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**TRANSPORTATION PROBLEM: VOGEL S APPROXIMATION METHOD
**

THE TRANSPORTATION PROBLEM

The transportation problem is concerned with transporting a single commodity from a number of supply sources (e.g. factories) to a number of demand destinations (e.g. warehouses). The objective of the model is to determine the amount to be shipped from each source to each destination so as to maintain the supply and demand requirements at the lowest transportation cost. The basic steps of the transportation method are: Step 1: Set up the transportation tableau. Step 2: Develop an initial solution. Some of the widely used methods to find the initial solution are: 1. North-west corner method 2. Least cost method, and 3. Vogel s approximation method (VAM) Step 3: Test the solution for optimality. The widely used methods for testing the optimality of the solution are: 1. Stepping stone method 2. Modified distribution method (MODI) Step 4: Develop the improved solution. Based on the previous step, a new improved solution is devised. Once this improved solution is obtained, the next step is to go back to step 3. This assignment concerns only with the development of the initial solution using the Vogel s Approximation Method.

one that is often the optimal solution. This is something that the northwest corner rule did not do.2
V OGEL S APPROXIMATION METHOD (VAM)
VAM is not quite as simple as the northwest corner approach. find the difference between the two lowest unit shipping costs. omitting rows or columns crossed out in the preceding step. Vogel s approximation method tackles the problem of finding a good initial solution by taking into account the costs associated with each route alternative. Step 4: Eliminate any row or column that has just been completely satisfied by the assignment just made. (This is the opportunity cost of not using the best route. Step 5: Recompute the cost differences for the transportation table. These numbers represent the difference between the distribution cost on the best route in the row or column and the second best route in the row or column. we first compute for each row and column the penalty faced if we should ship over the second best route instead of the least-cost route.) Step 2: Identify the row or column with the greatest opportunity cost. or difference. Step 3: Assign as many units as possible to the lowest cost square in the row or column selected. This can be done by placing Xs in each appropriate square. The steps to VAM are as follows: Step 1: For each row and column of the transportation table. but it facilitates very good initial solution as a matter of fact.
. Step 6: Return to step 2 and repeat the steps until an initial feasible solution has been obtained. To apply the VAM.

The penalty cost calculations for the first allocation are shown in the following table:
. develop an initial solution to the following transportation problem: To From D1 21 S1 17 S2 32 S3 27 18 41 18 14 13 D2 16 D3 15 D4 3 Supply
11
13
19
43
Demand
6
10
12
15
43
Solution.3
A N EXAMPLE
Using the Vogel s Approximation Method.

So we select row S1 for our first allocation.
. 3 per unit.4
First Allocation using VAM To From D1 21 S1 D2 16 D3 15 D4 3 Supply Row Penalty
11 0 12
X
17
X
18
X
14
11
13
S2 32 S3 15 Demand 6 10 12 4 43 27 18 41
13
1
19
43
9
Column Penalty
4
2
1
10
We observe from this table that the largest penalty occurs in row S1. subject to rim conditions is 11 units. Thus the first allocation will be made to the cell S 1D4. The cell in this row having the least transportation cost is S1 D4 at Rs. so we eliminate row S1 from further consideration. This exhausts supply in S 1 completely. The maximum allocation to this cell.

the penalty-cost calculations are shown above. subject to rim conditions is 4 units. so we eliminate D4 from further consideration. The cell having the least transportation cost in this column is S2D4. Here we find that the largest penalty cost occurs in column D4. Note that this exhausts column D4.
.5
Second Allocation using VAM To From D1 17 S2 32 S3 27 18 D2 18 D3 14 D4 13 Supply Row Penalty
13 9 1
4
41
X 4
19 43 43
9
Demand
6 15
10 9
12 4
0 28
Column Penalty
After eliminating row S 1 and adjusting the demand and supply. The maximum allocation to this cell.

6
Third Allocation using VAM To From D1 17 S2 D2 18 D3 14 Supply Row Penalty
9 3 1
6
32 27 18
S3
X 6
19 43 10 9 12 4 43
9
Demand
0 15
Column Penalty
With row S1 and column D4 eliminated and having adjusted the demand and supply. subject to rim conditions is 6 units. Note that this exhausts column D1. so we eliminate D 1 from further consideration. The maximum allocation to this cell. The cell having the least transportation cost in this column is S 2D1.
. the penalty-cost calculations are shown above. Here we find that the largest penalty cost occurs in column D 1.

to break the tie.7
Fourth Allocation using VAM To From D2 18 S2 27 S3 D3 14 Supply Row Penalty
X
18
3 19 7 43 43
4
12 12
9
Demand
10 9
0 4
Column Penalty
With row S1 and columns D1 and D4 no longer considered. the penalty cost calculations for the next allocation are shown in the table above. Hence we select the row S3. we select the row or column where a larger number of units can be allocated. the lowest cost cell in S3 is tied with the lowest cost cell is column D2.
. allocating 12 units to cell S3D3. Therefore. However. We find that we have a tie for the largest penalty cost between row S3 and column D2. The tie can be broken by selecting the cell with the lowest cost between the two.

e. So we allocate to column D2 the remaining capacity of source S1 and S3. 3 and 7 units respectively. where requirements are not fully satisfied. i. namely D2.8
Fifth Allocation using VAM To From D2 18 S2 Supply Row Penalty
3 0 4
3
27
7 0 43 43 9
S3
7 10
Demand
0 9
Column Penalty
Once the fourth allocation is made. we are left with one destination.
.

The above tables can be combined and shown in a single transportation table.9
Complete Initial Solution using VAM To From D1 21 S1 17 S2 18 14 D2 16 D3 15 D4 3 Supply
11
13
11
6
32
3
27 18
4
41
13
S3
7
12
19
43
Demand
6
10
12
15
43
As shown in the above table. the schedule of shipments is now complete. as following:
.