UNIT-III

Transportation Problem
Aim of Transportation Model

To find out optimum transportation

schedule keeping in mind cost of
transportation to be minimized.
What is a Transportation Problem?
The transportation problem is a special
type of LPP where the objective is to
minimize the cost of distributing a product
from a number of sources or origins to a
number of destinations.

Because of its special structure the usual

simplex method is not suitable for solving
transportation problems. These problems
require special method of solution.
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
Simple Network Representation
Sources Destinations

Supply s1 1 1 Demand d1

Supply s2 2 2 Demand d2

…
…

xij
Supply sm n Demand dn
m

Costs cij
Simple Network Representation
Application of Transportation Problem

Minimize shipping costs

Determine low cost location

Find minimum cost production schedule

Military distribution system

 Types of Transportation Problem

1. Balanced Transportation Problem

where the total supply equals total
demand
2. Unbalanced Transportation Problem
where the total supply is not equal to the
total demand
Phases of Solution of Transportation
Problem

Phase I- obtains the initial basic feasible

solution

Phase II-obtains the optimal basic solution

 Initial Basic Feasible Solution

North West Corner Rule (NWCR)

Row Minima Method
Column Minima Method
Least Cost Method
Vogle Approximation Method (VAM)
 Optimum Basic Solution

Stepping Stone Method

Modified Distribution Method a.k.a.

MODI Method
 Outline

Transportation Modeling

Developing An Initial Basic Feasible Solution

Developing An Optimum Basic Solution

 Learning Objectives
When you complete this module, you should be
able to

Identify or Define Transportation modeling

 Identify or Define Facility Location
Analysis.
Explain or use different methods for Initial
and Optimum Basic Feasible Solution
 Northwest-Corner Rule
1) Start with the uppermost left-hand cell (or northwest corner) of
the Transportation matrix (table).

2) Compare the figure of available supply (capacity) in the row and

demand in the column and allocate units equal to capacity or
demand whichever is less.

3) If the demand in the column is satisfied, move to the right square

in the next column and if capacity of row is satisfied, move down to
the square in the next row. And if both demand in the column and
capacity in the row are satisfied, move to the diagonal square formed
by next column and next row.

4) Repeat steps 2 and 3 until the capacity condition of all the plants
and demand condition of all warehouses have been satisfied.
 Transportation Problem
Determine the Total Transportation cost of bathtubs using
Northwest corner rule.
To
From
Jaipur Chennai Agra
Delhi $5 $4 $3
Mumbai $8 $4 $3
Kolkata $9 $7 $5

Table C.1
Transportation Problem

Chennai
Agra (200 units
(200 units required)
Delhi (100
units required)
capacity)

Jaipur
(300 units
required) Mumbai
(300 units
capacity)

Kolkata
(300 units
capacity)
Figure C.1
 Transportation Matrix

To (A) Jaipur (B) Delhi

Factory
From Chennai (C) Agra capacity capacity
constraint
$5 $4 $3
(D) Delhi 100
Cell
$8 $4 $3 representing
a possible
(E) Mumbai 300
source-to-
destination
$9 $7 $5 shipping
(F) Kolkata 300 assignment
(Mumbai to
Warehouse Agra)
requirement 300 200 200 700

Cost of shipping 1 unit from Kolkata Agra Total demand

factory to Chennai warehouse warehouse demand and total supply
 Northwest-Corner Rule
Assign 100 bathtubs from Delhi to Jaipur. (Exhausting Delhi's
Supply)
To (B) (C) Agra Factory
(A) Jaipur capacity
From Chennai
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay 300

$9 $7 $5
(F) Kolkata 300

Warehouse
requirement 300 200 200 700

Means that the firm is shipping 100 bathtubs from Delhi to Jaipur
 Northwest-Corner Rule
Assign 200 bathtubs from Bombay to Jaipur. (Exhausting
Jaipur's Demand)
To (B) (C) Agra Factory
(A) Jaipur capacity
From Chennai
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay 200 300

$9 $7 $5
(F) Kolkata 300

Warehouse
requirement 300 200 200 700

Means that the firm is shipping 200 bathtubs from Bombay to Jaipur
 Northwest-Corner Rule
Assign 100 bathtubs from Bombay to Chennai. (Exhausting
Bombay's Supply)
To (B) (C) Agra Factory
(A) Jaipur capacity
From Chennai
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay 200 100 300

$9 $7 $5
(F) Kolkata 300

Warehouse
requirement 300 200 200 700

Means that the firm is shipping 100 bathtubs from Bombay to Chennai
 Northwest-Corner Rule
Assign 100 bathtubs from Kolkata to Chennai. (Exhausting
Chennai's Demand)
To (B) (C) Agra Factory
(A) Jaipur capacity
From Chennai
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay 200 100 300

$9 $7 $5
(F) Kolkata 100 300

Warehouse
requirement 300 200 200 700

Means that the firm is shipping 100 bathtubs from Kolkata to Chennai
 Northwest-Corner Rule
Assign 200 bathtubs from Kolkata to Agra. (Exhausting
Kolkata’s Supply and Agra's Demand)
To (B) (C) Agra Factory
(A) Jaipur capacity
From Chennai
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay 200 100 300

$9 $7 $5
(F) Kolkata 100 200 300

Warehouse
requirement 300 200 200 700

Means that the firm is shipping 200 bathtubs from Kolkata to Agra
 Northwest-Corner Rule
Computed Shipping Cost
Route Bathtubs Cost per Total Cost
Shipped Unit
From To
(D) Delhi (A) Jaipur 100 $5 $500
(E) Bombay (A) Jaipur 200 $8 $1600
(E) Bombay (B) Chennai 100 $4 $400
(F) Kolkata (B) Chennai 100 $7 $700
(F) Kolkata (C) Agra 200 $5 $1000

Total $4200

This is a feasible solution but not necessarily the lowest cost alternative
 Row Minima Method
1) Start with the allocating as much as possible in the lowest cost
cell of the first row of the Transportation matrix (table). In Case of
Tie among the cost then select arbitrarily.
2) Compare the figure of available supply (capacity) in the row and
demand in the column and allocate units equal to capacity or
demand whichever is less.

3) If the supply in the first row is satisfied, then cross off the first
row and proceed to second row.
4) If the Demand in the column is satisfied, then cross off the
column and reconsider first row with remaining columns (remaining
capacity).

5) If the supply in the first row is satisfied as well as demand in the

column is satisfied then cross the first row and that column and
proceed to second row. Continue with this process till all supply
demand conditions are satisfied,
 Transportation Problem
Determine the Total Transportation cost of bathtubs using
Row Minima Method.
To
From
Jaipur Chennai Agra
Delhi $5 $4 $3
Mumbai $8 $4 $3
Kolkata $9 $7 $5

Table C.1
Transportation Problem

Chennai
Agra (200 units
(200 units required)
Delhi (100
units required)
capacity)

Jaipur
(300 units
required) Mumbai
(300 units
capacity)

Kolkata
(300 units
capacity)
Figure C.1
 Transportation Matrix

To (A) Jaipur (B) Delhi

Factory
From Chennai (C) Agra capacity capacity
constraint
$5 $4 $3
(D) Delhi 100
Cell
$8 $4 $3 representing
a possible
(E) Mumbai 300
source-to-
destination
$9 $7 $5 shipping
(F) Kolkata 300 assignment
(Mumbai to
Warehouse Agra)
requirement 300 200 200 700

Cost of shipping 1 unit from Kolkata Agra Total demand

factory to Chennai warehouse warehouse demand and total supply
 Row Minima Method
1.Select the First Row. 2.Then Find the Lowest
Transportation cost in first row.
3.Assign 100 bathtubs at the Lowest Cost cell of First
row i.e. from Delhi to Agra. (Exhausting Delhi's Supply)

To (B) (C) Agra Factory

(A) Jaipur capacity
From Chennai
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay 300

$9 $7 $5
(F) Kolkata 300

Warehouse
requirement 300 200 200 700

As the Supply (Capacity) of Delhi is satisfied. Cross First row and Proceed to second row
 Row Minima Method
1.Select the Second Row. 2.Then Find the Lowest
Transportation cost in Second row.
3.Assign 100 bathtubs at the Lowest Cost cell of Second
row i.e. from Bombay to Agra. (Exhausting Agra's
Demand )
To (B) (C) Agra Factory
(A) Jaipur capacity
From Chennai
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay
(E) Bombay 100 300
300

$9 $7 $5
(F) Kolkata 300

Warehouse
requirement 300 200 200 700

As the Demand of Agra is satisfied. Cross Last Column i.e. column of Agra Warehouse
Proceed to second row with remaining columns i.e. (Jaipur and Chennai)
 Row Minima Method
1.Select the Second Row. 2.Then Find the Lowest
Transportation cost in Second row.
3.Assign 200 bathtubs at the Lowest Cost cell of Second
row i.e. from Bombay to Chennai. (Exhausting
Bombay's Supply and Chennai's Demand )
To (B) (C) Agra Factory
(A) Jaipur capacity
From Chennai
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay
(E) Bombay 200 100 300
300

$9 $7 $5
(F) Kolkata 300

Warehouse
requirement 300 200 200 700

As the Bombay's Supply and Chennai's Demand is satisfied. Cross Second row and
second Proceed to Third row with remaining columns
 Row Minima Method
1.Select the Third Row. 2.Then Find the Lowest
Transportation cost in Third row.
3.Assign 300 bathtubs at the Lowest Cost cell of Third
row i.e. from Kolkata to Jaipur. (Exhausting Kolkata 's
Supply and Jaipur 's Demand )
To (B) (C) Agra Factory
(A) Jaipur capacity
From Chennai
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay 200 100 300

$9 $7 $5
(F) Kolkata 300 300

Warehouse
requirement 300 200 200 700

As the Kolkata 's Supply and Jaipur 's Demand is satisfied. Cross Third row and First
Column. Now all the Supply and demand is satisfied completely. Find the Optimum Cost.
 Row Minima Method
Computed Shipping Cost
Route Bathtubs Cost per Total Cost
Shipped Unit
From To
(D) Delhi (C) Agra 100 $3 $300
(E) Bombay (C) Agra 100 $3 $300
(E) Bombay (B) Chennai 200 $4 $800
(F) Kolkata (A) Jaipur 300 $9 $2700

Total $4100

This is a feasible solution but not necessarily the lowest cost alternative
 Column Minima Method
1) Start with the allocating as much as possible in the lowest cost
cell of the first Column of the Transportation matrix (table). In Case
of Tie among the cost then select arbitrarily.
2) Compare the figure of available supply (capacity) in the row and
demand in the column and allocate units equal to capacity or
demand whichever is less.

3) If the demand in the first Column is satisfied, then cross off the
first Column and proceed to second Column.

4) If the Demand in the row is satisfied, then cross off the row and
reconsider first Column with remaining rows.

5) If the supply in the first Column is satisfied as well as demand in

the row is satisfied then cross the first Column and that row and
proceed to second Column. Continue with this process till all supply
demand conditions are satisfied,
 Transportation Problem
Determine the Total Transportation cost of bathtubs using
Row Minima Method.
To
From
Jaipur Chennai Agra
Delhi $5 $4 $3
Mumbai $8 $4 $3
Kolkata $9 $7 $5

Table C.1
Transportation Problem

Chennai
Agra (200 units
(200 units required)
Delhi (100
units required)
capacity)

Jaipur
(300 units
required) Mumbai
(300 units
capacity)

Kolkata
(300 units
capacity)
Figure C.1
 Transportation Matrix

To (A) Jaipur (B) Delhi

Factory
From Chennai (C) Agra capacity capacity
constraint
$5 $4 $3
(D) Delhi 100
Cell
$8 $4 $3 representing
a possible
(E) Mumbai 300
source-to-
destination
$9 $7 $5 shipping
(F) Kolkata 300 assignment
(Mumbai to
Warehouse Agra)
requirement 300 200 200 700

Cost of shipping 1 unit from Kolkata Agra Total demand

factory to Chennai warehouse warehouse demand and total supply
 Column Minima Method
1.Select the First Column. 2.Then Find the Lowest
Transportation cost in first Column.
3.Assign 100 bathtubs at the Lowest Cost cell of First Column
i.e. from Delhi to Jaipur. (Exhausting Delhi's Supply)

To (A) Jaipur (B) (C) Agra Factory

From Chennai capacity
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay 300

$9 $7 $5
(F) Kolkata 300

Warehouse
requirement 300 200 200 700

As the Supply (Capacity) of Delhi is satisfied. Cross First row and Proceed to First
column with remaining rows
 Column Minima Method
1.Select the First Column. 2.Then Find the Lowest Transportation
cost in first Column from 2nd & 3rd Row.
3.Assign 200 bathtubs at the Lowest Cost cell of First Column
i.e. from Bombay to Jaipur. (Exhausting Jaipur's Demand)

To (A) Jaipur (B) (C) Agra Factory

From Chennai capacity
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay 200 300

$9 $7 $5
(F) Kolkata 300

Warehouse
requirement 300 200 200 700

As the Demand of Jaipur is satisfied. Cross First Column and Proceed to Second column
 Column Minima Method
1.Select the Second Column. 2.Then Find the Lowest Transportation
cost in Second Column from 2nd & 3rd Row.
3.Assign 100 bathtubs at the Lowest Cost cell of second Column
i.e. from Bombay to Chennai. (Exhausting Bombay's Supply)

To (A) Jaipur (B) (C) Agra Factory

From Chennai capacity
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay 200 100 300

$9 $7 $5
(F) Kolkata 300

Warehouse
requirement 300 200 200 700

As the supply of Bombay is satisfied. Cross Second row and Proceed to Third Row in
Second column
 Column Minima Method
1.Select the Second Column. 2.Then Find the Lowest Transportation
cost in Second Column from 3rd Row.
3.Assign 100 bathtubs at the Lowest Cost cell of second Column
i.e. from Kolkata to Chennai. (Exhausting Chennai's Demand)

To (A) Jaipur (B) (C) Agra Factory

From Chennai capacity
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay 200 100 300

$9 $7 $5
(F) Kolkata 100 300

Warehouse
requirement 300 200 200 700

As the Demand of Chennai is satisfied. Cross Second Column and Proceed to Third row
in Third column
 Column Minima Method
1.Select the Third Column. 2.Then Find the Lowest Transportation
cost in Third Column from 3rd Row.
3.Assign 200 bathtubs at the Lowest Cost cell of third Column
i.e. from Kolkata to Agra.

To (A) Jaipur (C) Agra

(B) Factory
From Chennai capacity
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay 200 100 300

$9 $7 $5
(F) Kolkata 100 200 300

Warehouse
requirement 300 200 200
200 700

As the Kolkata 's Supply and Agra's Demand is satisfied. Cross Third Column and Third
row. Now all the Supply and demand is satisfied completely. Find the Optimum Cost.
 Column Minima Method
Computed Shipping Cost
Route Bathtubs Cost per Total Cost
Shipped Unit
From To
(D) Delhi (A) Jaipur 100 $5 $500
(E) Bombay (A) Jaipur 200 $8 $1600
(E) Bombay (B) Chennai 100 $4 $400
(F) Kolkata (B) Chennai 100 $7 $700
(F) Kolkata (C) Agra 200 $5 $1000

Total $4200

This is a feasible solution but not necessarily the lowest cost alternative
 Least Cost Route Method

1) Start with the allocating as much as possible in the

lowest cost cell of the Transportation matrix (table). In
Case of Tie among the cost then select cell where the
maximum allocation of units can be made.

2) Again Start with the allocating as much as possible in the

remaining lowest cost cell of the Transportation matrix (table). In
Case of Tie among the cost then select cell where the maximum
allocation of units can be made. And so on Continue with this
process till all supply demand conditions are satisfied.
 Transportation Problem
Determine the Total Transportation cost of bathtubs using
Row Minima Method.
To
From
Jaipur Chennai Agra
Delhi $5 $4 $3
Mumbai $8 $4 $3
Kolkata $9 $7 $5

Table C.1
Transportation Problem

Chennai
Agra (200 units
(200 units required)
Delhi (100
units required)
capacity)

Jaipur
(300 units
required) Mumbai
(300 units
capacity)

Kolkata
(300 units
capacity)
Figure C.1
 Transportation Matrix

To (A) Jaipur (B) Delhi

Factory
From Chennai (C) Agra capacity capacity
constraint
$5 $4 $3
(D) Delhi 100
Cell
$8 $4 $3 representing
a possible
(E) Mumbai 300
source-to-
destination
$9 $7 $5 shipping
(F) Kolkata 300 assignment
(Mumbai to
Warehouse Agra)
requirement 300 200 200 700

Cost of shipping 1 unit from Kolkata Agra Total demand

factory to Chennai warehouse warehouse demand and total supply
 Least Cost Route Method
1. Find the Lowest Transportation cost cell in Transportation matrix.

2.Assign 100 bathtubs at the Lowest Cost cell i.e.

from Delhi to Agra. (Exhausting Delhi's Supply)

To (B) (C) Agra Factory

(A) Jaipur capacity
From Chennai
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay 300

$9 $7 $5
(F) Kolkata 300

Warehouse
requirement 300 200 200 700

As the Supply (Capacity) of Delhi is satisfied. Cross First row and Proceed to Further
 Least Cost Route Method
1. Find the Lowest Transportation cost cell in remaining Transportation
matrix.
2.Assign 100 bathtubs at the Lowest Cost cell i.e.
from Bombay to Agra. (Exhausting Agra's Demand)

To (B) (C) Agra Factory

(A) Jaipur capacity
From Chennai
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay 100 300

$9 $7 $5
(F) Kolkata 300

Warehouse
requirement 300 200 200 700

As the demand of Agra is satisfied. Cross Third Column and Proceed to Further
 Least Cost Route Method
1. Find the Lowest Transportation cost cell in remaining Transportation
matrix.
2.Assign 200 bathtubs at the Lowest Cost cell i.e. from
Bombay to Chennai. (Exhausting Bombay's Supply
and Chennai Demand)
To (B) (C) Agra Factory
(A) Jaipur capacity
From Chennai
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay 200 100 300

$9 $7 $5
(F) Kolkata 300

Warehouse
requirement 300 200 200 700

As the Supply of Bombay and Demand of Chennai is satisfied. Cross Second row and
second column and Proceed to Further
 Least Cost Route Method
1. Find the Lowest Transportation cost cell in remaining Transportation
matrix.
2.Assign 300 bathtubs at the Lowest Cost cell i.e. from
Bombay to Chennai. (Exhausting Bombay's Supply
and Chennai Demand)
To (B) (C) Agra Factory
(A) Jaipur capacity
From Chennai
$5 $4 $3
(D) Delhi 100 100

$8 $4 $3
(E) Bombay 200 100 300

$9 $7 $5
(F) Kolkata 300 300

Warehouse
requirement 300 200 200 700

As the Kolkata 's Supply and Jaipur's Demand is satisfied. Cross First Column and Third
row. Now all the Supply and demand is satisfied completely. Find the Optimum Cost.
 Least Cost Route Method
Computed Shipping Cost
Route Bathtubs Cost per Total Cost
Shipped Unit
From To
(D) Delhi (C) Agra 100 $3 $300
(E) Bombay (C) Agra 100 $3 $300
(E) Bombay (B) Chennai 200 $4 $800
(F) Kolkata (A) Jaipur 300 $9 $2700

Total $4100

This is a feasible solution but not necessarily the lowest cost alternative
 Vogel’s Approximation Method (VAM)
Transportation problem:- Transportation (distribution Models) is a typical operation
research technique intended to establish the ‘least cost route’ of transportation of goods
from the company’s plants to its warehouses located at different places.

Vogel’s Approximation Method (VAM):-

The NWCM generally does not give optimal solution since it does not take into
consideration cell costs.

The LCM provides better solution by allocating as many units as possible to the lowest cost
cell in the table, then to the next lowest, and so on.

However, in lowest cost method, sometimes, we are forced to use one of the highest cost
cells towards the end of initial allocation.

Vogel’s Approximation Method (VAM) avoids high penalties as well as high cost cells in
the initial allocations and generally provides an optimum or near optimum initial solution.
 Vogel’s Approximation Method (VAM)
Basic steps in VAM is as follows:

1) Calculate the difference between the lowest and the second lowest unit cost values for
each row and each column.

2) Then, enter the difference between the lowest and second lowest cost entries in each
column beneath the corresponding column, and the difference between the lowest and
second lowest entries of each row to the right of corresponding row. These values are called
VAM numbers or Penalty values of column or row.

3) Select the row or column with the largest difference and allocate maximum feasible
number of units to the square with the minimum cost in the selected row or column. If there
are more than one largest penalty row or column we select any of them arbitrarily.

4) Cross out the particular row or column on which the requirement is satisfied.

5) Re-determine row or column difference for each row and each column except the
completed row (S) and column (S) ignoring the crossed out water squares and stone Squares.

6) Repeat steps (1) to (5), eliminating from consideration those rows or columns that have
been satisfied until the supply and demand requirements are met.
 Transportation Problem
Determine the Total Transportation cost of bathtubs using
Vogel’s Approximation Method (VAM).
To
From
Jaipur Chennai Agra
Delhi $5 $4 $3
Mumbai $8 $4 $3
Kolkata $9 $7 $5

Table C.1
Transportation Problem

Chennai
Agra (200 units
(200 units required)
Delhi (100
units required)
capacity)

Jaipur
(300 units
required) Mumbai
(300 units
capacity)

Kolkata
(300 units
capacity)
Figure C.1
 Transportation Matrix

To (A) Jaipur (B) Delhi

Factory
From Chennai (C) Agra capacity capacity
constraint
$5 $4 $3
(D) Delhi 100
Cell
$8 $4 $3 representing
a possible
(E) Mumbai 300
source-to-
destination
$9 $7 $5 shipping
(F) Kolkata 300 assignment
(Mumbai to
Warehouse Agra)
requirement 300 200 200 700

Cost of shipping 1 unit from Kolkata Agra Total demand

factory to Chennai warehouse warehouse demand and total supply
Vogel’s Approximation Method (VAM)
1) Calculate the difference between the lowest and the second lowest unit cost
values for each row and each column.

To (A) Jaipur (B) Row

Factory
From Chennai (C) Agra capacity Difference

$5 $4 $3
(D) Delhi 100 $4-$3=$1

$8 $4 $3
(E) Mumbai 300 $4-$3=$1

$9 $7 $5
(F) Kolkata 300 $7-$5=$2

Warehouse
requirement 300 200 200 700

Column $8-$5=$3 $4-$4=$0 $3-$3=$0

Difference
 Vogel’s Approximation Method (VAM)
Select the row or column with the largest difference and allocate maximum feasible
number of units to the square with the minimum cost in the selected row or column. If
there are more than one largest penalty row or column we select any of them arbitrarily.

To (A) Jaipur (B) Row

Factory
From Chennai (C) Agra capacity Difference

$5 $4 $3
(D) Delhi 100 100 $4-$3=$1

$8 $4 $3
(E) Mumbai 300 $4-$3=$1

$9 $7 $5
(F) Kolkata 300 $7-$5=$2

Warehouse
requirement 300 200 200 700

Column $8-$5=$3 $4-$4=$0 $3-$3=$0

Difference
 Vogel’s Approximation Method (VAM)
Select the row or column with the largest difference and allocate maximum feasible
number of units to the square with the minimum cost in the selected row or column. If
there are more than one largest penalty row or column we select any of them arbitrarily.

To (A) Jaipur (B) Row

Factory
From Chennai (C) Agra capacity Difference

$5 $4 $3 100-
(D) Delhi 100
100=0
$8 $4 $3
(E) Mumbai 200 300 $4-$3=$1

$9 $7 $5
(F) Kolkata 300 $7-$5=$2

Warehouse
requirement 300-100=200 200 200 700

Column $9-$8=$1 $7-$4=$3 $5-$3=$2

Difference
 Vogel’s Approximation Method (VAM)
Select the row or column with the largest difference and allocate maximum feasible
number of units to the square with the minimum cost in the selected row or column. If
there are more than one largest penalty row or column we select any of them arbitrarily.

To (A) Jaipur (B) Row

Factory
From Chennai (C) Agra capacity Difference

$5 $4 $3 100-
(D) Delhi 100
100=0
$8 $4 $3
300-
(E) Mumbai 200 100 200=100 $8-$3=$5

$9 $7 $5
(F) Kolkata 300 $9-$5=$4

Warehouse
requirement 300-100=200 200-200=0 200 700

Column $9-$8=$1 $5-$3=$2

Difference
Vogel’s Approximation Method (VAM)

To (A) Jaipur (B) Row

Factory
From Chennai (C) Agra capacity Difference

$5 $4 $3 100-
(D) Delhi 100
100=0
$8 $4 $3
100-
(E) Mumbai 200 100 100=0

$9 $7 $5
(F) Kolkata 200 100 300 $9-$5=$4

Warehouse
requirement 300-100=200 200-200=0 200-100=100 700

Column $9 $5
Difference
Vogel’s Approximation Method (VAM)
Computed Shipping Cost
Route Bathtubs Cost per Total Cost
Shipped Unit
From To
(D) Delhi (A) Jaipur 100 $5 $500
(E) Mumbai (B) Chennai 200 $4 $800
(E) Bombay (C) Agra 100 $3 $300
(F) Kolkata (A) Jaipur 200 $9 $1800
(F) Kolkata (C) Agra 100 $5 $500

Total $3900

This is a feasible solution but not necessarily the lowest cost alternative