Transportation Problem

Dr. PR Weerathunga
Senior Lecturer
Faculty of Management Studies, RUSL

1
 Learning Objectives
After completing the lesson, you should be able to:
1. Develop Transportation Network ,
Transportation Table,
2. Formulate a Transportation Problem as a Linear
Programming Model.
3. Find Initial Feasible Solution,
4. Find Optimum Solution,
5. Special Cases: maximization transportation
problems, unbalanced problems, and problems
with prohibited routes.
Transportation
 Transportation Problem
– A distribution-type problem in which supplies of
goods that are held at various locations are to be
distributed to other receiving locations.
– The solution of a transportation problem will
indicate to a manager the quantities and costs of
various routes and the resulting minimum cost.
– Used to compare location alternatives in deciding
where to locate factories and warehouses to
achieve the minimum cost distribution
configuration.
 Transportation problem
Typically involves a set of sending locations, which
are referred to as origins, and a set of receiving
locations, which are referred to as destinations.

Supply Demand

Origins Destinations
 Transportation problem
To develop a model of a transportation problem, it
is necessary to have the following information:
1. Supply quantity (capacity) of each origin.
2. Demand quantity of each destination.
3. Unit transportation cost for each origin-
destination route.
Supply Demand

Origins Destinations
transportation cost p/u
 Transportation Network
Sale
Stores Centers
 Transportation Table General Format

(cost)

(Quantity)

 Cij = Cost per unit to transport from Origin i to Destination j

 Xij = Quantity transport from Origin i to Destination j
 Si = Supply for Origin i
 Dj = Demand for Destination j
Transportation Table
 LP Model for Transportation Problem
Objective Function
Minimize Cost (Rs.) Z = 4X11 + 2X12 + 8X13 + 5X21 + 1X22 + 9X23 + 7X31 +
6X32 + 3X33
Subject to Constraints:
Supply Constraints
x11 + x12 + x13 = 100
x21 + x22 + x23 = 200
x31 + x32 + x33 = 200
Demand Constraints
x11 + x21+ x31 = 50
x12 + x22 + x32 = 150
x13 + x23 + x33 = 300
Non- negative
xij ≥ 0
 Transportation Problem-Example-01
A product is produced in plants located in the
three different places (1,2 and 3) and
transported to four where houses located in four
Cities (A, B, C and D)
The cost of transporting one unit of product
from each plant (origin) to each where house
(destination) differs according to the distance
and transport system.
The problem is to determine how many units of
product to transport from each Plant to each
where houses on a monthly basis in order to
minimize the total cost of transportation.
The units available in the plants and demand of each
where houses (for a month) and transport cost from
origin to destinations are given below:
Where A B C D Suppl
House y
Plant
1 3 1 7 4 300
2 2 6 5 9 400
3 8 3 3 2 500
Demand 25 35 40 200 1200
0 0 0
 Questions
1. Develop a network diagram for the above problem,
2. Formulate LP Model for this problem,
3. Find Initial Feasible Solution, under Following Method
i, North West Corner Method,
ii, Least Cost Method,
iii, Vogal’s Approximation Method
4, Find Optimum Solution under Following Methods:
i, Stepping Stone Method, ii, Modified Distribution (MODI) Method
5. If there are prohibited rout between plant 2 and where house
c, how do you solve problem
6. If we assume above problem is a maximization problem
how do you find
i, Initial Feasible solution ii, Find Optimum Solution.
7. What is Degeneracy? Explain with example.
(1) Network Diagram
A

B
2

3
C
3

D
(2) LP Model for the Problem
Minimize Z = 3 X1A + 1X1B + 7X1C + 4X1D + 2X2A + 6X2B +
5X2C + 9X2D + 8X3A + 3X3B + 3X3C + 2X3D
Subject to: Supply Constraints
x1A + x1B + x1C + x1D = 300
x2A + x2B + x2C + x2D = 400
x3A + x3B + x3C + x3D = 500
Demand Constraints
x1A + x2A + x3A = 250
x1B + x2B + x3B = 350

x1C + x2C + x3C = 400

x1D + x2D + x3D = 200
Non-negativity
xij ≥ 0
 Transportation Table General Format
Where house
Plant
A B C D Supply

1 3 1 7 4
300
2 2 6 5 9
400
3 8 3 3 2
500

Demand 250 350 400 200 1200

(3 .i) Initial Feasible Solution
(North West Corner
Method)
 North West Corner Method the
largest possible allocation is made in
the cell in the upper left hand corner of
the tableau, followed by allocations to
next feasible cells.

 The initial solution is complete when all

rim requirements are satisfied.
 (3.i) Initial Feasible Solution (North West Corner
Method)
Where house
A B C D Supply
Plant

1 3 1 7 4
250 50 X 300
2 2 6 5 9
X 300 100 X 400
3 8 3 3 2
X 300 200 500

Demand 250 350 400 200 1200

The initial cost is obtained by substituting the allocations in the objective

function
Z = 3 X1A + 1X1B + 7X1C + 4X1D + 2X2A + 6X2B + 5X2C + 9X2D + 8X3A + 3X3B +
3X3C + 2X3D
= 3 (250) + 1(50)+ 7(0) + 4(0)+ 2(0)+ 6(300) + 5(100) + 9(0)+ 8(0)+
 (3.ii) Initial Feasible Solution
(Least Cost Cell
Method)
 The Least Cost Cell Method as much
as possible is allocated to the cell with
the minimum cost.
 The initial solution is complete when
all rim requirements are satisfied.
(3.ii) Initial Feasible Solution (Least Cost Cell
Method)
Where house
Plant
A B C D Supply
1 3 1 7 4
300
2 2 6 5 9
400
3 8 3 3 2
500
Demand 250 350 400 200 1200

The initial cost is obtained by substituting the allocations in the objective

function
Z = 3 X1A + 1X1B + 7X1C + 4X1D + 2X2A + 6X2B + 5X2C + 9X2D + 8X3A + 3X3B +
3X3C + 2X3D
=
 (3.iii) Vogal’s Approximation Method
Vogel's Approximation Model (VAM)is
based on the concept of penalty cost or
regret.

Penalty Cost is the difference between the

lowest cost and next lowest cost cell in a
row or column).

VAM allocates maximum units as much as

possible to the minimum cost cell in the row
or column with the largest penalty cost.
 (3.iii) Vogel's Approximation Model Steps
1. Determine the penalty cost for each row and
column by subtracting the lowest cell cost in
the row or column from the next lowest cell
cost in the same row or column.
 Column A: L C = 2, Next LC = 3. As such 3 - 2 = 1
2. Select the row or column with the highest
penalty cost (breaking ties arbitrarily or
choosing the lowest-cost cell).
3. Allocate as much as possible to the feasible
cell with the lowest transportation cost in
the row or column with the highest penalty
cost.
4. Repeat steps 1, 2, and 3 until all rim
(3.iii) Initial Feasible Solution (Vogal’s Approximation Method)
W- house
A B C D Supply Penalty Cost
Plant

1 3 1 7 4 √ 3 - -
2
X 300 X X 300
2 2 6 5 9 3 1 1 1
250 X 150 X 400
3 8 3 3 2 √ 1
X 1 1 0
50 250 200 500
Demand 250 √ 350 √ 400 200 √ 1200
Regret/ 1 2 2 2

Penalty - 2 2 2

Cost 3 2 7

3 2 -
(3.iii) Initial Feasible Solution (Vogal’s Approximation
Method)
Where house
Plant
A B C D Supply
1 3 1 7 4
300
2 2 6 5 9
400
3 8 3 3 2
500
Demand 250 350 400 200 1200
After each VAM cell allocation, all row and column penalty costs are
recomputed
The initial cost is obtained by substituting the allocations in the
objective function
Z = 3 X1A + 1X1B + 7X1C + 4X1D + 2X2A + 6X2B + 5X2C + 9X2D + 8X3A +
3X3B + 3X3C + 2X3D
 (4) Optimum Solution
After obtaining the initial solution, the
problem may be solved using:
1.Stepping-Stone Method
2.Modified Distribution Method (MODI)

1.Stepping Stone Method –

determines if there is a cell with no allocation
that would reduce cost if used.

2. Modified Distribution Method (MODI)–

a modified version of the stepping-stone
method. However, the individual cell cost
changes are determined mathematically.
 (4.1) Stepping Stone Method
Step 1: Determine the stepping-stone path
and cost changes for each empty cell in the
tableau.

Step 2: Allocate as much as possible to the

empty cell with the greatest net decrease in
cost.

Step 3: Repeat steps 1 and 2 until an empty

cell have positive cost changes that indicates
an optimal solution.
 4.1 Optimum Solution (Stepping Stone
Method)
T
o
1 2 3
From

X 25 125

X X 175

200 75 X

Step 1: Determine the stepping-stone path and cost

changes for each empty cell in the tableau.
But First Identify Empty Cells :
11
21
22
33
 From
T
o
1 2 3
25
+1
X -1 125

175

200 75
-1 +1

Evaluation of Cell 11
In evaluating the empty cells the constraint of
the problems cannot be violated, and
feasibility must be maintained.
Review of the cost increase/reduction of the
process. 12 11 31 32
 To
From
1 2 3
-1 +1
25 125

+1 -1
X 175
-1 +1
200 75

Evaluation of Cell 21

Review of the cost increase/reduction of the process.

23 21 31 32 12 13
- 11 +7 -4 +5 -8
+ 10 = -1
Evaluation of Cell 22
T
From o
1 2 3
-1 +1
25 125
+1 -1
X 175

200 75

Review of the cost increase/reduction of the

process.
23 22 12 13

- 11 +11 -8 +10 = +2
 Evaluation of Cell 33
T
From o
1 2 3
+1 -1
25 125

175
-1 +1
200 75 X

Review of the cost increase/reduction of the process.

32 33 13 12

- 5 +12 - 10 + 8 = +5
 T
From o
1 2 3

25 125

175

200 75
Identify cost changers and allocate maximum
number of units to the cell having high negative
value
(11) – reduction 1 (21) – reduction 1
(22) –
T
o
increase
1 22 (33) 3 – increase Evaluation
5 of
From
+1 -1 Cell
25 25 -25= 0 125 11
21
175
-1 +1
22
200 75 33
-25 = 175 + 25 = 100
Identify the
minimum in the
stepping
The cost of the initial cost is obtained by substituting stone
the allocations in
the objective function path.
Z = 611 + 812 + 1013 + 721 +1122 + 1123 + 431 + 532 + 1233
= 6(25) + 8(0) + 10(125) + 7(0) + 11(0) + 11(175) + 4(175) + 5(100) + 12(0)
 4.2 Optimum Solution (MODI Method)
An easier way to make cost per unit calculation for
unoccupied cell in a Tableau.
MODI method gives an index ui for each row and
an index vj for each column of the tableau which
required to have values.
Per unit cost of each Occupied Cell is Ui + Vj =
Cij. Then find all the values of Ui and Vj choosing
U1 = 0 and show them in the relevant rows and
columns in the Tableau.
Per unit change in total cost due to the allocation of
one unit to Unoccupied Cell is, eij = cij – ui – vj
If you get negative values for eij, select the
unoccupied cell with maximum negative and
distribute maximum possible amount.

Then we get second basic feasible solution

Repeat above steps until you get zero or positive

values for all eij which indicate that you have
reached the optimal solution.
 4.2 Optimum Solution (MODI Method)
Vj V1= V2= V3=

Ui T
From o 1 2 3
U1=
25 125

U2=
175
U3=
200 75

Step 1: Determine per unit cost of each Occupied

Cell (12, 13, 23, 31 and 32 )based on Ui + Vj =Cij.
Values of index Ui and Vj based on Ui + Vj = Cij
(Occupied Cell are12, 13, 23, 31 and 32 )

Ui + Vj = Cij If U1 = 0
U1 + V2 = C12 U1 + V2 = 8 0 + V2 = 8, V2 = 8
U1 + V3 = C13 U1 + V3 = 10 0 + V3 =10, V3 = 10
U2 + V3 = C23 U2 + V3 = 11 U2 + 10 =11, U2 = 1
U3 + V1 = C31 U3 + V1 = 4 -3 + V1 = 4, V1 = 7
U3 + V2 = C32 U3 + V2 = 5 U3 + 8 = 5, U3 = -3
 Values of Per unit change in total cost based on
eij = Cij - Ui - Vj (value of Unoccupied Cells 11, 21,
22, and 33 )
U1 = 0 , U2 = I , U3 = -3 and V1 = 7 , V2 = 8 , V3 = 10
eij = cij – ui – vj eij = cij – ui – vj
e11 = c11 – u1 – v1 e11= 6 – 0 – 7 e11= -1
e21 = c21 – u2 – v1 e21 = 7 – 1 – 7 e21 = -1
e22 = c22 – u2 – v2 e22 = 11 – 1 – 8 e22 = 2
e33 = c33 – u3 – v3 e33 = 12 – (-3) – 10 e33 = 5
Based on the calculated values of eij, Unoccupied Cells 11
and 21 show -1(negative 1) It means you can reduce
transport cost by Rs. 1 per unit shift form Occupied to
unoccupied cell (maximum # is 25)
Repeat above steps until you get zero or positive
values for all eij which indicate that you have
reached the optimal solution.
second basic feasible solution
Vj V1= V2= V3=

Ui T
From o 1 2 3
U1=
25 25 - 25 125

U2=
175
U3=
200 -25 75 + 25
Special Cases of Transportation Problems
Maximization
Transportation-type problems that concern profits or revenues
rather than costs with the objective to maximize profits rather
than to minimize costs.
Unacceptable Routes
Certain origin-destination combinations may be unacceptable
due to weather factors, equipment breakdowns, labor problems,
or skill requirements that either prohibit, or make undesirable,
certain combinations (routes).
Take example 01 and assume that there is a rout block between
plant 2 and wherehouse c
Special Cases of Transportation Problems
(cont’d)

Unbalanced Problem
Situations in which supply, and demand are not
equal such that it is necessary to modify the
original problem so that supply and demand are
equalized.
Quantities in dummy routes in the optimal
solution are not shipped and serve to indicate
which supplier will hold the excess supply, and
how much, or which destination will not receive
its total demand, and how much it will be short.
Thank you