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supply chain management for reducing cost and improving

service. Therefore, the goal is to find the most cost effective

way to transport the goods. Transportation problems are

among the most pressingstrategic developmentproblems in

many cities, often a major constraint for long-term urban

development ingeneral, and very closely related to land

development, economicstructure,energypolicies, and

environmental quality. Since all citizens are either enjoying

thetransportation system or, and often at the same time,

suffering from it, it is an important element of the urban quality

of life.

The transportation problems is generally to be solved ,deals

with inefficiency of urban transportation systems and

underlying land use patterns, whichnegatively affect quality of

life, economic efficiency, and the environment; the high(and

often hidden) costs of urban transportation in both socio-

economic andenvironmental terms; and in particular the

environmental consequences both in termsof physical aspects

that include land and resource use, ecological aspects,

andhuman health problems.Efficient tools for comprehensive

strategic analysis that are directly useful to cityadministrations

are lacking. New strategies for sustainable mobility require

wellbalanced combinations of measures with impacts on

improved land-use/economic development planning;

improved planning, management and use of transport

infrastructures andfacilities; incorporation of the real

costs of both infrastructure and environment in

investment policies and decisions and also in user costs;

development of public transport and improvement of its

competitive position ,continued technical improvement of

vehicles and fuels.

incentives for the use of less polluting fuels; promotion of

a more environmentally rational use of the private car,

including behavioural changes.

These problems can only be addressed with a consistent and

comprehensiveapproach and planning methodology that helps

to design strategies for sustainablecities. This has to include an

integration of socio-economic, environmental andtechnological

concepts including the development, integration,and

demonstration ofmethodologies to improve forecasting,

assessment and strategic policy level decision

Mathematical Model of Transportation Problem

Mathematically a transportation problem is nothing but a

special linear programming problem in which the objective

function is to minimize the cost of transportation subjected to

the demand and supply constraints.

Let ai = quantity of the commodity available at the origin i,

bj = quantity of the commodity needed at destination j,

cij = transportation cost of one unit of a commodity from origin

I

to destination j,

and xij = quantity transported from origin I to the destination j.

Mathematically, the problem is

Minimize z = ΣΣ xij cij

S.t.

Σxij = ai, i= 1,2,…..m

Σxij = bj, j= 1,2,…..,n

and xij ≥ 0 for all i and j .

Let us consider an example to understand the formulation of

mathematical model of transportation problem of transporting

single commodity from three sources of supply to four demand

destinations. The sources of supply can be production facilities,

warehouse or supply point, characterized by available capacity.

The destination are consumption facilities, warehouse or

demand point, characterized by required level of demand.

PROGRAMMING MODEL

Let P denote the plant (factory) where the goods are being

manufactured & W denote the warehouse (godown) where

finished products are stored by the company before shipping to

various destinations.

Further let, xij = quantity (amount of goods) shipped from

plant Pi to the warehouse Wj, and

Cij = transportation cost per unit of shipping

from plant Pi to the Warehouse Wj.

Objective-function. The objection function can be represented

as:

Minimize Z = c11x11 + C12x12 + C13x13 (i.e. cost of shipping

+ c21x21 + c22x22 + c23x23 from a plant

+ c31x31 + c32x32 + c33x33 to the ware house)

Supply constraints. x11 + x12 + x13 = S1

x21 + x22 + x23 = S2

x31 + x32 + x33 = S3

Demand constraints. x11 + x21 + x31 = D1

x21 + x22 + x23 = D2

x31 + x32 + x33 = D3

Either, xij ≥ for all values of I and j (ie; x11, x12, … all such

values are ≥ 0) .It is further assumed that: S1 + S2 + S3 = D1 +

D2 + D3

The total supply available at the plants exactly matches the

total demand at the destinations. Hence, there is neither excess

supply nor excess demand. Such type of problems where

supply and demand are exactly equal are known as Balanced

Transportation Problem. In general, if a transportation problem

has m rows an n column, then the problem is solvable if there

are exactly (m + n –1) basic variables.

A transportation problem is said to be unbalanced if the supply

and demand are not equal. If Supply < demand, a dummy

supply variable is introduced in the equation to make it equal

to demand ,Likewise, if demand < supply, a dummy demand

variable is introduced in the equation to make it equal to

supply.

1 points to note:-

1) Total supply = total demand then it is a balanced

transportation problem, otherwise it is a unbalanced problem.

2) The unbalanced problem can be balanced by adding a

dummy supply center (row) or a dummy demand center

(column) as the need arises.

3) When the number of positive allocation at any stage of

feasible solution is less than the required number (row

+Column – 1) the solution is said to be degenerate otherwise

non-degenarete.

2

The solution algorithm to a transportation problem can be

summarized into following steps:

Step 1. Formulate the problem and set up in the matrix form.

The formulation of transportation problem is similar to LP

problem formulation. Here the objective function is the total

transportation cost and the constraints are the supply and

demand available at each source and destination, respectively.

Step 2. Obtain an initial basic feasible solution.

This initial basic solution can be obtained by using any of the

following methods:

1

2 i. North West Corner Rule

3 It is a simple and an efficient method to obtain an initial

solution.This method does not take into account the cost of

transportation on any route of transportation. This method can

be summarized as follows :

4 Step 1: Start with the cel at the upper left (north-west)

corner of the transportation matrix and allocate as much as

possible equal to the minimum of the rim values for the first

row and first column, i.e. min (a1, b1).

5 Step 2: (a) If allocation made in step 1 is equal to the

capacity of the first source (a1, in first row), then move

vertically downward to the cell (2,1) in the second row and

first column and apply step1 again, for next allocation.

(b) If alcation made in step1 is equal to the first destination

(b1, in first column), then move horizontally to the cell (1,2) in

the first row and second column and apply step1 again for next

allocation.

(c) If a1 = b1, allocate x11 = a1, or b1 and move diagonally to

the cell (2,2).

allocation is made ion the south-east corner cell of the

transportation table.

7 Vogel’s approximation Method (penalty or regret method)

is a heuristic method and is preferred to the other two methods

described above. In this method each allocation is made on the

basis of the opportunity (or penalty or extra) cost that would

have incurred if allocation in certain cells with minimum unit

transportation cost were missed. In this method allocations are

made so that the penalty cost is minimized. The advantage of

this method is that it gives an initial solution which is nearer to

an optimum solution or is the optimum solution itself.The steps

in VAM are as follows:

8 Step1: calculate penalties for each (column) by taking the

difference between the smallest and next smallest unit

transportation cost in the same row (column).This difference

indicates the penalty or extra cost which has to be paid if one

fails to allocate to the cell with the minimum unit

transportation cost.

9 Step2: Select the row or column with the largest penalty

and allocate as much as possible in the cell having the least

cost in the selected row or column satisfying the rim

conditions. If there is a tie in the values of penalties then it can

be broken by selecting the cell where maximum allocation can

be made.

10 Step3: Adjust the supply and demand and cross out the

satisfied row or column. If a row and a column are satisfied

simultaneously, only one of them is crossed out and the

remaining row (column) is assigned a zero supply (demand).

Any row or column with zero supply or demand should not be

used in computing future penalties.

11 Step4: Repeat step1 to 3 until the entire available supply

at various sources and demand at various destinations are

satisfied.

12

13 (iii) Least cost method

Since our abjective is to minimize the total transportation cost ,

we musttry to transport as must as possible through those

routes (cells)where the unit transportation cost is minimum.

This method takes in to account the minimum unit cost and can

be summarized as follows:

Step1:select the cell with the smallest unit cost in the

entire transportation table and allocate as much as possible to

this cell and eliminate (line out )that row or column in which

either supply or demand is exhausted.if both a row and column

are satisfied simultaneously only one may be crossed out .In

case the smallest unit cost cell is not unique ,the then select

the cell where maximum can be made.

uncrossed – out rows and column repeat the procedure with

smallest unit cost among the remaining all rows and column of

the transportation and allocate as much as possible to this cell

and eliminate (line out )that row and column in which either

supply and demand is exhausted.

supply at various sources and demand at various destination is

satisfied. The solution so abtained need not to be non

degenerate.

following conditions:

1 i. The solution must be feasible, i.e., it must satisfy all the

supply and demand constraints. This is called RIM CONDITION.

2 ii. The number of positive allocations must be equal to m

+ n – 1, where, m is number of rows and n is number of

columns

are called a non-degenerate basic feasible solution.

Step 3. Test the initial solution for optimality.

Using any of the following methods can test the optimality of

obtained initial basic solution:

1 i. Stepping Stone Method

2 ii. Modified Distribution Method (MODI)

new improved solution.

solution is arrived at.

Case : sharma milk products pvt ltd , gujurat , india

A dairy firm has three plants located through out a state .the

daily milk production at each plant is as fol;lows :

Each day the firm must fufil the needs of its four distribution

centres .minimum requirement at each center is as follows :

distribution centre is given in the folloing tablr in hundreds

rupees:

Distribution centres

PLANT D1 D2 D3 D4

P1 2 3 11 7

P2 1 0 6 1

P3 5 8 15 9

using 3 methods which are as follows:

Solution : (A) North West Corner Rule

Plant D1 D2 D3 D4 SUPPLY

P1 11 6=a1

2 3 7

6

P2 1=a2

1

1 0 6 1

P3 8 15 9 10=a3

5 5 3 2

This exhaust the supply at p1 and left 1 unit as unsatisfied

demand at d1.

Since a2 = b1, therefore allocate x21 =1.

d2,d3 and d4, therefore x32 =5,x33 and x34=2.

basic cells) are 5 which is 1 less than the required number

m+m-1(3+1-1=6). Thus this solution is the degenerate

solution.

The transportation cost associasted with this solution is :

=RS 11600

(B) Least Cost Method

D1 D2 D3 D4 supply

2 3 11 7 6

6

0

1 6 1 1

1

5 8 4 15 3 9 2 10

1

Demand 7 5 3 2

maximum possible allocation which can be made here is 1.

This exhausts the supply at planned p2, therefore row2 is

crossed out.

maximum possible allocation which can be made here is 6.

This exhausts the supply at planned p1, therefore row p1 is

crossed out.

demand at all the four distribution centres, therefore

maximum possible allocation satisfying the supply and

demand conditions are made in cells (p3,d1), (p3,d2),

(p3,d3) and (p3,d4).

equal to the required number, m+n-1(3+4-1=6). Thus this

solution is non degenerate.

The transportation cost associated with this solution is

Total cost= Rs. (2x6+5x1+8x4+15x3+9x2)x100 = Rs.

11200.

2 3 11

7 6 1 1 5 -

1 5

1 1 1 1 - - -

0 6

1

5 8 15 10 3 3 4 4

6 3 9 1

7 5 3 2

1 3 5 6

3 5 4 2

3 - 4 2

5 - 15 9

the required number m+n-1(3+4-1=6), therefore this solution

is nondegenerate. The transportation cost associated with this

solution is

=Rs 10200

is lower than the cost of transportation determined by the

other two methods. Therefore it is of advantage to use this

method in order to find an initial basic feasible solution.

CONCLUSION

important element of the total cost structure for any business.

In this modern era of hypercompetitive competition, the key

criteria for any business is to achieve high profits and success

by reducing its cost. Hence transportation cost being an

important and major element of the cost structure need to be

reduced (taken care off) to the extent possible.

been duly shown in the study, through the use of three

different matters which are NORTH-WEST CORNER RULE, LEAST

COST METHOD and VOGAL’S APPROXIMATION METHOD, among

which Vogal’s Approximation Method is considered the most

efficient one in minimizing cost. Through the use of these

models a business can identify easily and efficiently how to

plan out its transportation, so that it can not only minimize the

cost of transporting goods and services but also create time

utility by reaching the goods and services at the right place and

at the right time.

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