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# VAM - MODI Transportation Scheduling

VOGEL’S APPROXIMATION METHOD (VAM)
The Vogel’s Approximation Method (Unit Cost Penalty Method) is an iterative procedure
for computing the basic feasible solution which is either optimal or very close to the optimal
solution of a transportation problem.
Example Problem
Carmels, a manufacturing company, has three plants and three destinations to which it has to
supply all the raw materials.
Compute the transportation costs for supplying the raw materials to all the destinations.
Initial Problem Table

Steps in VAM :
1. Identify the boxes having the minimum and next to minimum transportation cost in each row
and write the difference (penalty) along the side of the table against the corresponding row.
2. Identify the boxes having the minimum and next to minimum transportation cost in each
column and write the difference (penalty) below the table against the corresponding column.
Plant D1 D2 D3 Sources Penalties
A 6 8 10 150 2
B 7 11 11 175 4
C 4 5 12 275 1
Demand 200 100 300
Penalties 2 3 1

3. Identify the maximum penalty. If it is along the side of the table, make maximum allotment to
the box having the minimum transportation cost in that row. If it is below the table, make
maximum allotment to the box having the minimum transportation cost in that column.

4. Repeat the above steps until all the constraints are satisfied. If the penalties corresponding to
two or more rows or columns are equal, you are at liberty to break the tie arbitrarily.

Initial Basic Solution by VAM

Total Cost = 5125

REPORTER:

Abat, Thea Louise
3BSA2

275
What is MODI Method?

The MODI (modified distribution) method is a method for computing optimum solution of a
transportation problem. It allows us to compute improvement indices quickly for each unused
square without drawing all of the closed paths. Because of this, it can often provide considerable
time savings over other methods for solving transportation problems. MODI provides a new
means of finding the unused route with the largest negative improvement index. Once the largest
index is identified, we are required to trace only one closed path. This path helps determine the
maximum number of units that can be shipped via the best unused route.

How to Use the MODI Method?

Here are the steps.
1. a. V
i
+ W
j
= C
ij
, where
V
i
= the dual variable associated with the ith source constraint
W
j
= the dual variable associated with the jth destination constraint
C
ij
= the cost of shipping one unit from the ith source to the jth destination.
b. The value of an unoccupied cell: UC = C
ij
– V
i
- W
j
2. Write the complete set of equations in the style of formula 1(a) for all occupied cells in
the transportation table.
3. Write the complete set of equations in the style of formula 1(b) for all unoccupied cells in
the transportation table.
4. Set the first V
i
in step 2 equal to zero. It will then be possible to obtain numerical values
for all of the dual variables.
5. Use the numerical values you obtained in step 4 to solve the equations in step 3.
Let us use the example in VAM Method:
Initial Basic Solution by VAM

275
Computed values from occupied cells are as follows:
A-D3: V
1
+W
3
= 10
B-D1: V
2
+W
1
= 7
C-D1: V
3
+W
1
= 4
C-D2: V
3
+W
2
= 5
C-D3: V
3
+W
3
= 12
W1= 2 W2= 3 W3=10

V1=0
V2=5
V3=2

Test for Improvement:
Vacant Cells:
A-D1: 6-0-2=4
A-D2: 8-0-3=5
B-D2: 11-5-3=3
B-D3: 11-5-10= -4

REPORTER:
BRIGINO, Ivory C.
3SA2
275
SINCE THERE IS A NEGATIVE IN THE TESTING FOR
IMPROVEMENT, WE HAVE TO REVISE OUR TABLE UNTIL