OPERATIONS RESEARCH UNIT-III STUDY MATERIAL

Department of Statistics
Andhra Loyola College (Autonomous)
Vijayawada-520008

Title of the Paper : OPERATIONS RESEARCH (OR)

Paper Code : STA356OR
Syllabus for Unit-II : TRANSPORTATION PROBLEM
Transportation Problem - Introduction, Linear programming, Matrix form of
transportation problem, finding an initial basic feasible solution (IBFS) by North West Corner
Rule, Lowest cost Entry method, Vogel’s approximation method, unbalanced, maximization,
optimal solution by using MODI method.
Prepared by : Dr. Srinivas Karimujja, Lecturer, Department of Statistics,
Andhra Loyola College, Vijayadada-520008.
drgvasu.k@gmail.com

Object:
By the end of this unit student will be able to:
• Formulate the special linear programming using Transportation model.
• Define balanced Transportation Problem
• Develop an Initial Basic Feasible Solution (IBFS) using Northwest corner rule, Least
cost entry method and Vogel’s Approximation method.
• Understand the degeneracy of Transportation Problem
• Find an Optimum Solution using Modified Distributive (MODI) method

Transportation Problem
Introduction
The Transportation Problem (TP) is a special type of LP problem where the objective
is to minimize the cost of distributing 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
transportation problem is to determine an optimal strategy for distributing a commodity from
a group of supply centres, such as factories, called sources, to various receiving centres, such
as warehouses, called destinations, in such a way as to minimise total distribution costs. Each
source is able to supply a fixed number of units of the product, usually called the capacity or
availability, and each destination has a fixed demand, often called the requirement. TP refers
to a planning model that allocates resources, machines, materials, capital etc. in the best
possible manner so that the costs are minimized or profits are maximized.
Formulation of Transportation Problem
Transportation problem is an important class of the linear programming problem in
which, the objective is to transport various quantities of a single homogenous commodity that
are stored at various origins to different destinations in such a way that the transportation cost
is minimum. Transportation problem arises in situations involving physical movements of
goods e.g. milk and milk products from plants to cold storages, cold storages to wholesalers,
wholesalers to retailers and retailers to customers. The solution of a TP is to determine the
quantity to be shifted from each plant to each cold storage so as to maintain the supply and
demand requirements at the lowest transportation cost.
Let us suppose that there are m origins supplying a certain homogeneous product to n
destinations. Let origins Oi ;(i = 1, 2,..., m) has available ai units and destinations
Dj ;( j = 1, 2,..., n) requires b j units. Suppose that the cost of transporting one unit product
from Oi to D j is Cij and X ij be the quantity (number of units of product) transported from Oi
to D j . The objective is to determine the number of units to be transported from Oi to D j such
as to minimize the transportation cost Cij . For balanced transportation problem, it is assumed
m n
that the total supply equals to the total demand i.e.  ai =  b j . The transportation problem
i =1 j =1

in a tabular form can be represented as follows:

Tabular representation of transportation problem

Destination Availability

D1 D2 … Dj … Dn

O1 C11 X 11 C12 X 12 … C1i X 1i … C1n X 1n a1

O2 C21 X 21 C22 X 22 … C2 j X 2 j … C2 n X 2 n a2

… … … … … … … …
Origin

Oi Ci1 X i1 Ci 2 X j 2 Cij X ij Cin X in ai

… … … … … … … …

Om Cm1 X m1 Cm 2 X m 2 … Cmj X mj … Cmn X mn am

m n
b1 b2 … bj … bn
Requirement
 a = b
i =1
i
j =1
j
 m n
Then the sum of the product of X ij and Cij of allocated cells  C
i =1 j =1
ij X ij gives us the net cost

in transporting X ij units from Oi to D j .

Mathematical formulations of Transportation problem
The objective function is minimizing the total transportation cost
m n
MinZ =  Cij X ij
i =1 j =1

Availability condictions
n

X
j =1
ij = ai ; i = 1, 2,...m

Requirement conditions
m

X
i =1
ij = b j ; j = 1, 2,..., n

Satisfy
m n

 ai =  b j
i =1 j =1

And Non-negative condition

X ij  0; i, j

Such types of problems where availability and requirement are exactly equal are known
as Balanced Transportation Problem.
However, it is unbalanced if the totals of availability and requirement are not equal.
Availability (from various origins) is written in the rows, while a column is an
expression for the requirement of different destinations. In general, if a transportation problem
has m rows and n columns, then the problem is solvable if there are exactly ( m + n − 1) basic
variables.

Example 1: (Mathematical formulations of Transportation problem)

A concrete company transports concrete from three plants, 1, 2 and 3, to three construction
sites, A, B and C. The plants are able to supply the following numbers of tons per week:
Plant Supply
(Availability)
1 300
2 300
3 100
The requirements of the sites, in number of tons per week, are:
 Construction Demand
Site (Requirement)
A 200
B 200
C 300
The cost of transporting one ton of concrete from each plant to each site is shown in the
following table. For computational purposes it is convenient to put all the above information
into a table, as in the simplex method. In this table each row represents a source and each
column represents a destination.
Sites Availability
A B C ( ai )
1 4 3 8 300
Plants

2 7 5 9 300
3 4 5 5 100
( )
Requirement b j 200 200 300 700

Solution
A transportation problem can be formulated as a linear programming problem. To
illustrate this, let us see how this example can be formulated as a linear programming problem.
th
Let X ij represent the quantity transported from i plant to j th Site. These are the decision
variables. In this example there are nine decision variables. Let Cij represents the cost of
th
transported of one tone of concrete from i plant to j th Site. The objective is to find the values
for the X ij , so as to minimize total transportation cost. Thus, the LP objective function is:
Minimise Z = 4 X 11 + 3 X 12 + 8 X 13 +7X 21 + 5 X 22 + 9 X 23 +4X31 + 5 X 32 + 5 X 33
The supply of concrete from plants 1, 2 and 3 to construction sites A, B and C. The total
quantity transported from plant 1 must be equal to its availability i.e. 300 tons. Thus, for the
plant 1, the constraint is:
X 11 + X 12 + X 13 = 300

Similarly, the constraint for other two plants can be expressed as under:
X 21 + X 22 + X 23 = 300
X 31 + X 32 + X 33 = 100
Similarly, we must satisfy the requirement for each of the site.
X 11 + X 21 + X 31 = 200
X 12 + X 22 + X 32 = 200
X 13 + X 23 + X 33 = 300
Satisfies
m n

 a = b
i =1
i
j =1
j = 700

Finally, all values of X ij must be greater than or equal to zero, as negative units cannot be
transported. Thus, X ij  0; i = 1, 2,3; j = 1, 2,3
 INITIAL BASIC FEASIBLE SOLUTION
Introduction
Transportation problem can be solved by simplex method and transportation method.
In simplex method the solution is very lengthy and complicated process because of the
involvement of a large number of decision and artificial variables. In this we will look for an
alternate solution procedure called transportation method in which initial basic feasible solution
of a TP can be obtained in a better way by exploiting the special structure of the problem.
Some Definitions
The following terms are to be defined with reference to Transportation Problem

Feasible solution (FS)

By feasible solution we mean a set of non-negative individual allocations (X ij  0 ) which
satisfies the row and column conditions (rim condition).
Basic feasible solution (BFS)
A feasible solution is said to be basic if the number of positive allocations equals ( m + n − 1) ;
that is one less than the number of rows and columns in a transportation problem.
Optimal solution
A feasible solution (not necessarily basic) is said to be optimal if it minimizes the total
transportation cost.
Solution for Transportation Problem
The solution algorithm to a transportation problem can be summarized into following steps:
Step 1: Formulate the problem. The formulation of transportation problem is similar to a LP
problem formulation. Here the objective function is to minimize 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 feasible solution can be
obtained by using any of the following five methods:
a). North-West Corner Rule Method
b). Least-Cost entry (Matrix minima) Method
c). Vogel’s Approximation Method
The solution obtained by any of the above methods must fulfil the following conditions:

i. The solution must be feasible, i.e., it must satisfy all the supply and demand
constraints. This is called rim condition.
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.
The solution that satisfies both the above-mentioned conditions is called a non-degenerate basic
feasible solution.
Step 3: Test the initial solution for optimality. Using any of the following methods one can test
the optimality of an initial basic solution:

i. Stepping Stone Method

ii. Modified Distribution Method (MODI)

If the solution is optimal then stop, otherwise, find a new improved solution.
Step 4: Updating the solution. Repeat Step 3 until the optimal solution is obtained.
North-West Corner rule (NWC) method:
For the example 1 find initial basic feasible solution (IBFS) using North-West Corner rule
method.
Sites Availability
A B C ( ai )
1 4 3 8 300
Plants

2 7 5 9 300
3 4 5 5 100
( )
Requirement b j 200 200 300 700

Procedure:
Step I:

Check the given transportation problem is balanced or not. If not, balance by

introducing dummy row or dummy column with required amount of ai or b j as
availability or requirement and the cost ( Cij ) elements as zero valued.

Step II:

The first assignment is made in the cell occupying the upper left-hand (North
West) corner of the transportation table. The maximum feasible amount is allocated
there. That is X11 = Minimum ( a1 , b1 ) and this value of X 11 is then entered in the cell
(1,1) of the transportation table.

Step III:

i. If b1  a1 , we move down vertically to the second row and make the second
allocation of magnitude X 21 = Minimum(a2 , b1 − X 11 ) in the cell (2, 1).
ii. If b1  a1 , we move horizontally to the second column and make the second
allocation of magnitude X 12 = Minimum(a1 − X 11 , b2 ) in the cell (1, 2).
 iii. If b1 = a1 , we move diagonally to the second row and second column and make
the second allocation of magnitude X 22 = Minimum(a2 , b2 ) in the cell (2, 2).

Step IV:

Repeat steps II & III by moving down towards the lower right corner of the
transportation table until all the rim requirements are satisfied.

Calculations:
3 C
First, we check the given problem is balanced or not as a = b
i =1
i
j=A
j .

3 C
In the given problem  ai =  b j = 700 . So, the given problem is balanced.
i =1 j=A

In the given problem left-upper corner cell has 4 units of cost for transportation one
tone of concreate from plant “1” to site “A”. The plant “1” has available (ai ) 300 tonnes but
site “A” required ( bi ) only 200 tonnes. So, we allot the value { X 1 A = Minimum(a1 , bA ) } 200
and 100 units are available in plant “1” after allotting 200 units to site “A”. Since, we allot
maxim requirement to the site “A” from plant “1” and no need to receive from other plans to
site “A”. So, we cancelled the remaining cost elements (7,4) in the column “A”.

Sites Availability
( ai )
A B C

1 4(200) 3 8 300
100
Plants

2 7 5 9 300

3 4 5 5 100

( )
Requirement b j 200 200 300 700

Since, we have some amount remaining in availabilities in the row “1”. So, we moved
within the same row to the next column. i.e. row “1” second column “B” cell. This cell has 3
units of cost for transportation one tone of concreate from plant “1” to site “B”. The plant “1”
has available (ai ) 100 tonnes only, but site “B” required ( bi ) 200 tonnes. So, we allot the value
{ X 1B = Minimum(a1 − X 1 A , bB ) } 100 and 100 units of concreate is required in site “B” after
allotting 100 units from plant “1”. Since, we allot maxim availability to the site “B” from plant
“1” and no chance to supply the product from plat “1” to other sites. So, we cancelled the
remaining cost elements (8) in the row “1”.
Sites Availability
( ai )
A B C

1 4(200) 3(200) 8 300

100
Plants

2 7 5 9 300

3 4 5 5 100

( )
Requirement b j 200 200
100
300 700

Since, we have some amount remaining in requirement in the column “B”. So, we
moved within the same column to the next row. i.e. row “2” second column “B” cell. This cell
has 5 units of transportation cost for transporting one tone concreate from plant “2” to site
“B”. The plant “2” has available (ai ) 300 tonnes, but site “B” required ( bi ) 100 tonnes only.
So, we allot the value { X 2 B = Minimum(a2 , bB − X 1B ) } 100 and 200 units remaining in plant
“2” after allotting 100 units to site “B”. Since, we allot maxim requirement to the site “B”
from plant “1 & 2” and no need to receive product from other plats to this site. So, we cancelled
the remaining cost elements (5) in the column “B”.

Sites Availability
( ai )
A B C

1 4(200) 3(200) 8 300

100
Plants

2 7 5(100) 9 300
200
3 4 5 5 100

( )
Requirement b j 200 200
100
300 700

Since, we have some amount remaining in availabilities in the row “2”. So, we moved
within the same row to the next column. i.e. row “2” third column “C” cell. This cell has 9
units of cost for transportation one tone of concreate from plant “2” to site “C”. The plant “2”
has available (ai ) 200 tonnes only, but site “C” required ( bi ) 300 tonnes. So, we allot the
value { X 2C = Minimum(a2 − X 2 B , bC ) } 200 and 100 units of concreate is required in site “C”
after allotting 200 units from plant “2”.
Sites Availability
( ai )
A B C

1 4(200) 3(200) 8 300

100
Plants

2 7 5(100) 9(200) 300

200
3 4 5 5 100

( )
Requirement b j 200 200
100
300
100
700

Since, we have some amount remaining in requirement in the column “C”. So, we
moved within the same column to the next row. i.e. row “3” second column “C” cell. This cell
has 5 units of transportation cost for transporting one tone concreate from plant “3” to site
“C”. The plant “3” has available (ai ) 100 tonnes, but site “C” required ( bi ) 100 tonnes. So,
we allot the value { X 3C = Minimum(a3 , bC ) } 100.
Sites Availability
( ai )
A B C

1 4(200) 3(200) 8 300

100
Plants

2 7 5(100) 9(200) 300

200
3 4 5 5(100) 100

( )
Requirement b j 200 200
100
300
100
700

 3 C  3 C
Since, the total of allotments   X ij  are equal to the  ai =  b j . Hence, we reach the
 i =1 j = A  i =1 j=A

Initials Basic Feasible Solution (IBFS).

Conclusion:
 For the given transportation problem, the initial basic feasible solution using North-
West Corner rule method is
MinZ = 4  200 + 3  200 + 5 100 + 9  200 + 5 100
=4200 Units of cost.
And allocations are.
Sites Availability
A B C ( ai )
1 4(200) 3(100) 8
Plants

2 7 5(100) 9(200)
3 4 5 5(100)
Requirement b j ( ) 700

Least Cost Entry (Matrix minim) method:

For the example 1 find initial basic feasible solution (IBFS) using Least-Cost Entry method.
Sites Availability
A B C ( ai )
1 4 3 8 300
Plants

2 7 5 9 300
3 4 5 5 100
Requirement b j( ) 200 200 300 700

Procedure:
Step I:

Check the given transportation problem is balanced or not. If not, balance by

introducing dummy row or dummy column with required amount of ai or b j as
availability or requirement and the cost ( Cij ) elements as zero valued.

Step II:

Determine the smallest cost in the cost matrix of the transportation table. Let it
be Cij . Allocate X ij = Minimum(ai , b j ) in the cell ( i, j ) .

Step III:

i. If X ij = ai , cross off the i th row of the transportation table and decrease b j

by ai and go to Step IV.
 ii. If X ij = b j , cross off the j th column of the transportation table and decrease ai
by b j and go to Step IV.
iii. If X ij = ai = bj , cross of the i th row and the j th column remaining elements.

Step IV:

Repeat steps II & III for the resulting reduced transportation table until all the
requirements are satisfied. Whenever the minimum cost is not unique, make an
arbitrary choice among the minima.

Calculations:
Sites Availability
A B C ( ai )
1 4 3 8 300
Plants

2 7 5 9 300
3 4 5 5 100
Requirement b j ( ) 200 200 300 700

3 C
First, we check the given problem is balanced or not as  ai =  b j .
i =1 j=A

3 C
In the given problem  ai =  b j = 700 . So, the given problem is balanced.
i =1 j=A

In the given problem 3 is the minimum cost in “1” row “B” column. Allocate
Minimum(a1 , bB ) . i.e. X 1B = 200 . Since, we allot maximum requirement to the site “B” and no
need to receive from other plats. So, we cancelled remaining cost elements in the column “B”.
Sites Availability
( ai )
A B C

1 4 3(200) 8 300
100
Plants

2 7 5 9 300

3 4 5 5 100

( )
Requirement b j 200 200 300 700

The next minimum cost 4 in “1” row “A” column. Allocate Minimum(a1 , bA ) . i.e.
X1A = 100 . Since, we allot maximum supply in the plant “1” and no chance to supply other
sites. So, we cancelled remaining cost elements in the row “1”.
 Sites Availability
( ai )
A B C

1 4(100) 3(200) 8 300

100
Plants

2 7 5 9 300

3 4 5 5 100

( )
Requirement b j 200
100
200 300 700

The next minimum cost 4 in “3” row “A” column. Allocate Minimum(a3 , bA ) . i.e.
X 3A = 100 . Since, we allot maximum supply in the plant “3” and no chance to supply other
sites. So, we cancelled remaining cost elements in the row “3”.
Sites Availability
( ai )
A B C

1 4(100) 3(200) 8 300

100
Plants

2 7 5 9 300

3 4(100) 5 5 100

( )
Requirement b j 200
100
200 300 700

Now, we have only one cost element 9 with equal amount of availabilities and
requirements. So, we allocate to that element X 2C = 300 .
Sites Availability
( ai )
A B C

1 4(100) 3(200) 8 300

100
Plants

2 7 5 9(300) 300

3 4(100) 5 5 100

( )
Requirement b j 200
100
200 300 700
  3 C  3 C
Since, the total of allotments   X ij  are equal to the  ai =  b j . Hence, we
 i =1 j = A  i =1 j=A

reach the Initials Basic Feasible Solution (IBFS).

Conclusion:
For the given transportation problem, the initial basic feasible solution using Least-Cost
Entry method is
MinZ = 4 100 + 3  200 + 9  300 + 4 100
=4100 Units of cost.
And allocations are.
Sites Availability
A B C ( ai )
1 4(100) 3(200) 8
Plants

2 7 5 9(300)
3 4(100) 5 5
Requirement 700
(b ) j

Vogel’s Approximation Method (VAM)

For the example 1 find initial basic feasible solution (IBFS) using Vogel’s Approximation
method.
Sites Availability
A B C ( ai )
1 4 3 8 300
Plants

2 7 5 9 300
3 4 5 5 100
Requirement b j( ) 200 200 300 700

Procedure:
The Vogel’s Approximate Method takes into account not only the least cost Cij but also
the costs that just exceed Cij . Various steps of the method are given below:

Step I:

Check the given transportation problem is balanced or not. If not, balance by

introducing dummy row or dummy column with required amount of ai or b j as
availability or requirement and the cost ( Cij ) elements as zero valued.
Step II:

For each row of the transportation table identify the smallest and the next to
smallest cost. Determine the difference between them for each row. These are called
penalties (opportunity cost). Put them along side of the transportation table by enclosing
them in parenthesis against the respective rows. Similarly compute these penalties for
each column.

Step III:

Identify the row or column with the largest penalty among all the rows and
columns. If a tie occurs, use any arbitrary tie breaking choice. Let the greatest penalty
correspond to i th row and let Cij be the smallest cost in the i th row. Allocate the largest
possible amount X ij = Minimum(ai , b j ) in the ( i, j ) of the cell and cross off the i th row
or j th column in the usual manner.

Step IV:

Re-compute the column and row penalty for the reduced transportation table
and go to step III. Repeat the procedure until all the requirements are satisfied.

Remarks:

1. A row or column difference indicates the minimum unit penalty incurred by failing
to make an allocation to the smallest cost cell in that row or column.
2. It will be seen that VAM determines an initial basic feasible solution which is very
close to the optimum solution that is the number of iterations required to reach
optimum solution is minimum in this case.

Calculations:
Sites Availability
A B C ( ai )
1 4 3 8 300
Plants

2 7 5 9 300
3 4 5 5 100
( )
Requirement b j 200 200 300 700

3 C
First, we check the given problem is balanced or not as  ai =  b j .
i =1 j=A
 3 C
In the given problem a = b
i =1
i
j=A
j = 700 . So, the given problem is balanced.

Now, fiend the penalties for least and next to least in each and very row and column.

Sites Availability
A B C ( ai )
1 4 3 8 300 3− 4 =1
Plants

2 7 5 9 300 2
3 4 5 5 100 1
Requirement 200 200 300 700
(b )j

0 2 3

In the above, for column “C” has maximum penalty 3. We identified 5 is the minimum
cost in the “3” row of that column. Now, allocate X 3C = Minimim(a3,b3 ) = 100 . Since, the row
“3” has minimum value. So, we cancel remaining elements (4,5) in that row.

Sites Availability
A B C ( ai )
1 4 3 8 300 3− 4 =1
Plants

2 7 5 9 300 2
3 4 5 5(100) 100 1
Requirement 200 200 300 700
b ( )
j
200
0 2 3

Repeat this procedure until all availabilities or requirements are allotted.

Sites Availability
A B C ( ai ) Row
penalties
1 4(200) 3(100) 8 300 1 1 5
100
Plants

2 7 5(100) 9(200) 300 2 4

2
3 4 5 5(100) 100 1 -- --
Requirement 200 200 300 700
(b ) j
100 200
0 2 3
Column
penalties 3 2 1
-- 2 1
Conclusion:
For the given transportation problem, the initial basic feasible solution using Vogel’s
Approximation Method is
MinZ = 4  200 + 3  200 + 5 100 + 9  200 + 5 100
=4200 Units of cost.
And allocations are.
Sites Availability
A B C ( ai )
1 4(200) 3(100) 8
Plants

2 7 5(100) 9(200)
3 4 5 5(100)
Requirement b j ( ) 700

Solve the following Transportation problem for IBFS

1.

W1 W2 W3 W4 W5 Available
F1 4 3 1 2 6 40
F2 5 2 3 4 5 30
F3 3 5 6 3 2 20
F4 2 4 4 5 3 10
Required 30 30 15 20 5

2.

D E F G H Capacity
A 5 8 6 6 3 800
B 4 7 7 6 5 500
C 8 4 6 6 4 900
Requirement 400 400 500 400 800

3.

D1 D2 D3 D4 Supply
O1 21 16 15 13 11
O2 17 18 14 23 13
O3 32 27 18 41 19
Demand 6 10 12 15 43
4.

Warehouse→
W1 W2 W3 W4 Capacity
Factory↓
F1 1 2 3 4 6
F2 4 3 2 0 8
F3 0 2 2 1 10
Requirement 4 6 8 6 24

5.

P Q R S SUPPLY
A 15 20 25 30 80
B 10 40 30 35 100
C 20 15 40 30 120
D 30 25 20 30 190
DEMAND 110 90 150 130

6.

P Q R S SUPPLY
A 9 6 11 5 200
B 4 5 8 5 150
C 7 8 4 6 350
D 3 3 10 10 250
DEMAND 260 100 340 200

7.

D1 D2 D3 D4 Capacity
O1 1 2 3 4 6
O2 4 3 2 0 8
O3 0 2 2 1 10
Demand 4 6 8 6 24
 8.

problem-2 A B C D Supply
O1 1 5 3 3 34
O2 3 3 1 2 15
O3 0 2 2 3 12
O4 2 7 2 4 19
Demand 21 25 17 17

9.

problem-3 D1 D2 D3 D4 Capacity
O1 21 16 15 13 11
O2 17 18 14 23 13
O3 32 27 18 41 19
Demand 6 10 12 15

10.

problem-4 D1 D2 D3 D4 D5 Capacity
O1 2 11 10 3 7 4
O2 1 4 7 2 1 8
O3 3 9 4 8 12 9
Demand 3 3 4 5 6

Fill in the blanks:

1. In a transportation problem, if the total available quantities at the sources is

not equal to the total required quantities at the destinations, such a problem
is called unbalanced problem.
2. In an unbalanced transportation problem, we add either a fictitious sources
or fictitious destination( to balance the problem),with all the unit cost of
transportation corresponding to that sources or destination as equal to zero.
3. Among the three methods of finding the BFS for a transportation problem,
the Vogel’s approximation method or unit cost penalty method method is
the most difficult.
4. In a transportation problem, if m is the number of sources, and n is the
number of destinations, then the number of allocation positions should be
equal to m+ n -1 for the BFS to be non-degenerate.
5. In a transportation problem, if it is not possible to form a closed loop among
the allocation positions, then the allocation positions are considered to be
independent.
6. Among the three methods of finding the BFS for a transportation problem,
the North-West corner method easiest.
7. A degenerate BFS of a transportation problem, where in the number of
allocation positions is less by one than the required number, can be converted
into a non- degenerate BFS by placing A very small finance quantity ε in
any one of the empty cells in such that the independence of allocation
positions is not violated.
8. In a transportation problem, a set of individual allocations (Xij) which
simultaneously exhausts all the supply quantities available at all the sources
and satisfies all the requirements at all the destinations is termed as a feasible
solution.
9. Among all the three methods of finding the BFS for a transportation problem,
Vogel's approximation method or unit cost penalty method method
usually results in less number of iterations required to find the optimal
solution.
10. In the unit cost penalty method of finding the BFS for a transportation
problem, the penalties are computed as the difference between the least cost
and the next higher cost in that row or column.
11. In the North-west corner method of finding the BFS in a transportation
problem, the allocations are entered successively in the North-west corner
cells or left side top most cells cells.
12. In the least cost entry method of finding the BFS in a transportation problem,
the allocations are entered successively in the cells having the lowest cost.
13. In the unit cost penalty method of finding the BFS in a transportation
problem, the allocations are entered successively in the cells in the row/
column having the maximum penalty cost.
14. In a transportation problem, where m is the number of sources, and n is the
number of destinations, if the total number of allocation positions in a BFS
are less than (m + n -1), then the BFS is called degenerate.
15. In a transportation problem, if we are able to form a closed loop among the
allocation positions in a BFS, then the BFS is said to be degenerate.
MCQs

1. In a transportation problem, if the total available quantities at the sources is

not equal to the total required quantities at the destinations, such a problem is
called
(a) Degenerate problem (b) Infeasible problem
(c) Unbalanced problem (d) Unconstrained problem
2. Among all the methods of finding the BFS for a transportation problem, which
is the most cumbersome method?
(a) Least cost entry method (b)Unit cost penalty method
(c) North-West corner method (d) Least cost difference method
3. In a BFS of transportation problem, which is being tested for optimality, if the
net evaluations of one or more of the empty cells turns out to be negative, then
the BFS is
(a) Degenerate (b) Not Optimal
(c) Unbalanced (d) Infeasible
4. In an unbalanced transportation problem, when we add either a fictitious
source or a fictitious destination (to balance the problem), all the unit costs of
transportation corresponding to that sources or destinations are equal to
(a) Zero (b) Unity (c) (-1) (d)Infinity
5. In a BFS of transportation problem, a set of allocation quantities which just
satisfies the supplies and requirements is a
(a). Degenerate solution (b). Optimal solution
(c). Feasible solution (b). Balance solution
6. In a transportation problem, if m is the number of sources, and n is the number
of destinations, then for the BFS to be non-degenerate, the number allocation
positions should be equal to
(a). m+n (b). m-n (c). m+n+1 (d). m+n-1
7. In a BFS of a transportation problem, if the number of allocation positions are
exactly equal to (m+n-1), where m is the number of sources, and n is the
number destinations, then the BFS is
(a). Optimal (b). Infeasible (c). Non-degenerate (d). Unconstrained
8. For a BFS of transportation problem to be optimal, the condition to be satisfied
is that
(a). It should be non-degenerate (b).It should be feasible
(c). It should be balanced
(d).All the net evaluations of empty cells should be ≥0
9. In a transportation problem, if it is not possible to form a closed loop among
the allocation positions, then the allocation positions are considered to be
(a). Independent (b). Dependent
(c). Feasible (d). Unconstrained
10. In the unit cost penalty method of finding the BFS for a transportation
problem, the penalties are computed as the difference between a and b, where
a and b are
 (a) The highest and the next highest cost in the row/column
(b) The highest and the next lowest cost in the row/column
(c) The highest and the lowest allocation quantities in the row/column
(d) None of the above
11. A BFS of a transportation problem, in which m is the number of sources, and
n is the number of destinations, is considered to be non-degenerate if
(a) the number of allocation positions is greater than(m+n-1), and the
allocation are not in independent positions
(b) the number of allocation positions is equal to (m+n-1), and the
allocation are in independent positions.
(c) the number of allocation positions is less than(m+n-1), and the allocation
are not in independent positions.
(d) the number of allocation positions is less than(m+n-1), and the allocation
are in independent positions.

OPTIMAL SOLUTION

Introduction
After examining the initial basic feasible solution, the next step is to test the optimality
of basic feasible solution. Though the solution obtained by Vogel’s method is not optimal, yet
the procedure by which it was obtained often yields close to an optimal solution. So, to say, we
move from one basic feasible solution to a better basic feasible solution, ultimately yielding
the minimum cost of transportation. There are two methods of testing optimality of a basic
feasible solution. The first of these is called the Stepping Stone method and the second method
is called Modified Distribution method (MODI). By, applying either of these methods, if the
solution is found to be optimal, then problem is solved. If the solution is not optimal, then a
new and better basic feasible solution is obtained. It is done by exchanging a non-basic variable
for one basic variable i.e. rearrangement is made by transferring units from an occupied cell to
an empty cell that has the largest opportunity cost and then shifting the units from other related
cells so that all the rim requirements are satisfied.

Some Definitions
Non-degenerate solution
A basic feasible solution of an m x n transportation problem is said to be non-degenerate, if it
has the following two properties:
(1) Starting BFS must contain exactly (m + n -1) number of individual allocations.
(2) These allocations must be in independent positions.
Here by independent positions of a set of allocations we mean that it is always impossible to
form closed loops through these allocations. The following table show the non-independent
and independent positions indicated by the following diagram:
Degeneracy
If the feasible solution of a transportation problem with m origins and n destinations has fewer
than m+n-1 positive Xij (occupied cells), the problem is said to be a degenerate transportation
problem. Degeneracy can occur at two stages:
a) At the initial stage of Basic Feasible Solution.
b) During the testing of the optimal solution.
To resolve degeneracy, we make use of artificial quantity.
Closed path or loop
This is a sequence of cells in the transportation tableau such that
a) each pair of consecutive cells lie in either the same row or the same column.
b) no three consecutive cells lie in the same row or column.
c) the first and last cells of a sequence lie in the same row or column.
d) no cell appears more than once in the sequence.
MODI (Modified Distribution) Method
The MODI (Modified Distribution) method is an efficient method of testing the
optimality of a transportation solution. In stepping stone method each of the empty cells is
evaluated for the opportunity cost by drawing a closed loop. In situations where a large number
of sources and destinations are involved, this would be a very time-consuming exercise. This
method avoids this kind of extensive scanning and reduces the number of steps required in the
evaluation of the empty cells. This method 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. It
provides 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 transported via the best unused
route. Steps involved for finding out the optimal solution of transportation problem are as
follows:
1. Determine an initial basic feasible solution using any one of the three methods
discussed earlier. We start with a basic feasible solution consisting of (m + n
-1) allocations in independent positions.
 2. Determine a set of ( m + n) numbers ui ( i = 1, 2,3,..., m ) and
vi ( j = 1, 2,3,..., n ) such that, for each occupied cell ( i, j ) as Cij = ui + v j
3. Compute the opportunity cost for unoccupied cells using dij = Cij − ( ui + v j )
4. Check the sign of each opportunity cost. If the opportunity costs of all the
unoccupied cells are either positive or zero, the given solution is the optimum
solution. On the other hand, if one or more unoccupied cell has negative
opportunity cost, the given solution is not an optimum solution and further
savings in transportation cost are possible.
5. Select the unoccupied cell with the most negative opportunity cost as the cell
to be included in the next solution.
6. Draw a closed path or loop for the unoccupied cell selected in the previous
step, using the most direct route through at least three occupied cells and
moving with only horizontal and vertical moves.
7. Assign alternate plus and minus signs at the unoccupied cells on the corner
points of the closed path with a plus sign at the cell being evaluated.
8. Determine the maximum number of units that should be transported to this
unoccupied cell. The smallest value with a negative position on the closed
path indicates the number of units that can be transported to the entering cell.
Now, add this quantity to all the cells on the corner points of the closed path
marked with plus signs and subtract it from those cells marked with minus
signs. In this way an unoccupied cell becomes an occupied cell.

9. Repeat the whole procedure until an optimum solution is obtained.

Let us illustrate this method by taking example 1 into consideration.

Find optimal solution of the problem given in example-1 using MODI method.
Solution
The initial basic feasible solution using Least Cost Method was found in example-1 with the
following allocations.
Sites Availability
A B C ( ai )
1 4(100) 3(200) 8
Plants

2 7 5 9(300)
3 4(100) 5 5
Requirement 700
(b ) j

The Transportation cost according to the above allocation is given by

 MinZ = 4 100 + 3  200 + 9  300 + 4 100
=4100 Units of cost.
From the above IBFS we have only 4 basic cells
Number of rows(m) =3
Number of columns (n)=3
 m + n −1  4
Since the above solution is degenerate.
Now, we resolve the degeneracy as, introduce a small quantity namely  j to the unoccupied
cell with minimum cost.
Then, we get as
Sites
A B C
1 (100) (200)

4 3 8
2 (300)
Plants

7 5 9
3 (100) 1

4 5 5

Note: Each cell contains different values as follows

Now, apply the MODI technique as
Sites
A B C
1 (100) (200)

4 3 8
2 (300)
Plants

7 5 9
3 (100) 1

4 5 5

Then, we get modified distribution of allocations as follows

Sites

A B C
1 (200) (100)

4 3 8
2 (100) (200)
Plants

7 5 9
3 (100)

4 5 5

Now, check the degeneracy of the modified solution.

From the above modified distributed solution, we have 5 basic cells
Number of rows(m) =3
Number of columns (n)=3
 m + n −1 = 5
Since the above solution is non-degenerate. Apply Modi technique as
 Sites

A B C
1 (200) (100)

4 3 8
2 (100) (200)
Plants

7 5 9
3 (100)

4 5 5

Since, all dij  0 , hence, we get the optimal solution for the given transportation problem.

The optimum solution for the given transportation problem is

MinZ = 200  4 + 100  3 +100  5 + 200  9 + 100  5 = 3900 cost units

Find optimum solutions for the following problems.

1.

W1 W2 W3 W4 W5 Available
F1 4 3 1 2 6 40
F2 5 2 3 4 5 30
F3 3 5 6 3 2 20
F4 2 4 4 5 3 10
Required 30 30 15 20 5

2.

D E F G H Capacity
A 5 8 6 6 3 800
B 4 7 7 6 5 500
C 8 4 6 6 4 900
Requirement 400 400 500 400 800
3.

D1 D2 D3 D4 Supply
O1 21 16 15 13 11
O2 17 18 14 23 13
O3 32 27 18 41 19
Demand 6 10 12 15 43

4.

Warehouse→
W1 W2 W3 W4 Capacity
Factory↓
F1 1 2 3 4 6
F2 4 3 2 0 8
F3 0 2 2 1 10
Requirement 4 6 8 6 24

5.

P Q R S SUPPLY
A 15 20 25 30 80
B 10 40 30 35 100
C 20 15 40 30 120
D 30 25 20 30 190
DEMAND 110 90 150 130

6.

P Q R S SUPPLY
A 9 6 11 5 200
B 4 5 8 5 150
C 7 8 4 6 350
D 3 3 10 10 250
DEMAND 260 100 340 200
 7.

D1 D2 D3 D4 Capacity
O1 1 2 3 4 6
O2 4 3 2 0 8
O3 0 2 2 1 10
Demand 4 6 8 6 24

8.

problem-2 A B C D Supply
O1 1 5 3 3 34
O2 3 3 1 2 15
O3 0 2 2 3 12
O4 2 7 2 4 19
Demand 21 25 17 17

9.

problem-3 D1 D2 D3 D4 Capacity
O1 21 16 15 13 11
O2 17 18 14 23 13
O3 32 27 18 41 19
Demand 6 10 12 15

10.

problem-4 D1 D2 D3 D4 D5 Capacity
O1 2 11 10 3 7 4
O2 1 4 7 2 1 8
O3 3 9 4 8 12 9
Demand 3 3 4 5 6

Fill in the blanks:

1. In a BFS of transportation problem, which is being tested for optimality, if all

the net evaluations of the empty cells are ≥0, then the BFS is considered to be
Optimal.
2. In a BFS of transportation problem, which is being tested for optimality, if the
net evaluations of one or more of the empty cells turn out to be negative, then
the BFS is Not optimal.
3. In a BFS of transportation problem, which is being tested for optimality, if Ui
and Vj are some numerals whose sum Cij is the unit cost of the corresponding
 allocation cell (i,j), then the net evolution any empty cell is computed as the
difference between the Unit cost of that empty cell and the sum of Ui and Vj
corresponding to that empty cell.
4. In a BFS of transportation problem, which is being tested for optimality, the
numerals Ui and Vj are computed based on the unit costs of the corresponding
allocation cells(i,j).
5. In a BFS of transportation problem, which is being tested for optimality, if the
net evolution of an empty cell is negative, then we join the cell with the other
allocation cells to form a closed loop.

Multiple choice Questions:

1. In the procedure of testing a BFS of a transportation problem for optimality,

which of the following is expressed as a sum of two numerals Ui and Vj ?
(a) The unit costs in the cells where allocations are made
(b) The unit costs in the cells where allocations are not made
(c) The number of units(quantities) allocated in the cells
(d) The net evaluations of the empty cells
2. If Ui and Vj are two numerals whose sum is equal to Cij, where Cij is the unit
cost of transportation corresponding to the allocated cell (i,j), then the net
evaluation ∆mn of which of the following will be equal to [Cmn-(Um+Vn)]?
(a) The cells where allocations are made
(b) The cells where allocations are not made
(c) The degenerate cells
(d) The cells having negative values of ∆j
3. A simple check for independence of allocation positions in a BFS of a
transportation problem is that
(a) There should not be a closed loop formation among the allocation
positions ,if we join them by horizontal/vertical lines.
(b) There should be a closed loop formation among the allocation positions ,
if we join them by horizontal/vertical lines.
(c) The allocations must be in continuous positions
(d) The number of allocations should be exactly equal to (m+n-1), where m
is the number of sources, and n is the number of destinations.
4. In a BFS of a transportation problem, among the two conditions of (i) the
number of allocation positions should be exactly equal to (m+n-1)(where m
is the number of sources, and n is the number of destinations), and (ii) the
allocations must be in independent positions, which conditions must be
compulsorily satisfied for the BFS to be non-degenerate.
(a) 1st condition
(b) 2nd condition
(c) Both of the two conditions
(d) None of the above
5. In testing a BFS of transportation problem for optimality, the two numerals
Ui and Vj are determined for each source and each column , based on the
(a) Unit costs of the empty cells
(b) Unit costs of the cells where allocations are made
(c) Allocation quantities in the cells
(d) Net evaluations of the cells
6. A BFS of a transportation problem is considered to be optimal if the
(a) Net evaluations of the allocated cells are ≥ 0
(b) Net evaluations of the allocations cells are ≤ 0
(c) Net evaluations of the empty cells are ≤ 0
(d) Net evaluations of the empty cells are ≥ 0
7. In testing a BFS of a transportation problem for optimality, where Ui and Vj
are two numerals corrwsponding to the ith source and jth destination
respectively, and Cij is the unit cost of transportation corresponding to an
empty cell(i,j), then the net evaluation ∆ij of that empty cell is given by
(a) Cij+(Ui+Vj)
(b) Cij -(Ui+Vj)
(c) Cij x(Ui+Vj)
(d) Cij /(Ui+Vj)
8. In a transportation problem, while improving a BFS towards optimality,
when an empty cell (i,j) has the most negative net evaluation, and hence it is
joined with some of the other allocated cells to form a closed loop, the
maximum quantity that can be allocated in that empty cell (i,j) is the
(a) Maximum of the quantities at the two corner cells adjacent to that empty
cell
(b) Minimum quantity in any cell of the closed loop
(c) Maximum quantity in any cell of the closed loop
(d) Minimum of the quantities at the two corner cells adjacent to that
empty cell.