- The MODI and VAM Methods of Solving Transportation Problems MEET Outine ‘MoDI METHOD \VOGEL'S APPROXIMATION METHOD: How to Uso the MODI Method ANOTHER WAY TO FIND AN INITIAL Solving the Arizona Pumbing Pablem with MODI14-2 CP Turorian 4 THE MODI AND VAM Metuons oF SOLVING TRANSPORTATION PROBLEMS This tutorial deals with (wo techniques for solving transportation problems: the MODI method and Vogel's Approximation Method (VAM). MODI METHOD The MODI (modified distribution) 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 wansportation problems. ‘MODI provides a 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 shipped via the best unused route. How to Use the MODI Method In applying the MODI method, we begin with an inital solution obtained by using the northwest cor- ner rule of any other rule. But now we must compute a value for each row (call the values R, Ry, Ry if there are three rows) and for each column (K;, K,, K, ) in the transportation table. In general, we let R, = value assigned to row i Kj = value assigned to column j Gj = cost in square i (cost of shipping from source ito destination j) ‘The MODI method then requires five steps: 1. To compute the values for each row and column, set R+K=¢, but only for hose squares that are currently used or occupied. For example, ifthe square at the intersection of row 2 and column 1 is occupied, we set Ry + Ky = Cy, 2. Afterall equations have been written, set R, Solve the system of equations for all R and K values, 4. Compute the improvement index for each unused square by the formula improvement index (I,) = Cy ~ R, ~ K, 5, Select the largest negative index and proceed to solve the problem as you did using the stepping-stone method, Solving the Arizona Plumbing Problem with MODI Let us try out these rules on the Arizona Plumbing problem. The initial northwest comer solution is shown in Table T4.1. MODI will be used to compute an improvement index for each unused square. Note that the only change in the transportation table is the border labeling the R,s (rows) and Ks (columns). We first set up an equation for each occupied square: A R+K,=5 2 Ry+K,=8 3. Ry+Ky=4 4 Ry+K=7 5. R+K,=5 Letting R, = 0, we can easily solve, step by step, for K,, R,, K,,R,, and Ky 5TABLE T4.1 Initial Solution to Arizona Plumbing Problem in the MODI Format MODI Metuop 14-3 K Ki kK: Ks TO R FACTORY ‘Avpuguenque| Boston | cLevELAND | CApacrty FROM 5 4 3 Ry | DES MOINES 100 3 4 3 Ry) EVANSVILLE 200 100 300 9 7 5 R FORT LAUDERDALE 100 200 300 WAREHOUSE REQUIREMENTS 300 200 200 700 4 RFK, R+1=7— Ri=6 5. Ry +K, ork, ‘You can observe that these R and K values will not always be positive; iis common for zero and neg- ative values to occur as well. After solving for the Rs and Ks in afew practice problems, you may become so proficient that the calculations can be done in your head instead of by writing the equations out “The next step is to compute the improvement index for each unused cell, That formula is improvement index = 1, = Cy ~ R,— K, We have: Des Moines-Boston index = Ipg (or 3) = Cin = 483 Des Moines~Cleveland index = Ie (ot fy) = Cys ~ R; 184 Evansville-Cleveland index = Ie (0F fy3) = Cos =481 Fort Lauderdale~ Albuquerque index = Iyq (ot fy) = Cyy ~ Ry =-82 R- K,=4-0-1 Ky =3-0-CD Ry Ky =3-3-C) K,= 9-6-5 Because one of the indices is negative, the current solution is not optimal. Now it is necessary to tuace only the one closed path, for Fort Lauderdale~Albuguerque, in order to proceed with the solu- tion procedures, The steps we follow to develop an improved solution after the improvement indices have been computed are outlined briefly 1, Beginning at the square with the best improvement index (Fort Lauderdale-Albuquerque), trace a closed path back to the original square via squares that are currently being used. 2, Beginning with a plus (+) sign at the unused square, place alternate minus (—) signs and plus signs on each comer square of the closed path just traced. 3, Select the smallest quantity found in those squares containing minus signs. Add that num- ber to all squares on the closed path with plus signs: subtract the number from all squares assigned minus signs, 4, Compute new improvement indices for this new solution using the MODI method.T4-4 CD Turortan 4 TABLE T4.2 Second Solution to the Arizona Plumbing Problem TABLE T4.3 Third and Optimal Solution to Arizona Plumbing Problem Tue MODI axp VAM MetHops oF SOLVING TRANSPORTATION PROBLEMS 10 A 8 © FACTORY FROM. 88 4 33 > 100 100 38 34 3 E 100 200 300 9 37 35 F 100 200 300 WAREHOUSE 300 200 200 700 0 A 8 c FACTORY From 85 4 33 > 100 100 $8 s4| 3 E 200 100 300 39 37 38 F 200 100 300 WAREHOUSE 300 200 200 700 Following this procedure, the second and third solutions to the Arizona Plumbing Corporation problem can be found. See Tables T4.2 and T4.3. With each new MODI solution, we must recalcu- late the R and K values. These values then are used to compute new improvement indices in order to determine whether further shipping cost reduction is possible, VOGEL’S APPROXIMATION METHO! ANOTHER WAY TO FIND AN INITIAL SOLUTION In addition to the northwest comer and intuitive Iowest-cost methods of setting an initial solution to transportation problems, We introduce one other important technique—Vogel’s approximation ‘method (VAM). VAM is not quite as simple as the northwest comer approach, but it facilitates a very good initial solution—as a matter of fact, one that is often the optimal solution ‘Vogel's approximation method tackles the problem of finding a good initial solution by taking {nto account the costs associated with each route alternative. This is something that the northwest comer rule did not do. To apply the VAM, 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.VoorL’s APPROXIMATION METHOD: ANOTHER WAY TO FIND AN INITIAL SOLUTION T4-5 TO] Warehouse | Warehouse | Warehouse 2 at at Factory FROM Albuquerque | Boston Cleveland _| capacity es Moines 38 st 8 factory 100 | Des Moines capacity constraint Evansville 38 s# 3 factory 300 Fort Lauderdale 9 37 sf 300 | -Cellrepresenting a factory source-to-destination Warehouse (Evansville to Cleveland) requirements 300 200 200 790 | shipping assignment that could be made Cleveland Total demand and total supply warehouse demand ‘cost of shipping 1 unit trom Foot Lauderdale factory to Boston warchouse TABLE T4.4 Transportation Table for Arizona Plumbing Corporation ‘The six steps involved in determining an initial VAM solution ate illustrated on the Arizona Plumbing Corporation data. We begin with Table T4.4 VAM Step 1: For each row and column of the transporation table, find the difference between the two lowest uni shipping costs. These numbers represent the difference between the dstibu- ‘ion cost on the Best route in the row of column and the second Best route in the 10 or column. (This isthe epportunity cost af not using the best route) ‘Step 1 as been done in Table T4.5."Tae numbers atthe heads ofthe columns and to the right of the zows represen these dilleences, For example, in row E the three transportation costs ate $8, $4, and $3. The two lowest costs axe $4 and $3; tei difference is $1 VAM Step 2: Identify the row or column with the greatest opportunity cos, or dillerence. Inthe case of Table T45, the row or columa selected is column A, with a difference of 3 TABLE T4.5 a 3 ° o Transportation Table = with VAM Row and ALBUQUERQUE | BOSTON | CLEVELAND | TOTAL Column Differences A a c AVAILABLE shown From 3 4 3 DES MOINES ao | D 8 4 3 EVANSVILLE 30a FORT 8 7 5 LAUDERDALE. 30 | 2 F RequaneD 300 200 200 700T4-6 CD TuroRiaL 4 THE MODI axp VAM Merops oF SOLVING TRANSPORTATION PROBLEMS TABLE T4.6 VAM Assignment with D's Requirements Satisfied TABLE T4.7 Second VAM Assignment with 8's Requirements Satisfied a1 ws wn To ToTaL A 5 c From AVAILABLE 5 a 3 00 ° 100 x x x z 5 4 3 E soa 9 7 5 F soo |2 ToTAaL REQUIRED 300 200 200 700 VAM Step 3: Assign as many units as possible tothe lowest cost square in the row or column, selected. Slep 5 has been done in Table T4.6. Under Colum A, the loweet-cost route is D-A (with a cost of $5), and 100 units have been assigned to that square. No more were placed inthe square because doing so would exceed D's availability. VAM Step 4: Eliminate any row or columa that has just been completely satisfied by the assigament {ust made, This can be dane by placing Xs in each appropriate square. ‘Step 4 has been done in Table T4.6 D row. No future assignments will be made to the D-B oz D-C routes VAM Stop compute the cost diferences forthe transportation table, omitting rows or columns crossed out in the preceding step. ‘Thi is also shown in Table T46, 4's, B's, and C's differences each change. D's row is climinated, and E's and F's diferences remain the same asin Table T4.5 VAM Stop 6: Return o step 2 and repeat the steps until an inital feasible solution has been. cisained a1 Bs wr 70 ToTaL A 8 c AVAILABLE From 3 4 3 o 100 x x 100 z 3 4 3 e 200 ao | as 2 7 3 F x 300 z4 TOTAL aeaty 300 200 200 700Vosrn’s APPROXIMATION METHOD: ANOTHER WAY TO FIND AN INITIAL SOLUTION 14-7 TABLE 14. Third VAM Assignment with C's Requirements Satisied TABLE T4.9 Final Assignments to Balance Column and Row Requirements To TOTAL a a © AVAILABLE FROM. 5 4 3 > 100 x x in 3 4 3 & x 200 100 300 9 7 3 F x 300 TOTAL REQUIRED 300 200 200 700 In our case, column B now has the greatest difference, which is 3. We assign 200 units tothe low est-cost square in column B that has not been crossed out. This is seen to be E-B. Since B's requ: ments have now been met, we place an X in the FB square to eliminate it. Differences are once again recomputed. This process is summarized in Table T4.7 “The greatest difference is now in row E, Hence, we shall assign as many units as possible to the lowest-cost square in row E, that is, E-C with a cost of $3. The maximum assignment of 100 units depletes the remaining availability at £. The square E-A may therefore be crossed out. This is illus uated in Table T4.8, “The final two allocations, at F-A and FC, may be made by inspecting supply restrictions (in the rows) and demand requirements (in the columns). We see that an assignment of 200 units to FA. and 100 units to FC completes the table (see Table T4.9) “The cost of this VAM assignment is = (100 units x $5) + (200 units x $4) + (100 units x $3) + (200 units x $9) + (100 units x $5) = $3,900. It is worth noting that the use of Vogel's approximation method on the Arizona Plumbing Corporation data produces the optimal solution to this problem, Even though VAM takes many ‘more calculations to find an initial solution than does the northwest comer rule, it almost always produces a much better inital solution, Hence VAM tends to minimize the total number of compu- tations needed to reach an optimal solution, 10 TOTAL “ 5 © AVAILABLE FROM 3 7 3 ° 100 x x 100 8 3 & x 200 100 300 8 7 5 r 200 x 100 300 TOTAL REQUIRED 300 200 200 700T4-8 CD TuroriaL 4 THE MODI xp VAM Metnons oF SoLVING TRANSPORTATION PROBLEMS ®) DISCUSSION QUESTIONS A. Why docs Vogel’s approximation method provide a good inital feasible solution? Could the northwest corner tule ever provide an initial solution with as low a cost? 2. How do the MODI and stepping-stone methods differ? 9% PROBLEMS* R T41 ‘The Hardrock Concrete Company has plants in three locations and is currently working on three major con- siruetion projects, eack located at a different site. The shipping eost per truckload of concrete dally plant capacities, and daily project requirements ave provided i the accompanying table. = To | Project | Project | Project Plant From | A 3 C | Capacities Plant 1 slo sa si 7 Plant 2 2 5 © 50 Plant 3 2 7 6 30 Project Requirements 40 50 6 130 4) Formulate an intial feasible solution to Hardrock’s transportation problem using VAM. ') Then solve using the MODI method. ©) Was the inital solution optimal? R T42 Hardrock Concrete’s owner has decided to increase the capacity a his smallest plant (see Problem T'.1). Instead of producing 30 loads of concrete per day t plant 3, that plant's capacity is doubled to 60 loads. Find the new optimal solition using VAM and MODI, How has changing the third plants capacity altered the opti- sal shipping assignment?” R 43 The Saussy Lumber Company ships pine flocring to three building supply houses from its mills in Pineville, (ak Ridge, and Mapletown, Determine the best tansportation schedule for the data given inthe accompanying table, Use the northwest corner tule and the MODI method, 0 SUPPLY SUPPLY SUPPLY MIL HOUSE 1 HOUSE 2 | HOUSE3 CAPACITY (TONS) From 33 3 2 PINEVILLE 25 4 2 3 ‘OAK RIDGE 40 3 2 3 MAPLETOWN, 30 SUPPLY HOUSE DEMAND (TONS) ” *° 38 * Note: P seans he pobens ay be solved wit POM fr Windows; © mean the problem maybe solved wih Excl OoMcand Re seas the prob may be solved ith POM for Window aor cel OMPd @ Tad Tas Tas PROBLEMS 14-9 ‘The Krampf Lines Railway Company specializes in coal handling. On Friday, April 13, Krampf had empty cats at the following towns inthe quantities indicated Town Surruy Morgantown 35 Youngstown, Pitsbureh Cans By Monday, April 16, the following towns will ned coal care: Towx __ DEMAND FOR Cans (Coal Valley 30 Coaltowa, 45 Coal Juaction 2s Coalsbure 20 Using a railway eity-to-city distance chat, the dispatcher constructs a mileage table for the preceding towns ‘The results To. From Coat VaLuey CoaLTown Coat JUNCTION COALSBURG ‘Morgantown 30 30 0 70 Youngstown 20 80 10 90 Pitsburg 100 40 80 30 Minimizing total miles over which cars are moved to new locations, compute the best shipment of coal ars Use she northwest comer rule and the MODI method “The Jessie Cohen Clothing Group owns factories in three towns (W, Y, and 2) that distribute to three Cohen retail dress shops (in A,B, and C). Factory availabilities, projeced store demands, and unit shipping costs are summarized in the table that fllows: 10 FACTORY A 8 © From AVAILABILITY 4 3 3 w 35 6 7 6 y 0 3 2 5 z 50 STORE STyaND 30 65 40 13s Use Vogels approximation method to find an initial feasible solution to this transportation problem. Ie your ‘VAM solution optimal? ‘The state of Missouri has three major power-generating companies (A, B. and C). During the months of peak demand, the Missouri Power Authority authorizes these companies to pool their excess supply and to distribute it to smaller independent power companies that do not have generators large enough to handle the demand. Excess supply is ditnbuted on the basis of cost per kilowatt hour transmitted. The following table shows theT4-10 CD TuroriaL 4 THE MODI Axp VAM Metnons oF SoLVING TRANSPORTATION PROBLEMS demand and supply i millions of kilowatt hours and the costs per kilowatt hour of tansmittng electic power to four small companies in cities W, X,Y, and Z rom x ly | az) Bose A is |e | 9 | se | 55 ze se [is | oe | oe | 8 c ie [me | a | | 0 Unfiled Power Demand 40 | 2 | so | 20 Use Vogel's approximation method to find an initial tanstaision assignment ofthe excess power supply. Then apply the MODI technique to find the least-cost distribution system,