TRANSPORTATION PROBLEM:

ASSUMPTIONS AND USES

PRESENTED BY
ATHIRA J R
S2 MCOM
ROLL NO. 10
DEPARTMENT OF COMMERCE
KARIYAVATTOM CAMPUS
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 CONTENTS
 INTRODUCTION

 MEANING

 ORIGIN

 OBJECTIVE OF TRANSPORTATION PROBLEM

 ASSUMPTIONS OF TRANSPORTATION PROBLEM
 DEFINITION OF TRANSPORTATION PROBLEM
 TYPES OF TRANSPORTAION PROBLEM
 USES OF TRANSPORTATION PROBLEM
 LIMITATIONS OF TRANSPORTATION PROBLEM
 CONCLUSION

 REFERENCE

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 INTRODUCTION
Industries transport products from sources or production centres to destinations or
markets
High transportation costs are incurred in the process
Costs are to be minimised to increase profit
‘Transportation model’ is used to analyse and minimise the cost
Model is not confined to transportation or distribution only
Used for wide variety of situations :- scheduling, personnel assignment, product
mix problems etc.

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 MEANING
It is a model that is applied to determine how many units of
commodity to be shipped from each origin to various destinations,
satisfying source availability and destination demand and minimizing
the total cost of transportation.

Origin means the place where the product is originated or

manufactured for the ultimate sales while the places where the product
is required to be sold is called destination.

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 origin
Dates back to 1941
Presented by F.L. Hitchcock on his study ‘The Distribution of a Product from
Several sources to Numerous Localities’
In1947, T. C. Koopmans presented a study called ‘Optimum Utilisation of
Transportation System’
These two contributions resulted in the development of transportation models
which involve a number of sources and a number of destinations

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OBJECTIVE OF TRANSPORTATION PROBLEM

Each shipping source has a certain capacity and each destination has a
certain requirement based on certain cost of transportation
Objectiveis to minimise the cost of transportation while meeting
requirements at the destinations
Transportation problem involve movement of a products from plants
to warehouses, warehouses to wholesalers, wholesalers to retailers,
retailers to customers etc.

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ASSUMPTIONS OF TRANSPORTATION PROBLEM
Total quantity of items available at different sources/supply is equal to total
requirements/demand at different destinations/markets
Items can be transported conveniently from all sources to destinations
The unit transportation cost of the item from all sources to destinations is
known
Thetransportation cost on a given route is directly proportional to the
number of units shipped on that route
The objective is to minimise the total transportation cost for the
organisation as a whole and not for individual supply and distribution
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DEFINITION OF TRANSPORTATION PROBLEM
Suppose there are m sources and n destinations .
Let ai be the no. of supply units available at source i (i =1,2,3,…m)
Let bj be the no. of demand units required at destination j(j=1,2,3,..n)
Let cijrepresent the unit transportation cost for transporting the units from source i to
destination j
The objective is to determine the no. of units to be transported from source i to destination
j so that the total transportation cost is the minimum
Inaddition, the supply limits at the source and the demand requirements at the destination
must be satisfied exactly
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 If xij ( xij ≥ 0 ) is the no. of units shipped from source i to destination j, then the
equivalent linear programming model will be
Find xij ( i = 1,2,3,…,m ; j = 1,2,3,…,n ) in order to minimise
m n

z ₌ ∑ ∑ cij xij ,
i=1 j=1

Subject to n

∑ xij = ai , i = 1,2,3,…,m, and

j=1
m

∑ xij = bj , j = 1,2,3,…n,
i =1

Where xij ≥ 0
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The two sets of constraints will be consistent i.e., the system will be in balance if
m n

∑ Σ ai = Σ bj .
i =1 j=1

Equality sign of the constraints causes one of the constraints

to be redundant (and hence it can be deleted) so that the problem
will have (m + n - 1) constraints and (m x n ) unknowns.
Note that a transportation problem will have a feasible solution only if the above
restriction is satisfied. Thus,

m n

Σ ai = Σ bj is necessary as well as a sufficient condition for a

i=1 j=1

transportation problem to have a feasible solution.

Problems that satisfy this condition are called balanced transportation problems.
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 Types of transportation problem

TRANPORTATION PROBLEM

ORIGIN SUPPLY VERSUS DESTINATION

DEMAND

SUPPLY AND DEMAND ARE NOT SUPPLY AND DEMAND ARE EQUAL
EQUAL

BALANCED UNBALACED
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FIG. BALANCED TRANSPORTATION MODEL
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FIG. UNBALACED TRANPORTATION PROBLEM WHERE SUPPLY IS
MORE THAN DEMAND. NEED TO ADD A DUMMY DEMAND

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 TRANSPORTATION PROBLEM

OBJECTIVE

MINIMIZE COST MAXIMIZE PROFIT

MINIMIZING MAXIMIZING
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variants in TRANSPORTATION PROBLEM

Following are the variants in transportation problem:

1. Unbalanced Transportation Problem

2. Maximization Problem
3. Different Production Costs
4. No allocation in a particular cell/cells
5. Overtime Production

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1. Unbalanced transportation problem
 Total availability may not be equal to total demand i.e.,
m n

Σ ai ≠ Σ bj
i=1 j=1

 In these problems either some available resources will remain

unused or some requirements will remain unfilled

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Techniques have been developed for solving balanced or standard
transportation problems only.
 Any non – standard problem in which the supplies and demands do
not balance, must be converted to a standard transportation problem
before it can be solved.
This conversion can be achieved by the use of a dummy
source/destination.
Cost of shipping are set equal to zero ands zero cells are treated the
same way as real cost cells
Problem is solved as balanced problem
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2. THE MAXIMIZATION PROBLEM
Transportation problem may involve maximization of profit rather
than minimization of cost. Such a problem may be solved in one of
the following ways:
1. Can be converted into a minimization problem by multiplying the profit
matrix by -1. the negative matrix solved by the usual method is
equivalent to the maximization of the given problem
2. Can be converted into minimization by subtracting all the profits from
the highest profit in the matrix. Problem is solved by usual method
3. It may be solved as maximization problem itself. However, while
finding the initial basic feasible solution, allocation are to be made in
highest profit cells, rather than in lowest cost cells. Also solution will be
optimal when all cell evaluations are non-positive ( ≤ 0 )
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3. Different production costs
 A particular product may be manufactured and trans \ported
from different production locations
 The production cost could be different in different units due to
various reasons, like higher labour cost, higher cost of
transportation of raw materials, higher overhead charges etc.
 In this situation the production cost is added to the transportation
cost while finding the optimal solution
 If variable production costs and fixed costs are given for various
production plants, no consideration is given for fixed cost.

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4. No allocation in particular cell/cells

 In transportation of goods from sources to destinations, some

routes may be banned, blocked, affected by flood etc.

 To avoid allocation in a particular cell/cells, a heavy penalty cost

is assigned to the cell/cells and the problem is solved in the usual
manner

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5. Overtime production
In the production units, overtime production is taken up to
increase the production.
This will add the cost of production due to higher wages paid
Such wages paid also included in the transportation cost

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USES OF TRANSPORTATION PROBLEM
Minimize shipping costs from factories to warehouses (or from
warehouses to retail outlets).

Determine lowest cost location for new factory, warehouses, office, or

other outlet facility.

Find minimum cost production schedule that satisfies firms demand

and production limitations.

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 CONCLUSION
The transportation problem is one of the most frequently
encountered application in real life situations and is a special type
of linear programming problem.

The transportation problem indicates the amount of consignment

to be transported from various origins to different destinations so
that the total transportation cost is minimized without violating
the availability constraints and the requirement constraints.

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 At a glance
 INTRODUCTION
 MEANING
 ORIGIN
 OBJECTIVE OF TRANSPORTATION PROBLEM
 ASSUMPTIONS OF TRANSPORTATION PROBLEM
 DEFINITION OF TRANSPORTATION PROBLEM
 TYPES OF TRANSPORTAION PROBLEM
 USES OF TRANSPORTATION PROBLEM
 LIMITATIONS OF TRANSPORTATION PROBLEM
 CONCLUSION

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 reference
Hamdy A. Taha, Operations Research, Pearson Education Inc.
http://ecourseonline.iasri.res.in
www.finance-assignment.com
http://shodhganga.inflibnet.ac.in

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Thank you

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