Transportation Model Part One

Dr A R M Harunur Rashid
 The Transportation Method of Linear
Programming

• Definition: A special linear programming method

used to solve problems involving transporting
products from several sources to several
destinations
 How is the Transportation Method of LP
Useful?

• Very fast
• Easy
 How it Works

• A linear function subject to constraints is used to

minimize an objective, in this case cost
• The constraints that must be met in balanced type
are:
– supply must meet demand
– supply cannot exceed capacity
• In the unbalanced problem above will not be met.
So we will use a method to solve such problem.
• Software: TORA, Microsoft Excel’s Solver, etc.
 The Transportation Problem
• The problem of finding the minimum-cost
distribution of a given commodity
from a group of supply centers (sources) i=1,…,m
to a group of receiving centers (destinations)
j=1,…,n
• Each source has a certain supply (si)
• Each destination has a certain demand (dj)
• The cost of shipping from a source to a
destination is directly proportional to the number
of units shipped
 Transportation Simplex Method
• Since any transportation problem can be
formulated as an LP, we can use the simplex
method to find an optimal solution
• Because of the special structure of a
transportation LP, the iterations of the simplex
method have a very special form
• The transportation simplex method is nothing but
the original simplex method, but it streamlines
the iterations given this special form
 Procedures
• In the rows, put factories production
• In the columns, put warehouses capacity, that is also
called demand
• On the right hand side of the row is total output of a
particular factory or we could call it supply.
• On the bottom at the end of each column, total
capacity or demand of a particular warehouse.
• One cell is divided into two diagonally. The upper part
denotes cost of moving one unit from the factory
corresponding to that cell and the bottom part is the
amount moves from the factory to the warehouse
corresponding to that cell. It may be other way round.
 Methods for solving Transportation
Problem
• First you need to find an initial basic feasible
solution.
• Then you need to find the optimal solution.
• To find the initial basic feasible solution, there
are three popular methods.
• A] North West Corner (NWC) rule
• B] Least Cost method
• C] Vogels Approximation Model(VAM)
• Mnemonics: Supply in Row and Demand in
Column >> SR DC
 North West Corner rule

STEP 1 Start with the cell in the upper left hand corner (North West
Corner).
STEP 2 Allocate the maximum feasible amount.
STEP 3 Move one cell to the right if there is any remaining supply.
Otherwise, move one cell down. If both are
impossible, stop or go to step (2). However, going diagonal is not allowed.

The solution obtained by the North West Corner Rule is a basic feasible
solution. In this method we do not consider the unit cost
of transportation. Hence the solution obtained may not be an
optimal solution. But this will serve as an initial solution, which can be
improved.
 Problem

supply level, demands at various destinations, and the unit cost of

transportation are given. Use NWC rule to find the initial solution
The North West Corner cell (AP) is chosen for allocation. The origin A has 70 items
and the
destination P requires only 65 items. Hence it is enough to allot 65 items from A to P.
The origin A which is
alive with 5 more items can supply to the destination to the right is alive with 5 more
items can supply to the
destination to the right of P namely Q whose requirement is 42. So, we supply 5
items to Q thereby the origin A
is exhausted. Q requires 37 items more. Now consider the origin B that has 30 items
to spare. We allot 30 items
to the cell (BQ) so that the origin B is exhausted. Then move to origin C and supply 7
more items to the
destination Q. Now the requirement of the destination Q is complete and C is left
with 43 items and the same
can be alloted to the destination R. Now the origin C is emptied and the requirement
at the destination R is also
complete. This completes the initial solution to the proble
The total cost of transportation by this method will be
65 × 5 + 5 × 7 + 30 × 4 + 7 × 7 + 43 × 7 = $830

As the solution obtained by the North West Corner Rule may not be expected to be
particularly close to the optimal solution, we have to explore a promising initial
basic feasible solution, so that we can teach the optimal solution to the problem
with minimum number of iterations
 Least Cost Method
STEP 1: Determine the least cost among all the rows or
columns of the transportation table.
STEP 2:Identify the row or column and allocate the
maximum feasible quantity in the cell corresponding to
the least cost
in the row or column. Then eliminate that row (column)
when an allocation is made. Eliminated one may be
column or row.
STEP 3: Repeat steps 1 and 2 for the reduced
transportation table until all the available quantities are
distributed to the required places. If the minimum cost is
not unique, the tie can be broken arbitrarily
We examine the rows A, B and C, 4 is the least cost element in
the cell (B,P) and (B, Q) and the tie can be
broken arbitrarily. Select (B, P). The origin B can supply 30 items
to P and thus origin B is exhausted. P still
requires 35 more units. Hence, deleting the row B, we have the
reduced matrix as in the table
In the reduced matrix (previous slide table) we observe that 5 is the
least element in the cell (A, P) and examine the supply at
A and demand at P. The destination P requires 35 items and this
requirement is satisfied from A so that the
column P is deleted next. So we have the reduce matrix as in the
following table
In the reduced matrix (previous slide’s table) we choose 7 as least
element corresponding to the cell (A. Q). We
supply 35 units from A to Q so have the reduced matrix in the following
table
Now, only one row is left behind. Hence, we allow 7 items from C to Q and
43 items C to R.
We now have the allotment as per the least cost method as shown in the
following table
The cost of the allocation by the least cost method is 35 x 5 + 35 x 7 + 30 x 4
+ 7 x 7 + 43 x 7 = $ 890
 Vogel's Approximation Method
(VAM)
This method is based on the 'difference' associated with each row and column in the
matrix giving unit cost of transportation cij. This 'difference' is defined as the arithmetic
difference between the smallest and next to the smallest element in that row or column.
This difference in a row or column indicates the minimum unit penalty incurred in failing
to make an allocation to the smallest cost cell in that row or column. This difference also
provides a measure of proper priorities for making allocations to the respective rows and
column.
In other words, if we take a row, we have to allocate to the cell having the least cost and if
we fail to do so, extra cost will be incurred for a wrong choice, which is called penalty. The
minimum penalty is given by this difference. So, the procedure repeatedly makes the
maximum feasible allocation in the smallest cost cell of the
remaining row or column, with the largest penalty. Once an allocation is fully made in a
row or column, the particular row or column is eliminated. Hence and allocation already
made cannot be changed. Then we have a reduced matrix. Repeat the same procedure of
finding penalty of all rows and columns in the reduced matrix,
choosing the highest penalty in a row or column and allotting as much as possible in the
least cost cell in that row or column. Thus we eliminate another fully allocated row or
column, resulting in further reducing the size of the matrix. We repeat till all supply and
demand are exhausted
A summary of the steps involved in Vogel's Approximation Method is given below:
STEP 1: Represent the transportation problem in the standard
tabular form.
STEP 2: Select the smallest element in each row and the next to
the smallest element in that row. Here the next smallest element
may be two or more cells away, it does not have to be physically
next one in the table. Then difference is to be written as absolute.
Find the difference. This is the penalty written on the right hand
side of each row. Repeat the same for each column. The penalty is
written below each column.
STEP 3: Select the row or column with largest penalty. If there is a
tie, the same can be broken arbitrarily.
STEP 4: Allocate the maximum feasible amount to the smallest
cost cell in that row or column.
STEP 5: Allocate zero else where in the row or column where the
supply or demand is exhausted.
STEP 6: Remove all fully allocated rows or columns from further
consideration. Then proceed with the remaining reduced matrix
The difference between the smallest and next to the smallest element in each row
and in each column is
calculated. This is indicated in the parenthesis. We choose the maximum from
among the differences. The first individual allocation will be to the smallest cost of
a row or column with the largest difference. So we select the
column Q (penalty = 3) for the first individual allocation, and allocate to (B, Q) as
much as we can, since this cell has the least cost location. Thus 30 units from B are
allocated to Q. This exhausts the supply from B.
However, there is still a demand of 12 units from Q. The allocations to other cells in
that column are 0, as indicated. The next step is to write down the reduced matrix
(as in table in next slide) eliminating row B (as it is Exhausted)
From the following table , (2) is the largest unit difference corresponding to the row A.
This leads to an allocation in the
corresponding minimum cost location in row A, namely cell (A, P). The maximum possible
allocation is only 65 as required by P from A and allocation of 0 to others in the row A.
Column P is thus deleted and the reduced matrix is given in second table in the next slide.
Maximum difference is 1 in row A and in column R. Select arbitrarily A and allot the least
cost cell (A, Q) 5units. Delete row A.
Now, we have only one row C and two columns Q and R (Table on the right) indicating that
all the available amount from C has to be moved to Q and R as per their requirements.
Hence we have the table in the right hand side table in this slide

Q
(1)

(0)
We obtain as our basic feasible solution by re-tracking various positive allocations in
successive stages.
We have the solution by Vogel's Approximation Method as shown in the following
table
The cost of allocation by Vogel's Approximation Method will be
65 × 5 + 5 × 7 + 30 × 4 + 7 × 7 + 43 × 7
= 325 + 35 + 120 + 49 + 301 = $ 830
Cost of allocation for the same problem with three methods:
NWC method - 830/-
Least cost method - 890/-
Vogel's Approximation Method - 830/-
Generally VAM gives a better initial solution
 Unbalanced Transportation Problem
• In the unbalanced transportation problem if the total
supply is more than the total demand then
we introduce an additional column which will indicate the
surplus supply with transportation cost zero. That is
there is we need to introduce dummy demand and
dummy demand is put with additional column.
• Similarly, if the total demand is more than the total
supply an additional row is introduced in the
transportation table which indicates unsatisfied
demand with zero transportation cost. That is there is
we need to introduce dummy supply and dummy
supply is put with additional row.
Example UB
• In this problem the demand is 1300 whereas
the total supply is 900. Thus, we now
introduce an additional row with zero
transportation cost denoting the unsatisfied
demand. So that the modified transportation
problem table is provided in the next slide.
Then we will solve the problem with our usual
method using that table.
 Note
• VAM
• Penalty=second min. Cost - min. Cost
• Penalty in absolute form.

• Second min cost in a row may be two cell away

from the min cost

• For example, in a row the values are 2 6 4 9 so in

this row penalty would be 2-4= -2 = 2 as we take
absolute difference.