quiz for modi, mcm and vam

I. Solve the following:

A. Which location would result in the lowest transportation cost for the
system?
Using NCR method for initial solution and by MODI.

Step 1. Establish the transportation tableau:

A B C D Supply
1 4 7 7 1 100
2 12 3 8 8 200
3 8 10 16 5 150
Demand 80 90 120 160 450

Observe the variable representation in each square.

A B C D Supply
1 4 7 7 1 100
X1A X1B X1C X1D
2 12 3 8 8 200
X2A X2B X2C X2D
3 8 10 16 5 150
X3A X3B X3C X3D
Demand 80 90 120 160 450
Objective Function:
Minimize : Z j = 4X1A + 7X1B + 7X1C + 1X1D + 12X2A + 3X2B + 8X2C + 8X2D +
8X3A + 10X3B + 16X3C + 5X3D

Constraints:
Subject to: 4X1A + 7X1B + 7X1C + 1X1D = 100
12X2A + 3X2B + 8X2C + 8X2D = 200
8X3A + 10X3B + 16X3C + 5X3D = 150
4X1A + 12X2A + 8X3A = 80
7X1B + 3X2B + 10X3B = 90
7X1C + 8X2C + 16X3C = 120
1X1D + 8X2D + 5X3D = 160

By Northwest Corner Rule (NCR)

Step 1. Beginning in cell X1A, allocate 80 units, exhausting demand in column 1
and leaving 20 units of supply in row 1.

A B C D Supply
1 4 7 7 1 (100)
80 20
2 12 3 8 8 200
3 8 10 16 5 150
Demand (80) 90 120 160 450

Step 2: Staying in row 1, move to cell X1B, where supply is now 20 and demand is
90 units. Allocate 20 units to the cell, exhausting the supply of row 1 and leaving
70 units in column B.
A B C D Supply
1 4 7 7 1 (100)
80 20
2 12 3 8 8 200
3 8 10 16 5 150
Demand (80) 70 120 160 450
(90)
Step 3. Starting in column B, move down to cell X2B, where supply is 200 units.
Allocate 70 units to this cell, exhausting demand in column B and leaving 130
units of supply in row 2.
A B C D Supply
1 4 7 7 1 (100)
80 20
2 12 3 8 8 200
70 (130)
3 8 10 16 5 150
Demand (80) 120 160 450
(90)

Step 4: Staying in row 2, move to cell X2C and allocate 120 units, exhausting that
row's supply and leaving 10 units in column D. Starting in row 3, move to cell X3D
and allocate 150 units.
A B C D Supply
1 4 7 7 1 (100)
80 20
2 12 3 8 8 (200)
70 120 10
3 8 10 16 5 (150)
150
Demand (80) (90) (120) 160 450
Using Minimization Problem by Modified Distribution Method (MODI)

Tableau 1:
V1 V2 V3 V4 Supply
U1 4 7 7 1 100
80 20 X1C X1D
U2 12 3 8 8 200
X2A 70 120 10
U3 8 10 16 5 150
X3A X3B X3C 150
Demand 80 90 120 160 450

Step 1: Compute the stone squares:

Source-Destination Quantity shipped X Total Cost

Combination Unit cost

X1A 80 x 4 320

X1B 20 x 7 140

X2B 70 x 3 210

X2C 120 x 8 960

X2D 10 x 8 80

X3D 150 x 5 750

Total transportation cost 2,460

For Step 2: represent a new variable for each row and column:
Let U i = a value assigned to row 1
V i = a value assigned to column 1, and
C i = a value to cost in square ij.

Using the formula of cost of the stone square ij:

Cj = Ui + Vj
Step 3: substitute the appropriate
Value for each Cij, let Ui be equal to zero or U1 = 0 and compute for the unknown.
X1A » U1 + V1 = 4
X1B » U1 + V2 = 7
X2B » U2 + V2 = 3 V1= 4, V2= 7 , V3= 4 , V4= 4 , U2= 4 , U3= 1
X2C » U2 + V3 = 8
X2D » U2 + V4 = 8
X3D » U3 + V4 = 5

Step 4: Evaluate the stone square in the initial solution by finding the
improvement index.

Unused square Cij - Ui - Vj Improvement indices

X1C X1C - U1 - V3 7-0-4=3

X1D X1D - U1 - V4 1 - 0 - 4 = -3

X2A X2A - U2 - V1 12 - 4 - 4 = 4

X3A X3A - U3 - V1 8-1-4=3

X3B X3B - U3 - V2 10 - 1 - 7 = 2

X3C X3C - U3 - V3 16 - 1 - 4 = 11

Step 5: Identify the lowest negative value in the improvement index, which is
equal to -3. Find the closed path into X1D just like what we did in the previous
method.
Tableau 2:

A B C D Supply
1 4 7 7 1 100
80 10 10
2 12 3 8 8 200
80 120
3 8 10 16 5 150
150
Demand 80 90 120 160 450

Step 6. Solve for the stone squares:

Source-Destination Quantity shipped X Total Cost

Combination Unit cost

X1A 80 x 4 320

X1B 10 x 7 70

X1D 10 x 1 10

X2B 80 x 3 240

X2C 120 x 8 960

X3D 150 x 5 750

Total transportation cost 2,350

Step 7: substitute the appropriate

Value for each Cij, let Ui be equal to zero or U1 = 0 and compute for the unknown.
X1A » U1 + V1 = 4
X1B » U1 + V2 = 7
X1D » U1 + V4 = 1 V1= 4, V2= 7 , V3= 4 , V4= 1 , U2= 4 , U3= - 4
X2B » U2 + V2 = 3
X2C » U2 + V3 = 8
X3D » U3 + V4 = 5
Step 8: Evaluate the stone square in the initial solution by finding the
improvement index.

Unused square Cij - Ui - Vj Improvement indices

X1C X1C - U1 - V3 7-0-4=3

X2A X2A - U2 - V1 12 - 4 - 4 = 4

X2D X2 - U2 - V4 8-4-1=3

X3A X3A - U3 - V1 8 - -4 - 4 = 8

X3B X3B - U3 - V2 10 - -4 - 7 = 7

X3C X3C - U3 - V3 16 - -4 - 4 = 16

Since the improvement index does not contain any negative value in the solution
is optimum.

The optimal solution and the maximum profit are

X1A = 80, X1B = 10, X1D = 10, X2B = 80, X2C = 120, X3D = 150

Zj = 4(80) + 7(10) + 7(0) + 1(10) + 12(0) + 3(80) + 8(120) + 8(0) + 8(0) + 10(0) + 16(0) +
5(150)
= 2,350
 B. Which location would result in the lowest transportation cost for the system?
Use Minimum cost method and VAM method for initial solution.

Table 6a - New XYZ Sawmill company log transportation problem.

Mill A Mill B Mill C Supply

Site 1 90 100 130 20

Site 2 100 140 100 15

Site 3 100 80 80 10

Demand 5 20 20 45

MINIMUM COST METHOD (MCM) OR GREEDY METHOD

STEP 1: Beginning with the lowest cost S3B, in which the cost is 80, allocate 10
units. Cross out that column and the demand, and we change the column to 10
units.

Mill A Mill B Mill C Supply

Site 1 90 100 130 20

Site 2 100 140 100 15

Site 3 100 80 80 10
10

Demand 5 (10) 20 45
20
STEP 2: Of the cells that remain, S1A has the lowest cost. Allocate 5 units in cell
S1A, the cells in column A are crossed out along with the demand
Mill A Mill B Mill C Supply

Site 1 90 100 130 20

5 (15)

Site 2 100 140 100 15

Site 3 100 80 80 10
10

Demand 5 (10) 20 45
20

STEP 3: of the remaining cells, S1B has the lowest cost. Assigned 10 units to that cell.
Because column 2 has been satisfied, the cells in the column must be crossed out, and
10 units must be subtracted from the supply of row 1.

Mill A Mill B Mill C Supply

Site 1 90 100 130 20

5 10 (5)

Site 2 100 140 100 15

Site 3 100 80 80 10
10

Demand 5 20 20 45
STEP 4: Cell S2C has the next lowest cost, so it is next in line for allocation. The supply
is 15 units, and the demand is 20 units. Consequently the quantity 15 is placed in S2C.
This completes the use of supply for row 2, and leaves a demand of 5 units for column
3.

Mill A Mill B Mill C Supply

Site 1 90 100 130 20

5 10 (5)

Site 2 100 140 100 15

15

Site 3 100 80 80 10
10

Demand 5 20 (5) 45
20

STEP 5: The last remaining cell X1C, then, receives a quantity of 5 units,
canceling the remaining supply and demand for both its row and column.

Mill A Mill B Mill C Supply

Site 1 90 100 130 20

5 10 5

Site 2 100 140 100 15

15

Site 3 100 80 80 10
10

Demand 5 20 20 45

VOGEL’S APPROXIMATION METHOD (VAM)

Step 1. Determine the difference of the lowest and second lowest cost Alternatives for
each row and column. Identify the row or column with the largest opportunity cost.

Opportunity Cost for the first allocation

Row and Column 2nd lowest Cost Lowest Cost Opportunity Cost

1 100 90 10

2 100 100 0

3 80 80 0

A 100 90 10

B 100 80 20 - largest

C 100 80 20

Step 2: Allocate 10 units in cell X3B that contains the lowest cost in row 3 and
cross out row 3. Compute for the next opportunity cost.

Mill A Mill B Mill C Supply

Site 1 90 100 130 20

Site 2 100 140 100 15

Site 3 100 80 80 10
10

Demand 5 (10) 20 45
20
Step 3: Then identify the difference of the lowest and second lowest cost Alternatives
for each remaining row or column. Identify the row or Column with the largest
opportunity cost.
Opportunity Cost for the first allocation

Row and Column 2nd lowest Cost Lowest Cost Opportunity Cost

1 100 90 10

2 100 100 0

A 100 90 10

B 100 140 20 - largest

C 100 130 20

Step 4: Allocate 10 units in cell X1B that contains the lowest cost in column B and
cross out column B. Compute for the next opportunity cost.

Mill A Mill B Mill C Supply

Site 1 90 100 130 20

10

Site 2 100 140 100 15

Site 3 100 80 80 10
10

Demand 5 (10) 20 45
20
Step 5: Again select the largest difference between the lowest and the second lowest
cost alternatives for each row or column. Identify the row or column with Largest
opportunity cost.
Opportunity Cost for the first allocation

Row and Column 2nd lowest Cost Lowest Cost Opportunity Cost

1 130 90 40 - Largest

2 100 100 0

A 100 90 10

C 100 130 30

Step 6: Allocate 5 units in cell X1A that contains the lowest cost in column A
and cross out column A. If there are only two unused squares, select the lowest
cost and allocate the necessary amount.

Mill A Mill B Mill C Supply

Site 1 90 100 130 20

5 10

Site 2 100 140 100 15

Site 3 100 80 80 10
10

Demand 5 (10) 20 45
20
Step 7: In the previous tableau the lowest cost is in X2C. Allocate 15 units in X2C
and then allocate 5 units in X1C.

Mill A Mill B Mill C Supply

Site 1 90 100 130 20

5 10 5

Site 2 100 140 100 15

15

Site 3 100 80 80 10
10

Demand 5 20 20 45