OMDM Project Sec-C (Group-2) Submitted to- Prof.

Alok Kumar
Date -04/10/2021
Amoolya Pratap Singh - 301126
Ankit Yadav – 301127
Radhika Bansal -301149
Anshul Natani -301153
Shivam Dharmadhikari -301162

Introduction to Unbalanced Transportation Problem with Maximisation Case

The transportation problem constitutes an important part of logistics management. In a

transportation problem, the sum of supply available from all sources is not equal to the sum
of demands of all destinations, i.e. the problem is said to be an Unbalanced transportation
problem. The unbalanced transportation problem is a particular class of transportation
problem, which is associated with day-to-day activities in our real life and mainly deals with
logistics. It helps in solving problems on distribution and transportation of resources from one
place to another. The goods are transported from “m” sources to “n” designations and their
capacities are a1,a2,....,am and b1,b2,...bn and respectively. In addition, there is a penalty
associated with transporting a unit of product from source i to destination j. This penalty may
be cost or delivery time or safety of delivery etc. A variable represents the unknown quantity
to be shipped from source i to destination j. The objective is to satisfy the demand at
destinations from the supply constraints at the minimum transportation cost. 

There are certain types of transportation problems where the objective function is to be
maximized instead of being minimized. These problems can be solved by converting the
maximization problem into a minimization problem.

In order to find basic feasible solution we have 3 methods-

 North-West Corner Method
 Vogel’s Approximation Method
 Least Cost Method

In this problem we have used the VAM Method

It’s a method for finding a first feasible solution to a transportation problem. The procedure
begins by finding the two lowest cost cells for each row and column in the transportation
problem array. Subtracting the smaller of these costs from the other produces a Vogel number
for each row and column. Select the largest Vogel number and make the first assignment to
the corresponding lowest cost cell, where the assignment is the maximum amount that can be
sent from the corresponding origin to the corresponding destination. After each assignment,
the Vogel numbers are recomputed based on the remaining rows and columns in the array.
The procedure is repeated until all assignments (shipments) are made. Although VAM tends
to find a good (low cost) first feasible solution, the extra computational work required has
proven to be a detriment to its use in computer-based software for solving transportation
problems
After finding the initial basic solution we used MODI method to check the optimality

The MODI method 

The modified distribution method, also known as MODI method or (u - v) method provides a
minimum cost solution to the transportation problem. In the stepping stone method, we have
to draw as many closed paths as equal to the unoccupied cells for their evaluation. To the
contrary, in MODI method, only closed path for the unoccupied cell with highest opportunity
cost is drawn. 

Problem statement and definition – source of the problem

A company wishes to determine an investment strategy for each of the next four years. Five
investment types have been selected, investment capital has been allocated for each of the
coming four years and maximum investment levels have been established for each investment
type. An assumption is that amounts invested in any year will remain invested until the end of
the planning horizon of four years. The following table summarizes the data for this problem.
The values in the body of the table represent net return on investment of one rupee upto the
end of the planning horizon. For example, a rupee invested in investment type B at the
beginning of year I will grow to Rs ₹1.90 by the end of the fourth year, yielding a net return
of ₹ 0.90.

Investment made at the A B C D E Rupees

beginning of the year available

1 0.8 0.9 0.6 0.75 1 500

2 0.55 0.65 0.4 0.6 0.5 600

3 0.3 0.25 0.3 0.5 0.2 750

4 0.15 0.12 0.25 0.35 0.1 800

5 0 0 0 0 0 1000

Maximum rupee investment 750 600 500 800 1000 2650/3650

Total 3650
Demand

Total 2650
Supply
The objective in this problem is to determine the amount to be invested at the beginning of
each year in each investment to maximize the net rupee return for the 4 year period.
Source of the problem- Operation Research by Er. Prem Kumar Gupta and Dr.D.S.
Hira(publisher- S.Chand)

Interpretation of the solution

 After getting a maximum net return on investment we have interpreted that At the beginning
of 1st year the 5,00,000 rupees should be invested in type E, at the starting of the second year
the 6,00,000 should be invested in type B, In the 3rd year the 7,50,000 should be invested in
type D, in the 4th year we should divide 8,00,000 rupees into 3 scheme 2,50,000 in type A,
5,00,000 in type C, and 50,000 in type D for getting maximum on the invested capital  

Managerial implications

The transportation problem involves the distribution of goods from the manufacturing units to
the warehouse, retailers, or the customers. These are very useful for business and the
industries since it is a useful method and is used for the supply and distribution of goods to
the final end-users.

In this particular problem we used a transportation model to find out the investment to be
done by a company in a year among various scheme so as to maximize the return on
investment.

The result of this problem provides the key insight to the manager which helped him to
achieve the objective of maximizing return

Conclusion

From this given problem we conclude that transportation model is very effective in the cases
where we have to allocate resources in an optimal way.
So far we have been discussing an unbalanced transportation problem with a maximization
case and its solution approach. Since all the cell values are either negative or zero
(Maximization Problem)

Further, it gives optimal solution in most of the cases or it gives very near to optimal solution.