply point i can supply at most si units.
2. A set of n demand points to which the good is
shipped. Demand point j must receive at least di
units of the shipped good.
3. Each unit produced at supply point i and shipped to
demand point j incurs a variable cost of cij.
Methods to find the BFS for a
balanced TP
There are three basic methods:

1. Northwest Corner Method

2. Minimum Cost Method

3. Vogel’s Method
1. Northwest Corner Method
To find the BFS by the NWC method:
Begin in the upper left (northwest) corner of the
transportation tableau and set x11 as large as
possible (here the limitations for setting x11 to a
larger number, will be the demand of demand point
1 and the supply of supply point 1. Your x11 value
can not be greater than minimum of this 2 values).
According to the explanations in the previous
slide we can set x11=70 (meaning demand of
demand point 1 is satisfied by supply point
1). 100

125

75

70 90 80 60

70 30

125

75

X 90 80 60
After we check the east and south cells, we
saw that we can go east (meaning supply point
1 still has capacity to fulfill some demand).

70 30 X

125

75

X 60 80 60

70 30 X

60 65

75

X X 80 60
70 30 X

60 65 X

75

X X 15 60

70 30 X

60 65 X

15 60

X X X 60
Finally, we will have the following bfs, which is:
x11=70, x12=30, x22=60, x23=65, x33=15, x34=60
therefore;

the cost of transportation=

70*6+30*5+60*8+65*7+15*9+60*5=1940

70 30 X

60 65 X

15 60 X

X X X X
2. Minimum Cost Method
The Northwest Corner Method dos not utilize shipping
costs. It can yield an initial bfs easily but the total cost
may be very high. The minimum cost method uses costs
in order come up with a bfs that has a lower cost. To
begin the minimum cost method, first we find the decision
variable with the smallest cost (Xij). Then assign Xij its
largest possible value, which is the minimum of si and dj
An example for Minimum Cost
Method
Step 1: Select the cell with
minimum
2 cost.3 5 6
5

2 1 3 5
10

3 8 4 6
15

12 8 4 6
Step 2: Cross-out column 2

2 3 5 6
5

2 1 3 5
2
8

3 8 4 6
15

12 X 4 6
Step 3: Find the new cell with minimum shipping
cost and cross-out row 2

2 3 5 6
5

2 1 3 5
X
2 8
3 8 4 6
15

10 X 4 6
Step 4: Find the new cell with minimum shipping
cost and cross-out row 1

2 3 5 6
X
5
2 1 3 5
X
2 8
3 8 4 6
15

5 X 4 6
Step 5: Find the new cell with minimum shipping
cost and cross-out column 1

2 3 5 6
X
5
2 1 3 5
X
2 8
3 8 4 6
10
5

X X 4 6
Step 6: Find the new cell with minimum shipping
cost and cross-out column 3

2 3 5 6
X
5
2 1 3 5
X
2 8
3 8 4 6
6
5 4

X X X 6
Step 7: Finally assign 6 to last cell. The
bfs is found as: X11=5, X21=2, X22=8,
X31=5, X33=4 and X34=6

2 3 5 6
X
5
2 1 3 5
X
2 8
3 8 4 6
X
5 4 6

X X X X
3. Vogel’s Method
Begin with computing each row and column a penalty.
The penalty will be equal to the difference between the
two smallest shipping costs in the row or column. Identify
the row or column with the largest penalty. Find the first
basic variable which has the smallest shipping cost in that
row or column. Then assign the highest possible value to
that variable, and cross-out the row or column as in the
previous methods. Compute new penalties and use the
same procedure.
An example for Vogel’s Method
Step 1: Compute the penalties.

Supply Row Penalty

6 7 8
10 7-6=1

15 80 78
15 78-15=63

Demand 15 5 5

Column Penalty 15-6=9 80-7=73 78-8=70

Step 2: Identify the largest penalty and assign
the highest possible value to the variable.

Supply Row Penalty

6 7 8
5 8-6=2
5
15 80 78
15 78-15=63

Demand 15 X 5

Column Penalty 15-6=9 _ 78-8=70

Step 3: Identify the largest penalty and assign
the highest possible value to the variable.

Supply Row Penalty

6 7 8
0 _
5 5
15 80 78
15 _

Demand 15 X X

Column Penalty 15-6=9 _ _

Step 4: Identify the largest penalty and assign
the highest possible value to the variable.

Supply Row Penalty

6 7 8
X _
0 5 5
15 80 78
15 _

Demand 15 X X

Column Penalty _ _ _
Step 5: Finally the bfs is found as X11=0, X12=5,
X13=5, and X21=15

Supply Row Penalty

6 7 8
X _
0 5 5
15 80 78
X _
15

Demand X X X

Column Penalty _ _ _