Chapter 7

Transportation, Assignment &

Transshipment Problems

to accompany
Operations Research: Applications and Algorithms
4th edition
by Wayne L. Winston

Copyright (c) 2004 Brooks/Cole, a division of Thomson Learning, Inc.

The transportation model is formulated for a class of
problems with the following unique characteristics:

(1) A product is transported from a number of

sources to a number of destinations at the
minimum possible cost;

(2) each source is able to supply a fixed

number of units of the product, and each
destination has a fixed demand for the product.

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The following example demonstrates the
formulation of the transportation model.

Wheat is harvested in the Midwest and stored in

grain elevators in three different cities—Kansas
City, Omaha, and Des Moines.

These grain elevators supply three flour mills,

located in Chicago, St. Louis, and Cincinnati.

Grain is shipped to the mills in railroad cars,

each car capable of holding 1 ton of wheat.

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Each grain elevator is able to supply the following
number of tons (i.e., railroad cars) of wheat to the
mills on a monthly basis and Each mill demands
the following number of tons of wheat per month:

The cost of transporting 1 ton of wheat from each

grain elevator (source) to each mill (destination)
differs, according to the distance and rail system.
(For example, the cost of shipping 1 ton

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The cost of transporting 1 ton of wheat from each
grain elevator (source) to each mill (destination)
differs, according to the distance and rail system.
(For example, the cost of shipping 1 ton of wheat
from the grain elevator at Omaha to the mill at
Chicago is $7.) These costs are shown
in the following table:

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In a transportation problem, items are
allocated from sources to destinations at a
minimum cost.

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The linear programming model for this problem is
formulated as follows:

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In a balanced transportation model in which
supply equals demand, all constraints are
equalities.

In an unbalanced transportation model, supply

is greater than demand or demand is greater than
supply.

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9
Transportation network solution for wheat-
shipping example (CARA MENCARI SOLUSI
AKAN DIBAHAS DIBELAKANG)

Figure 6.2

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7.1 Formulating Transportation
Problems
 A transportation problem basically deals with
the problem, which aims to find the best way
to fulfill the demand of n demand points using
the capacities of m supply points.
 While trying to find the best way, generally a
variable cost of shipping the product from one
supply point to a demand point or a similar
constraint should be taken into consideration.

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Example 1: Powerco Formulation
 Powerco has three electric power plants that
supply the electric needs of four cities.
 The associated supply of each plant and
demand of each city is given in the table 1.
 The cost of sending 1 million kwh of electricity
from a plant to a city depends on the distance
the electricity must travel.

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 Ex. 1 - continued
 A transportation problem is specified by the
supply, the demand, and the shipping costs.
Relevant data can be summarized in a
transportation tableau.
From To

City 1 City 2 City 3 City 4 Supply (Million

kwh)

Plant 1 $8 $6 $10 $9 35

Plant 2 $9 $12 $13 $7 50

Plant 3 $14 $9 $16 $5 40

Demand (Million 45 20 30 30
kwh)

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Example 1: Solution
 Decision Variables
 Powerco must determine how much power is sent
from each plant to each city so xij = Amount of
electricity produced at plant i and sent to city j
 x14 = Amount of electricity produced at plant 1 and
sent to city 4
 Constraints
 A supply constraint ensures that the total quality
produced does not exceed plant capacity. Each plant
is a supply point.
 A demand constraint ensures that a location
receives its demand. Each city is a demand point.
 Since a negative amount of electricity can not be
shipped all xij’s must be non negative
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Ex. 1 – Solution continued
 LP Formulation of Powerco’s Problem
Min Z = 8x11+6x12+10x13+9x14+9x21+12x22+13x23+7x24
+14x31+9x32+16x33+5x34

S.T.: x11+x12+x13+x14 <= 35 (Supply Constraints)

x21+x22+x23+x24 <= 50
x31+x32+x33+x34 <= 40

x11+x21+x31 >= 45 (Demand Constraints)

x12+x22+x32 >= 20
x13+x23+x33 >= 30
x14+x24+x34 >= 30
xij >= 0 (i= 1,2,3; j= 1,2,3,4)
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 In general, a transportation problem is
specified by the following information:
 A set of m supply points from which a good is
shipped. Supply point i can supply at most si units.
 A set of n demand points to which the good is
shipped. Demand point j must receive at least di
units of the shipped good.
 Each unit produced at supply point i and shipped to
demand point j incurs a variable cost of cij.

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 xij = number of units shipped from supply point
i to demand point j
im j n
min  cijXij
i 1 j 1
j n
s.t. Xij  si (i  1,2,..., m)
j 1
i m

X
i 1
ij  dj ( j  1,2,..., n)

Xij  0(i  1,2,..., m; j  1,2,..., n)

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 If
i m j n

s  d
i 1
i
j 1
j

then total supply equals to total demand, the

problem is said to be a balanced
transportation problem.
 If total supply exceeds total demand, we can
balance the problem by adding dummy
demand point. Since shipments to the
dummy demand point are not real, they are
assigned a cost of zero.
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 If a transportation problem has a total supply
that is strictly less than total demand the
problem has no feasible solution.
 No doubt that in such a case one or more of the
demand will be left unmet.
 Generally in such situations a penalty cost is often
associated with unmet demand and as one can guess
the total penalty cost is desired to be minimum.

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7.2 Finding Basic Feasible Solution for
Transportation Problems
 Unlike other Linear Programming problems, a
balanced transportation problem with m supply
points and n demand points is easier to solve,
although it has m + n equality constraints.
 The reason for that is, if a set of decision
variables (xij’s) satisfies all but one constraint,
the values for xij’s will satisfy that remaining
constraint automatically.

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 An ordered sequence of at least four different cells is
called a loop if
 Any two consecutive cells lie in either the same row or
same column
 No three consecutive cells lie in the same row or column
 The last cell in the sequence has a row or column with the
first cell in the sequence
 There are three basic methods to find the bfs for a
balanced TP
 Northwest Corner Method
 Minimum Cost Method
 Vogel’s Method

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 To find the bfs by the Northwest Corner
method:
 Begin in the upper left (northwest) corner of the
transportation tableau and set x11 as large as
possible. X11 can clearly be no larger than the smaller
of s1 and d1.
 Continue applying this procedure to the most
northwest cell in the tableau that does not lie in a
crossed-out row or column.
 Assign the last cell a value equal to its row or column
demand, and cross out both cells row and column.

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 The Northwest Corner Method does not utilize
shipping costs. It can yield an initial bfs easily
but the total shipping cost may be very high.
 The minimum cost method uses shipping costs
in order come up with a bfs that has a lower
cost.
 To find the bfs by the Minimum Cost method:
 Find the decision variable with the smallest shipping
cost (xij). Then assign xij its largest possible value,
which is the minimum of si and dj

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  Next, as in the Northwest Corner Method cross out
row i and column j and reduce the supply or demand
of the noncrossed-out row or column by the value of
xij.
 Choose the cell with the minimum cost of shipping
from the cells that do not lie in a crossed-out row or
column and repeat the procedure.
 Often the minimum cost method will yield a
costly bfs.
 Vogel’s method for finding a bfs usually avoids
extremely high shipping costs.

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 To find the bfs by the Vogel’s method:
 Begin with computing each row and column a
penalty. The penalty will be equal to the difference
between the two smallest shipping costs in the row or
column.
 Identify the row or column with the largest penalty.
 Find the first basic variable which has the smallest
shipping cost in that row or column.
 Assign the highest possible value to that variable,
and cross-out the row or column as in the previous
methods.
 Compute new penalties and use the same procedure.

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7.3 The Transportation Simplex
Method
 The Simplex algorithm simplifies when a
transportation problem is solved.
 By using the following procedure, the pivots for
a transportation problem may be performed
within the confines of the transportation
tableau:
Step 1 Determine the variable that should enter the
basis.
Step 2 Find the loop involving the entering variable and
some of the basic variables.
Step 3 Counting the cells in the loop, label them as even
cells or odd cells.
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 Step 4 Find the odd cells whose variable assumes
the smallest value. Call this value θ. The variable
corresponding to this odd cell will leave the basis.

To perform the pivot, decrease the value of each odd

cell by θ and increase the value of each even cell by
θ. The variables that are not in the loop remain
unchanged. The pivot is now complete.
 If θ=0, the entering variable will equal 0, and an odd
variable that has a current value of 0 will leave the
basis. In this case a degenerate bfs existed before
and will result after the pivot.
 If more than one odd cell in the loop equals θ, you
may arbitrarily choose one of these odd cells to leave
the basis; again a degenerate bfs will result
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 Two important points to keep in mind in the
pivoting procedure
 Since each row has as many +20s as –20s, the new
solution will satisfy each supply and demand
constraint.
 By choosing the smallest odd variable (x23) to leave
the basis, we ensured that all variables will remain
nonnegative.

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7.4 Sensitivity Analysis for
Transportation Problems
 Three aspects of sensitivity analysis for the
transportation problems.
 Changing the objective function coefficient of a
nonbasic variable.
 Changing the objective function coefficient of a basic
variable.
 Increasing a single supply by Δ and a single demand
by Δ.

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Assignment Problems/The Assignment
Model

The assignment model is a special form of a

linear programming model that is similar to the
transportation model.

There are differences, however. In the assignment

model, the supply at each source and the
demand at each destination are each limited
to one unit.

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7.5. Assignment Problems
 Assignment problems are a certain class of
transportation problems for which
transportation simplex is often very inefficient.

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Example 4: Machine Assignment
Problem
 Machineco has four jobs to be completed.
 Each machine must be assigned to complete
one job.
 The time required to setup each machine for
completing each job is shown.
Time (Hours)

Job1 Job2 Job3 Job4

Machine 1 14 5 8 7

Machine 2 2 12 6 5

Machine 3 7 8 3 9

Machine 4 2 4 6 10

 Machineco wants to minimize the total setup

time needed to complete the four jobs.
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Exercise 4: Solution
 Machineco must determine which machine
should be assigned to each job.
 i,j=1,2,3,4
 xij=1 (if machine i is assigned to meet the demands of job j)

 xij=0 (if machine i is not assigned to meet the demands of job j)

min Z  14 X 11  5 X 12  8 X 13  7 X 14  2 X 21  12 X 22  6 X 23  5 X 24
 7 X 31  8 X 32  3 X 33  9 X 34  2 X 41  X 42  6 X 43  10 X 44
s.t. X 11  X 12  X 13  X 14  1 (Machine constraint s)
X 21  X 22  X 23  X 24  1
X 31  X 32  X 33  X 34  1
X 41  X 42  X 43  X 44  1
X 11  X 21  X 31  X 41  1 (Job constraint s)
X 12  X 22  X 32  X 42  1
X 13  X 23  X 33  X 43  1
X 14  X 24  X 34  X 44  1
Xij  0orXij  1
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 Ex. 4 – Solution continued
 In general an assignment problem is
balanced transportation problem in which all
supplies and demands are equal to 1.
 The assignment problem’s matrix of costs is its
cost matrix.
 All the supplies and demands for this problem
are integers which implies that the optimal
solution must be integers.
 Using the minimum cost method a highly
degenerate bfs is obtained.

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 The Hungarian Method is usually used to solve
assignment problems.
 The steps of The Hungarian Method are as
listed below:
Step1 Find a bfs. Find the minimum element in each
row of the m x m cost matrix. Construct a new
matrix by subtracting from each cost the minimum
cost in its row. For this new matrix, find the minimum
cost in each column. Construct a new matrix
(reduced cost matrix) by subtracting from each cost
the minimum cost in its column.

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Step2 Draw the minimum number of lines (horizontal
and/or vertical) that are needed to cover all zeros in
the reduced cost matrix. If m lines are required , an
optimal solution is available among the covered zeros
in the matrix. If fewer than m lines are required,
proceed to step 3.
Step3 Find the smallest nonzero element (call its value
k) in the reduced cost matrix that is uncovered by
the lines drawn in step 2. Now subtract k from each
uncovered element of the reduced cost matrix and
add k to each element that is covered by two lines.
Return to step2.

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7.6 Transshipment Problems
 A transportation problem allows only
shipments that go directly from supply points
to demand points.
 In many situations, shipments are allowed
between supply points or between
demand points.
 Sometimes there may also be points (called
transshipment points) through which goods
can be transshipped on their journey from a
supply point to a demand point.
 Fortunately, the optimal solution to a
transshipment problem can be found by solving
a transportation problem.
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 The following steps describe how the optimal
solution to a transshipment problem can be
found by solving a transportation problem.
Step 1 If necessary, add a dummy demand point (with a
supply of 0 and a demand equal to the problem’s
excess supply) to balance the problem. Shipments to
the dummy and from a point to itself will be zero. Let
s= total available supply.
Step2 Construct a transportation tableau as follows: A
row in the tableau will be needed for each supply
point and transshipment point, and a column will be
needed for each demand point and transshipment
point.

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 Each supply point will have a supply equal to
it’s original supply, and each demand point will
have a demand to its original demand.
 Let s= total available supply.
 Then each transshipment point will have a supply
equal to (point’s original supply)+s and a demand
equal to (point’s original demand)+s.
 This ensures that any transshipment point that is a
net supplier will have a net outflow equal to point’s
original supply and a net demander will have a net
inflow equal to point’s original demand.
 Although we don’t know how much will be shipped
through each transshipment point, we can be sure
that the total amount will not exceed s. 39
The transshipment model is an extension of the
transportation model in which intermediate
transshipment points are added between the
sources and destinations.

An example of a transshipment point is a

distribution center or warehouse located
between plants and stores.

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We will expand our wheat-shipping example to
demonstrate the formulation of a transshipment
model. Wheat is harvested at farms in Nebraska and
Colorado before being shipped to the three grain
elevators in Kansas City, Omaha, and Des Moines,
which are now transshipment points.

The amount of wheat harvested at each farm is 300

tons. The wheat is then shipped to the mills in
Chicago, St. Louis, and Cincinnati.

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The shipping costs from the grain elevators to
the mills remain the same, and the shipping costs
from the farms to the grain elevators are as follows:

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The basic structure of this model is shown in
the graphical network in Figure 6.3.

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The available supply constraints for the farms in
Nebraska and Colorado are

The demand constraints at the Chicago, St. Louis,

and Cincinnati mills are

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Next we must develop constraints for the grain
elevators (i.e., transshipment points) at Kansas City,
Omaha, and Des Moines. To develop these
constraints we follow the principle that at each
transshipment point, the amount of grain shipped in
must also be shipped out. For example, the amount
of grain shipped into Kansas City is

and the amount shipped out is

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 Thus, because whatever is shipped in must also
be shipped out, these two amounts must equal
each other:

Or

The transshipment constraints for Omaha and Des Moines

are constructed similarly:

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The complete linear programming model, including
the objective function, is summarized as follows:

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 Transshipment network solution for
wheat-shipping example

Figure 6.4

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