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EXAMPLE FOR SOLUTION OF TRANSPORTATION PROBLEM

An organization has four destinations and three sources for supply of goods. The transportation cost per unit is given below. The entire availability is 700 units which exceeds the cumulative demand of 600 units. Decide the optimal transportation scheme for this case.

Solution

Step 1:

Check for balance of supply and demand

S Supply = 250 + 200 + 250 = 700 units

S Demand = 100 + 150 + 250 + 100 = 600 units

Decision Rule

(i)

If S Supply = S Demand

then go to next step.

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Homework Help . in this problem S supply > S Demand Hence. add a “dummy destination” with zero transportation cost.aspx 2/17 . add a “dummy destination” (say D5) with zero transportation cost and balance demand which is difference in supply and demand (= 100 units). Note that each cell of the transportation matrix represents a potential route. Introducing dummy column for balancing the supply and demand Step 2: (i) Decide the nature of problem : Minimization of transportation-cost (ii) Make initial assignment Initial assignment may be done by using any of the following approaches : (i) Least-cost method (ii) North-West corner method (iii) Vogel's approximation method We would demonstrate all the three methods. Since. The initial transportation matrix is now formulated with transportation cost in the small box of each route. transtutors. Management. if S supply < S Demand then.… (ii) Else.12/16/12 Solved Example Transportation Problem Help for Transportation Model.com/homework-help/industrial-management/…/solved-example-transportation-problem. (iii) Or else. add a “dummy source” with zero transportation cost. if S Supply > S Demand then.

S1. For S1D5. column D5) and work for allocation of other routes. With this allocation.e. We allocate minimum of the two. Hence. with 13 per unit of shipping cost. For this route.12/16/12 Solved Example Transportation Problem Help for Transportation Model.… (i) Initial Solution by Least Cost method Select the lowest transportation (or shipping) cost cell (or route) in the initial matrix. available supply is 250 and available demand is 100 units. With 100 units allocation in route S 1 D5 Assignment for destination D1 and D5 consumed transtutors. 100 units in this route.e. is still (250-100) or 150 units left. the demand is 100 units and remaining supply is 150 units. Let us select S1D5 route. For example: it is route S1D5. Homework Help .e. D1 is consumed but source S1 is still left with (150-100) = 50 units of supply.. Allocate the minimum of remaining balance of supply (in last column) and demand (in last row). We get the following matrix (Fig. S1D5). S2D5 and S3D5 in our problem with zero shipping cost. D5. 12.aspx 3/17 . now leave the destination D1 and we get the following matrix. Next. allocate 100 units-through this route (i.. With this destination.com/homework-help/industrial-management/…/solved-example-transportation-problem. The entire demand of destination. So.6) by crossing out the consumed destination (D5): Now. least cost route is S1D1. Management. is consumed. This is marked in last column of supply. entire demand of route S1D5 is consumed but supply of corresponding source. i. One can also select other route (S2D5 or S3D5) in case of tie. The lower is 100 units. we leave the consumed routes (i.

we work on remaining matrix. column. Assignment with destination D1 . cross out row of S1.com/homework-help/industrial-management/…/solved-example-transportation-problem. Next assignment is due in the least cost route of the remaining routes. In case of any tie (such as this). So. D4 and D5 source S 1 are consumed Now. With this. we select any of the routes. all supply of source S1 is consumed. With this source. S2 is consumed. Management. 9450.12/16/12 Solved Example Transportation Problem Help for Transportation Model. and allocate 50 units (minimum of demand of 150 and supply of remaining 50 units). Final initial assignment is as follows: Total cost in this assignment is (13 × 100 + 16 × 50 + 100 × 0 + 16 × 100 + 15 × 100 + 17 × 150) or Rs. the demand of destination D4 is consumed. Therefore. this column is now crossed out. D1. which excludes first column (D1) and last column (D5). which is route S2D4. We get the following matrix: Destination D1 . Next assignment is due in the least cost route. transtutors. D4 and D5 consumed Now. Homework Help . Both have 16 units of transportation cost. remaining allocation is done in route S2D3 (as 100 units). D4 and D5. we work on the remaining matrix which excludes. Note that we have two potential routes: S1D2 and S2D3. By this allocation in route S2D4. Next allocation of 100 units is done in route S3D2 and 150 units in route S3D3. we can allocate 100 units which is lesser of the corresponding demand (100 units) and (200 units).aspx 4/17 . Let us select route.… Now. For this route. S1D2.

aspx 5/17 . which excludes column Dr Again. With this. as we have done in the least cost method. demand for this route is 100 and supply is 250. proceed to step 5. Therefore. including dummy column. If filled route < (m + n – 1) then the solution is degenerate. row. allocate 100 units in this route. Hence. Homework Help .12/16/12 Solved Example Transportation Problem Help for Transportation Model.e. it is cell S1D2. Management. select the top-left route. Now. if any For our problem (m + n. column corresponding to D1 is consumed. Allocate in the same way. Hence. 150 units are allocated in this route. Therefore. we start with the top-left (corner-most) route. step 5). work on the remaining matrix. Thus.… Initial assignment by least cost method Step 3: Count the number of filled (or allocated) routes. remove degeneracy and go to Here. m = number of destinations. allocation is made in this route for the minimum of supply or demand. this approach should not be applied if initial assignment has already been made by any other method. Decision rule (i) If filled route = (m + n – 1) then go for optimality check (i. which is S: Dr Irrespective of cost. if any n = number of source.l) = 5 + 3-1 = 7. Now. problem is not degenerate. In the NorthWest Corner (NWC) method. are consumed. transtutors. Therefore. Initial Assignment by North-West Corner Method (an alternative to least cost method) This approach is also for making initial assignment.com/homework-help/industrial-management/…/solved-example-transportation-problem. The number of filled route is equal to 7. with this. including dummy. both D2 and S. (ii) step 4. Note that. In our case.

the least cost unfilled cells are S1D5 and S2D5. S3D4 and S3D5 in sequential order. Step 4: In case of degeneracy. in this. Step 3: Check for degeneracy (m + n – 1) = 5 + 3 – 1 = 7 Number of filled cells = 6.com/homework-help/industrial-management/…/solved-example-transportation-problem. Hence.11): Initial assignment by North-West corner method For this assignment. allocation in the top-left cell is due in route S2D3. We get the following allocation after Initial assignment by North-West corner method after removing degeneracy Initial Assignment by Vogel’s Approximation Method (VAM) This is the third alternative method for doing initial assignment of a transportation problem. Let us select S1D5 and allocate removing degeneracy. Remaining allocations are done in S2D3. we calculate the difference between the two least-cost routes for each row and column. allocate a very-very small quality.aspx 6/17 . D1 and D2.… Remaining matrix excludes S1. 200 units may be allocated and S2 is now consumed. Homework Help . the total cost is (13 × 100 + 16 × 150 + 16 × 100 + 0 × 100) or Rs. Here. 9350. in the least cost of un-filled cells. Management. which is one less than (m + n – 1). 12. go to step 4 for removing degeneracy.12/16/12 Solved Example Transportation Problem Help for Transportation Model. We get the initial solution by northwest corner method as follows (Fig. The difference is called as penalty cost for not using the least-cost route. (which is zero for all calculation purposes). transtutors. In this method. Hence. In the above figures of North-West corner method allocation.

… “6” Management experts Online First calculation of Penalty cost in VAM 725. This route S3D5. Homework Help . 127.12/16/12 Solved Example Transportation Problem Help for Transportation Model. first allocation is as follows. Now for this. should be the lowest cost of this row. Hence. the least cost route is S1D1. which one must select.992 Experts Highest of all calculated penalty costs is for S3 and (S2). We exclude this column and work on the remaining matrix for calculating the penalty cost. The route (or cell). next assignment is due in this route: Chat now Second calculation of Penalty cost in VAM transtutors.445 Questions Asked 1.aspx 7/17 . destination D5 is consumed. Hence. Therefore. Management. with the first allocation.164 Questions Answered Ask Your Question Now! First calculation in Vogel’s method Now.com/homework-help/industrial-management/…/solved-example-transportation-problem. source S1 has highest penalty cost. For this row. We get the following matrix. allocation is to made in row of source S3.

we leave this column and proceed for calculation of next penalty cost.com/homework-help/industrial-management/…/solved-example-transportation-problem. we break the tie by arbitrarily selecting any route (S1D2 in this case.… Second allocation in Vogel’s method After second allocation.aspx 8/17 . Allocation is done in route S1D2. Homework Help . Management.12/16/12 Solved Example Transportation Problem Help for Transportation Model.) Third calculation of Penalty cost Third allocation in Vogel’s method transtutors. Since there is tie between all routes. since destination D1 is consumed.

Hence. the allocations of 100 units and 150 units are done in route S2D3 and S4D3 respectively. Final allocation through Vogel’s method The initial cost for this allocation is (13 × 100 + 16 × 150 + 16 × 100 + 15 × 100 + 17 × 150 + 0 × 100) or equal to Rs. Homework Help . we get the following allocations in the Vogel’s approximation method. 9350: Step 3: Check for degeneracy (m + n – 1) = 7 Number of filled cell = 6. which is one less than (m + n + 1).12/16/12 Solved Example Transportation Problem Help for Transportation Model.com/homework-help/industrial-management/…/solved-example-transportation-problem. In the only left column D3. Management. column D4 is consumed. Thus. go to step 4 for removing the degeneracy.… Fourth calculation of Penalty cost in VAM Fourth allocation in Vogel’s method With the fourth allocation.aspx 9/17 . transtutors.

source S1. Homework Help . we have to calculate the opportunity cost of un-occupied routes. next step is to check the optimality of the initial solution. using following equation: u1 + v1 = Cij (For any filled route) where u1 = row value vj = column value Cij = unit cost of assigned route Once first set of column values (vj is known. none of these methods guarantees optimal solution.e.aspx 10/17 . locate other routes of filled cells in these columns. we get following matrix after removing degeneracy.. Hence. let us define row value. For these routes. Step 5: Check the optimality of the initial solution For this.12/16/12 Solved Example Transportation Problem Help for Transportation Model. However.degenerate initial solution. Calculate next of ui (or vj values using above equation. First. This cell is route S1D5 or S2D5. Now consider all filled routes of this row. for all rows and columns. Let us select row 1. In this way. Thus. For this row. Final allocation after removing degeneracy in Vogel’s method Optimization of Initial Assignment The initial feasible assignment is done by using least-cost method or North-West corner method or Vogel's approximation method. Step 6: Check the optimality Calculate the opportunity of non-allocated orunfilled routes. u1 = 0.com/homework-help/industrial-management/…/solved-example-transportation-problem. Let us select route S1D5. calculate column values v. ui and vj values are determined for a non.… Step 4: We allocate in the least-cost un-filled cell. we start with any row (or column). Management. For this. use the following equation: transtutors. i.

v1 = 13 – 0 = 13 v2 = 16 – 0 = 16 v5 = 0 – 0 = 0 transtutors. successive corner points from unfilled cell are subtracted with this value. ¥o r this. Step 7: Make a loop of horizontal and vertical lines which joins some filled routes with the unfilled route.10) : For this. Homework Help . Hence.and S1D5are filled cells.aspx 11/17 . for filled cells. transfer the minimal of all allocations at the filled cells to the positive opportunity cost cell.… Opportunity unassigned route = ui + vj – Cij where ui = row value vj = column value Cij = unit cost of unassigned route If the opportunity cost is negative for all unassigned routes. In this way. Now S1Dp S1D2. Management. Let us consider the initial allocation of least-cost method (Fig. the row and column addition of demand and supply is maintained. S1and take u1 = 0.com/homework-help/industrial-management/…/solved-example-transportation-problem. which has a positive opportunity cost. the initial solution is optimal. If in case any of the opportunity costs is positive. Now. we start with row. Note that all the corner points of the loop are either filled cells or positive opportunity cost un-assigned cells. (vj = Cij – ui). then go to next step. Corresponding addition is done at alternate cells. We show the algorithm with our previous problem. 12.12/16/12 Solved Example Transportation Problem Help for Transportation Model.

transtutors. For this cell u2 = 16 – 16 = 0 Now. Management. cell S2D4 is selected. as this has a ui value.12/16/12 Solved Example Transportation Problem Help for Transportation Model. as it has a ui value. For this cell u3 = 17 – 16 = 1 Now. as this has a vj value.aspx 12/17 . Step 6: Calculate opportunity cost of un-assigned routes.com/homework-help/industrial-management/…/solved-example-transportation-problem. as it has a vj value. For this cell v4 = 15 – 0 = 0 Thus. the solution is non-optimal. Homework Help . all ui and vj are known. hence. Unassigned route S1D3 S1D4 S2D1 S2D2 S2D5 S3D1 S3D4 S3D5 Opportunity cost (ui + vj – Cij ) 0 + 16 – 19 = –3 0 + 15 – 17 = –2 0 + 13 – 17 = –4 0 + 16 – 19 = –3 0 +0 – 0 = 0 1 + 13 – 15 = –2 1 + 15 – 16 = 0 1 + 0 – 0 = +1 Since route S3D5 has positive opportunity cost.… Calculation for ui and vj in least cost initial assignment Now. we go to next step and make a loop as follows. For this cell v3 = 17 – 1 = 16 Now. cell S3D3 is selected. cell S3D2 is taken. cell S2D3 is selected.

Unassigned route S1D3 S1D4 S2D1 S2D2 S2D5 S3D1 S3D2 S3D4 Opportunity cost (ui + vj – Cij ) 0 + 17 – 19 = –2 0 + 16 – 17 = –1 –1 + 13 – 17 = –5 –1 + 16 – 19 = –4 –1 + 0 – 0 = –1 0 + 13 – 15 = –0 0 + 16 – 17 = –1 0 + 16 – 16 = 0 Opportunity cost Route Unit Cost in this route transtutors.aspx 13/17 . since un-allocated routes have negative (or zero) opportunity cost. revised allocation is as follows: Revised allocation in least-cost assignment Since above solution is degenerate now. Management. we allocate to the least-cost un-filled cell S1D5. Similarly. For this assignment. Now. optimality of North-West corner method solution is done.… Closed loop for cell S 3 D5 The revised allocation involves 100 units transfer from cells S1D5 and S3D2 to cells S3D5 and S1D2.com/homework-help/industrial-management/…/solved-example-transportation-problem.12/16/12 Solved Example Transportation Problem Help for Transportation Model. Thus. Note that total cost is less than the initial assignment cost of least-cost method (= Rs. the opportunity cost of unassigned cells is as follows. Thus. the present assignment is the optimal one. 9450). Fresh calculation of ui and vj is also done in the similar way as explained in Step 5. Homework Help . optimal allocation of route is given in Figure.

9350 Optimal allocation in different routes Calculation of ui and vj for N-W corner method’s initial solutions Opportunity cost of above assignment is as follows: Since all opportunity costs are negative or zero. 200 units in S2D3. the optimality of Vogel’s method’s initial solution is done.com/homework-help/industrial-management/…/solved-example-transportation-problem. 9350. Opportunity cost of above N-W corner assignment is as follows Unassigned route S1D3 S1D4 S2D1 S2D2 S2D4 S2D5 S3D1 S3D2 Opportunity cost (ui + vj – Cij ) 0 + 17 – 19 = –2 0 + 16 – 17 = –1 –1 + 13 – 17 = –5 –1 + 16 – 19 = –4 –1 + 16 – 15 = 0 –1 + 0 – 0 = –1 0 + 13 – 15 = –2 0 + 16 – 17 = –1 transtutors. Homework Help .aspx 14/17 . the initial assignment is optimal one with total cost of Rs. 150 units in S1D2. Management. 50 units in S3D3. 100 units in S3D4. The optimal assignment of routes is 100 units is S1D1.12/16/12 S1D1 S1D2 S2D3 S2D4 S3D3 S3D5 Solved Example Transportation Problem Help for Transportation Model. Similarly.… 100 150 100 100 150 100 13 × 100 = 1300 16 × 150 = 2400 16 × 100 = 1600 15 × 100 = 1500 17 × 150 = 2550 0 × 100 = 0 Total cost = Rs.

Management. 100 units in S2D3. Note that this solution is different from North-West corner solution but total cost is same and minimum.12/16/12 Solved Example Transportation Problem Help for Transportation Model.aspx 15/17 . Homework Help . 9350. 100 units in S2D4.… Calculation of ui and vj for Vogel method’s initial solutions Opportunity cost of above assignment is as follows: Unassigned route S1D3 S1D4 S2D1 S2D2 S2D5 S3D1 S3D2 S3D4 Opportunity cost (ui + vj – Cij ) 0 + 17 – 19 = –2 0 + 16 – 17 = –1 –1 + 13 – 17 = –5 –1 + 16 – 19 = –4 –1 + 0 – 0 = –1 0 + 13 – 15 = –2 0 + 16 – 17 = –1 0 + 16 – 16 = 0 Since all opportunity costs are negative or zero. The optimal assignment of routes is 100 units in S1D2. the initial assignment of Vogel’s solution is optimal with total cost of Rs. transtutors.com/homework-help/industrial-management/…/solved-example-transportation-problem. and 150 units in S3D3.

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