Transportation Problem

Content..

Generic Model
Initial Solutions
VAM
Least Cost Method
Modi Method

Transportation Problem
This problem involves the shipment of a
homogeneous product from a number of supply
locations to a number of demand locations.

Problem: given needs at the demand locations,

how should we take limited supply at supply
locations and move the goods. Further suppose
we wish to minimize cost.

Basic Concept
Objective:
Minimize cost
Variables:
Quantity of goods shipped from each
Supply point to each demand point
Restrictions:
Non negative shipments
Supply availability at a supply point
Demand need at a demand point

Formulation of Problem
Suppose there are m sources and n destinations
Let ai be the number of supply units available at
source i (i=1,2,3 m).
Let bj be the number of demand units required at
destination j (j= 1, 2, 3n)
The total number of variables is m x n.
The total number of constraints is m + n.
Let cij represent unit transportation cost for
transporting unit from source i to destination j.
We have determine number of units to be transported
from i source to j destination so that total cost of
transportation is minimum.

Formulation of Problem
cont
Let x be the number
of units shipped from
ij

source i to destination j.
Let ai be the row i total supply
Let bj be the column j total demand
Min

cijxij

subject to

ij
xij < ai for each source
j

xij > bj for each destination

i
xij > 0 for all i and j

Balanced Transportation
Problem
The total supply from all the sources equals
the total demand in all the destinations.

In case of balanced transportation problem, all

constraints are expressed as equations i.e. there
is no inequality.

Example 1:
A dairy firm has three plants and four distribution centers. The daily
production capacity and demand at each distribution centre is given in
the table below. The cost shipping of one million litres of milk from
plant to distribution centre is also given in hundreds of rupees.
Plant

1
2
3
Demand

Distribution Centres

2
1
5
7

3
0
8
5

11
6
15
3

7
1
9
2

Supply
(millio
n
litres)
6
1
10

17

Formulation: Step 1

Here xij are the decision variables i.e. the

quantities of milk to be shipped from different
plants to different distribution centres.
When i=1,2,3 and j= 1, 2, 3,4
and xij 0

Formulation: Step 2
Minimize the objective function i.e.
Minimize Z = 2x11 + 3x12 + 11x13 + 7x14 +
x21 + 0x22 + 6x23 + x24 + 5x31 + 8x32 +
15x33 + 9x34

In general we can write:

Min cijxij

ij

Formulation: Step 3
Here constraints are the supply of milk is limited. So,

Here constraints are the demand of milk

Solving Transportation
Problem
The transportation problem is solved in two phases:
Phase I Obtaining an initial feasible solution
Phase II Moving toward optimality

In Phase I,
North-West Corner Rule
The Least-Cost Method
Row Minima Method
Column Minima Method
Vogels Approximation Method (VAM)

In Phase II,
The Stepping Stone Method,
The MODI method ( Modified Distribution Method)

North-West Corner Rule

1. Assign largest possible allocation to the cell in the
upper left-hand corner of the tableau
2. Repeat step 1 until all allocations have been
assigned
3. Stop. Initial tableau is obtained
4. The proposed solution is feasible solution since all
demand and supply constraints are fully satisfied.
5. Assignment has been done without considering
cost, solution may not be the best or optimal.
6. The value of xij can be taken as zero when they
are not allocated in any cell.
7. A cell that gets an allocation is called a basic cell.

Allocation of supply using NWC rule

11

15

10

6
1

1
5

5
7
1

3
3

2
2

17

Example 2: Transportation
Tableau

Northwest corner
Step 1

Step 2

Max (150,200)

150 --

--

150 --

50

--

0
125

--

150

0
17

Allocation of supply using NWC rule

Row Minima
Allocate as mush as possible in the
lowest cost cell of the first row so
that either the capacity of the first
plant is exhausted or the
requirement at jth distribution center
is satisfies or both.
In case of tie among the cost, select
arbitrarily.

Least cost Method

Here, we use the following steps:
Steps:
Step 1 Find the cell that has the least cost
Step 2: Assign as much as allocation to this cell
Step 3: Block those cells that cannot be allocated
Step 4: Repeat above steps until all allocation
have been assigned.

In case tie among the cost, select the

cell where allocation of more number
of units can be made.

Example 1:Allocation of supply using

Least Cost Method
2

11

15

10 9
5 2

6
1

1
5

1
7
1

4
5
4

3
3

2
2

17

Example 2: Allocation of supply using Least

Cost Method
Step 1:

Step 2:

200

The min cost, so allocate as much resource as possible here

Step 3

22

Example 2: Allocation of supply

using Least Cost Method cnt
Second iteration, step 4

Step 3:

--200

75

23

Example 2: Allocation of supply using Least Cost Method cnt

The initial solution

Stop. The above tableau is an initial

tableau because all allocations have been
assigned
24

Vogels approximation
method
Operational steps:

Step 1: for each column and row, determine its

penalty cost by subtracting their two of their
least cost
Step 2: select row/column that has the highest
penalty cost
in step 1
Step 3: assign as much as allocation to the
selected row/column that has the least cost
Step 4: Block those cells that cannot be further
allocated
Step 5: Repeat above steps until all allocations have
been
25
assigned

Vogels approximation
method
If

Then

Case 1

Tie among the highest penalties

Select the row

/column having
minimum cost

Case 2

Tie among minimum cost

Select the cell which

can have max.
allocation

Case 3

Tie among maximum allocation

Select cell arbitrarily

for allocation

subtracting their two of their least cost

Step 1

(8-6)
(11-7)
(5-4)

(6-4)

(8-5)

(11-10)
27

Steps 2 & 3
Step 2:
Highest penalty
cost

Step 3: this has the least cost

28

Step 4

---

---

29

Step 5
Second Iteration

-----

---

30

3 Iteration of VAM
rd

---

-----

---

31

Initial tableau for VAM

32

Some definitions
Feasible Solution: A set of non-negative
values of xij that satisfy the constraints of
transportation problem. The demand and
supply constraints are satisfied.
Basic Feasible Solution: A feasible
solution that contains no more than m+n1 non-negative allocations, satisfy demand
and supply constraints, non-negative
constraints and constraints are
independent and do not form loop.

Some definitions
Optimal Solutions: A feasible
solution which makes the cost of
transportation is minimum. The
solution need not to be basic feasible
solution.
Degenerate Basic Feasible
Solution: A basic feasible solution
that contains less than m+n-1 nonnegative allocations.

Finding Optimal Solution:

35

Test for Optimality

After finding initial solution, test for
optimality is done.
The two methods can be used to test
optimality:
Stepping Stone Method
Modified distribution Method (MODI
Method) or u-v method.

Stepping-stone method
1. Determine an initial basic feasible solution using any three method
discussed above.
2. Select a non-basic cell (unoccupied cell) and allocate +1 unit to this cell.
3. Trace a closed loop so that the turning points of the loop is in the
allocated cells.
4. Calculate net change in the transportation cost.
5. Carry out all above four steps for all unallocated cells.
6. Negative value in net change in transportation cost implies that the cost
can be further reduced.
7. In case net change is positive or zero, the solution in the question is
optimal.
8. Select the cell giving highest negative net cost change and determine
maximum number of units that can be assigned to that cell. Also addition
and subtraction have to made to other cells in the loop to satisfy the
demand and supply constraints.
9. Again go to step 2 and follow subsequent steps till net change in all
unoccupied cells is positive or zero.

Stepping-stone method
Let consider the following initial tableau from the Min Cost algorithm

There are
Non-basic variables

These are basic

variables

Question: How can we introduce

a non-basic variable into basic variable?
38

Introduce
a non-basic variable into basic
variables
Here, we can select any non-basic variable
as an entry and then using the + and
steps to form a closed loop as follows:

Then we have
let consider this non
basic variable

39

Stepping stone

The above saying that, we add min value of all ve cells into cell that has + sign, and subtracts
the same value to the -ve cells
Thus, max ve is min (200,25) = 25, and we add 25 to cell A1 and A3, and subtract it from B1 and A3

40

Stepping stone

The above tableaus give min cost = 25*6 + 120*10 + 175*11

175*4 + 100* 5 = $4525
We can repeat this process to all possible non-basic cells in that above
tableau until one has the min cost!
NOT a Good solution method
41

Getting optimal solution using MODI

method

In this method, net cost change is

evaluated for all unoccupied cells
and only one closed path is traced
for the most negative value of net
cost change.
There is considerable time saving
over the Stepping Stone Method.

42

Modified distributed method

(MODI)
It is a modified version of stepping stone
method
MODI has two important elements:
1.It determines if a tableau is the optimal one
2.It tells you which non-basic variable should be
firstly considered as an entry variable
3.It makes use of stepping-stone to get its
answer of next iteration
. How it works?
43

Procedure (MODI)
Step 0: let ui, vj , cij variables represent rows, columns, and cost in
the

transportation tableau, respectively

Step 1: (a) form a set of equations that uses to

represent all basic variables
ui + vj = cij

(b) solve variables by assign

one variable = 0
Step2: (a) form a set of equations use to
represent non-basic variable (or
empty cell) as such
cij ui vj = kij

(b) solve variables by using step 1b information

Step 3: Select the cell that has the most ve value in 2b
Step 4: Use stepping-stone method to allocate resource to cell
in
step 3
Step 5: Repeat the above steps until all cells in 2a has no
negative
Example
value
44

MODI
Consider to this initial tableau:

Step 0: let ui, v , cij variables represent rows, columns, and cost in the
transportation tableau, respectively
45

Step 0

C3A

Step 1: (a) form a set of equations that

uses to
represent all basic variables
ui + vj = cij

46

ui + vj = cij

(b) solve variables by assign

one variable = 0
47

Set one variable = 0

Because we
added an
non-basic variable

Step2: (a & b)

48

Step2: (a & b)

Note this may look difficult and complicated, however, we can add these
49
V=values into the above tableau as well

Step2: (a & b), alternative

-1
-1

+2
+5

6-0-7
Step 3: Select the cell that has the most ve value in 2b
50

Step3
-1
-1

+2
+5

Select either one, (Why?)

These cells mean, introduce it will reduce the min z to -1 cost unit
51

Step 4: Use stepping-stone

method

From here we have .

52

Step 4: Use stepping-stone method

Step 5: we repeat steps 1-4 again for the above tableau, we have
53

Step 5

54

Step 5 cont

All positive
STOP

55