Transportation Methods

Developing Initial Solutions • Northwest Method • Intuitive Method • Vogel Approximation Method Evaluating Solutions • Stepping Stone Method • MODI Method

Example
Warehouse A
5

B
9

C
3

Supply

1
Factory

100
4 2 6

2

100

200 Demand 80 90 30 200

OBJ. FUNCTION : Minimize C = 5X1 + 9X2 + 3X3 + 4X4 + 2X5 + 6X6

A
5

B
9

C
3
Constraints :

1

X1
4

X2
2

X3
6

100

X1 +X2 + X3 = 100 X4 +X5 + X6 = 100

2

X4

X5

X6

100

X1 +X4 = 80 X2 + X5 = 90

200 80 90 30 200

X3 +X6 = 30

Conditions : X1, X2, X3, X4, X5 , X6 = > 0

Northwest corner rule
• Allocate the available supply to the cells starting from the northwest corner (Upper left) and moving down vertically or horizontally, satisfying the demand. • Observed that the number of cells used must be equal to the number of rows + the number of columns – one. • Compute for the cost of transportation summing up the products of the cost of transport and amount to be transported to the destination. • Proceed to check for areas of improvement using any of the methods stated in the next number.

Northwest Method
W

N E S 3

A
5

B
9

C 20 100

1

80
4 2 6

2

100

200 80 90 30 200

Northwest Method A
5

B
9

C
3

1

80
4

20
2 6

20 100

2

100

200 80 90 30 200

Northwest Method A
5

B
9

C
3

1

80
4

20
2 6

20 100

2

70

30 100

200 80 90 30 200

Northwest Method A
5

B
9

C
3

1

80
4

20
2 6

20 100

2

70

30

30 100

200 80 90 30 200
Completed Cells = R + C - 1 = 2 + 3 - 1 = 4 TC =80(5)+20(9) + 70(2) + 30(6) = 900

Stepping Stone Method A
5

B
9

C
33

1
Factory

-

80
4

20

+

100
+ 2 6 2A +4

2A 1A -5 2C -2 ____ -7 +6

2
+

70
-

30

100

1B

+3 ____ +7

200 80 90 30 200

Stepping Stone Method A
5

B
9 -

C
3 +

1

80
4

20
2

100
1C

1C + +3 +2 ____ +5 -10 2C -6 1B ____ -9 -15

6

2B

2

70
+

30
-

100

200 80 90 30 200

Stepping Stone Method A
5

B
9

C
3

1

80
4 2

20
6

100

2

90

10
-

100

200 80 90 30 200
TC =80(5)+20(3) + 90(2) + 10(6) = 700

Stepping Stone Method A
5

B
9 +

C
3 -

1

80
4 2

20
6

100
+ 1B +9 +6 ____ +15

1B 1C -3 2B -2 ____ -5 +10

2
-

90

10
+

100

2C

200 80 90 30 200

Stepping Stone Method A
5

B
9

C
3 +

1

-

80
4 2

20
6

100
+ 2A +4 +2 ____ +5

2A 1A -5 2C ____ -6 -11 -4

2
+

90

10
-

100

1C

200 80 90 30 200

Stepping Stone Method A
5

B
9

C
3 +

1

-

80
4 2

20
6

100
+ 2A +4 +2 ____ +5

2A 1A -5 2C ____ -6 -11 -4

2
+

90

10
-

100

1C

200 80 90 30 200

Stepping Stone Method A
5

B
9

C
3

1

70
4 2

30
6

100

2

10

90

100

200 80 90 30 200

Stepping Stone Method A
5 -

B
9 +

C
3

1

70
4 2

30
6

100
+ 1B +9 +4 ____ +13

1B 1A -5 2B ____ -2 -7 +6

2
+

10

90
-

100

2A

200 80 90 30 200

Stepping Stone Method A
5

B
9

C
3 -

1

+

70
4 2

30
6

100
+ 1A +5 +6 ____ +11

2C 1C -3 2B ____ -4 -7 +4

2
-

10

90
+

100

2A

200 80 90 30 200

Stepping Stone Method A
5

B
9

C
3

1

70
4 2

30
6

100

2

10

90

100

200 80 90 30 200
TC =70(5)+30(3) + 10(4) + 90(2) = 660 SOLUTION IS OPTIMAL

Least Cost Method (Intuitive Method)
• Start from the cell with the least cost. Then work your way to the other cells always considering the least transportation cost. • Compute the cost of transport and improve using any of the two methods in no. 4.

Intuitive Method A
5

B
9

C
3

1

100
4 2 6

2

100

200 80 90 30 200

Intuitive Method A
5

B
9

C
3

1

100
4 2 6

10

2

90

100

200 80 90 30 200

Intuitive Method A
5

B
9

C
3

1

70

30
4 2 6

100

10

2

90

100

200 80 90 30 200

Intuitive Method A
5

B
9

C
3

1

70

30
4 2 6

100

10

2

10

90

100

200 80 90 30 200

Intuitive Method A
5

B
9

C
3

1

70

70
4 2

30
6

100

10

2

10

90

100

200 80 90 30 200
Completed Cells = R + C - 1 = 2 + 3 - 1 = 4 TC =70(5)+30(3) + 10(4) + 90(2) = 660

MODI Method
5 3 3

A
Index 5 0

B
9

C
3

1

70
4 2

30
6

100

-1

2

10

90

100

200 80 90 30 200
Cell Cost - ( Row Index + Column Index )

MODI Method
5 3 3

A
Index 5 0

B
9

C
3

1

70
4 2

30
6

100

1B: 9 - ( 0 + 3 ) = + 6

-1

2

10

90

100

2C: 6 - (-1 + 3 ) = + 4

200 80 90 30 200
SOLUTION IS OPTIMAL

VAM - Vogel Approximation Method
Based on the concept of minimizing opportunity cost. The opportunity cost of a given row or column is the difference between the lowest cost and the second lowest cost alternative.

Procedure : 1. For each row an column, select the lowest and second lowest alternatives from those not already allocated and calculate the opportunity cost. 2. Scan the opportunity cost figures and identify the row or columns with the largest opportunity cost. 3. Allocate as many units as possible to this row or column in the square with the least cost.

VAM - Vogel Approximation Method
A
9

B
8

C
5

W
6 8 4

25 35
7 6 9

X

Y 30 25 45

40 100 100

VAM - Vogel Approximation Method
A
9

B
8

C
5

W
6 8

25
4

25 35

X
7 6 9

Y 30 25 45

40 100 100

Row/Column Row W Row X Row Y Column A Column B Column C

2nd Lowest Cost - Lowest Cost = Opportunity Cost 8 6 7 7 8 5 5 4 6 6 6 4 3 2 1 1 2 1 Largest

VAM - Vogel Approximation Method
A
9

B
8

C
5

W
6 8

25
4

25 35

X
7 6

20
9

Y 30 25 45

40 100 100

Row/Column Row X Row Y Column A Column B Column C

2nd Lowest Cost - Lowest Cost = Opportunity Cost 6 7 7 8 9 4 6 6 6 4 2 1 1 2 5

Largest

VAM - Vogel Approximation Method
A
9

B
8

C
5

W
6 8

25
4

25 35

X
7 6

20
9

Y 30

25 25 45

40 100 100

Row/Column Row X Row Y Column A Column B

2nd Lowest Cost - Lowest Cost = Opportunity Cost 8 7 7 8 6 6 6 6 2 1 1 2 Largest

Largest

VAM - Vogel Approximation Method
A
9

B
8

C
5

W
6 8

25
4

25 35

X Y

15
7 6

20
9

15 30

25 25 45

40 100 100

Thank You!

7

6

5

A
9 0

B
8

C
5

W
6 8

25
4

25 35

-1

X Y

15
7 6

20
9

0

15 30

25 25 45

40 100 100

WA: 9 - ( 0 + 7 ) = + 2 WB: 8 - ( 0 + 6 ) = + 2

XB: 8 - ( -1 + 6 ) = + 3 YC: 9 - ( 0 + 5 ) = + 4

TC =25 (5)+15(6) + 20(4) + 15(7) + 25(6) = 550

A
9

B
8

C
5

W
6 8

25
4

25 35

X Y

15
7 6

20
9

15 30

25 25 45

40 100 100

A
+
9

B
8

C
5

W
6 8

25
4

25 35

X Y

15
7 6

20 25 25 45

+
9

15 30

40 100 100

A
9

B
8

C
5

W
6 8

25
4

25 35

X Y
+

15
7

+
6

20
9

15 30

25 25 45

40 100 100

A
9

B
8

C
5

W X Y
+
6 8

25
4

25 35

15
7 6

20
9

15 30

25 25 45

+

40 100 100

A
9

B
+
8

C
5

W
6

25
8 4

25 35 40

X Y
+

15
7 6

20 25 25 45

+
9

15 30

100

100

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