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Chapter-Three
Transportation and Assignment Problems
3.1 Introduction
The transportation model deals with a special class of linear programming problem in which the
objective is to transport a homogeneous commodity from various origins or factories to different
destinations or markets at a total minimum cost.

3.2 Transportation Problem

A transportation problem typically involves a set of sending locations, which are referred to as
origins, and a set of receiving locations, which are referred to as destinations. In order to develop
a model of a transportation problem, it is necessary to have the following information:
1. Supply quantity or capacity of each origin.
2. Demand quantity or requirement of each destination.
3. Unit transportation cost for each origin-destination route.
The properties of transportation problems:
1. It has an objective function.
2. It has structural constraints.
3. It has a non-negativity constraint.
4. The relationship between the variables and the constraints are linear.
We know very well that these are the properties of a linear programming problem. Hence the
transportation model is also a linear programming problem. But a special type of linear
programming problem.

3.3 Methods of Finding Initial Basic Feasible Solution

In Transportation Problem we can use any one of the following methods to determine the initial
basic feasible solution:
i. North-West Corner Rule

ii. Least Cost Method

iii. Vogel’s Approximation Method

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 Note: Vogel’s Approximation Method generally gives a solution closer to the optimum
solution. Hence, it is preferred over other methods.

A. North-West Corner Method: Start from the left hand side top corner or cell and make
allocations depending on the availability and requirement constraint. If the availability
constraint is less than the requirement constraint, then for that cell make allocation in units
which is equal to the availability constraint. In general, verify which is the smallest among
the availability and requirement and allocate the smallest one to the cell under question. Then
proceed allocating either sidewise or downward to satisfy the rim requirement. Continue this
until all the allocations are over.
Once all the allocations are over, i.e., both rim requirement (column and row i.e., availability
and requirement constraints) are satisfied, write allocations and calculate the cost of
transportation.
The Steps of North-West Corner Method are:
1) Allocate as much as possible to the cell in the upper left-hand corner, subject to
the supply and demand constraints.
2) Allocate as much as possible to the next adjacent feasible cell.
3) Repeat step-2 above until all rim requirements has been met.

B. Least Cost Method: The least cost method is also known as the Matrix Minimum Method or
Inspection Method. It starts by making the first allocation to the cell for which the shipping
cost (transportation cost) per unit is lowest of the other cost. The row or column for which
the capacity is exhausted or requirement is satisfied is removed from the transportation table.
The process is repeated with the reduced matrix till all the requirements are satisfied.

If there is a tie for the lowest cost cell while making any allocation, the choice may be made
for a row or a column by which maximum requirement is exhausted. If there is a tie in
making this allocation as well, then we can arbitrarily choose a cell for allocation.
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The Steps of Least Cost Method are:

1) Allocate as much as possible to the feasible cell with the minimum transportation
cost and adjacent the rim requirement.
2) Repeat step-1 above until all rim requirements has been met.

C. Vogel’s Approximation Method (VAM): The Vogel’s Approximation Method (VAM) is

also called the Penalty Method. In this method, we use the concept of opportunity cost.
Opportunity cost is the penalty for not taking correct decision. To find the row opportunity
costs in the given matrix deduct the smallest element in the row from the next highest
element. Similarly, to calculate the column opportunity cost, deduct smallest element in the
column from the next highest element. Write row opportunity costs of each row just by the
side of availability constraint and similarly write the column opportunity cost of each column
just below the requirement constraints. These are known as penalty column and penalty row.
The Steps of Vogel’s Approximation Method are:
1) Determine the penalty cost for each row and column by subtracting the lowest
cell cost in the row or column from the next lowest cell cost in the same row or
column.
2) Select the row or column with the highest penalty cost (breaking ties arbitrary or
choosing the lowest-cost cell).
3) Allocate as much as possible to the feasible cell with the lowest transportation
cost in the row or column with the highest penalty cost.
4) Repeat steps 1, 2 and 3 until all rim requirements have been met.

Now Let Us Compare the Three Methods of Getting Basic Feasible Solution:
A. North – West Corner Method:
1. The allocation is made from the left hand side top corner irrespective of the
cost of the cell.
2. As no consideration is given to the cost of the cell, naturally the total
transportation cost will be higher than the other methods.
3. It takes less time. This method is suitable to get basic feasible solution
quickly.
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4. When basic feasible solution alone is asked, it is better to go for northwest

corner method.
B. Inspection or Least Cost Method:
1. The allocations are made depending on the cost of the cell. Lowest cost is
first selected and then next highest etc.
2. As the cost of the cell is considered while making allocations, the total cost
of transportation will be comparatively less.
3. The basic feasible solution, we get will be very nearer to optimal solution. It
takes more time than northwest coroner method.
4. When optimal solution is asked, better to go for inspection method for basic
feasible solution and MODI for optimal solution.
C. Vogel’s Approximation Method:
1. The allocations are made depending on the opportunity cost of the cell.
2. As the allocations are made depending on the opportunity cost of the cell,
the basic feasible solution obtained will be very nearer to optimal solution.
3. It takes more time for getting basic feasible solution. But the solution we get
will be very nearer to optimal solution.
4. VAM and MODI is the best option to get optimal solution.
Example 1: The Transportation Table is Given as Follows:
Warehouse
Factory A B C D Supply
X 42 40 38 37 160
Y 40 49 52 51 150
Z 39 38 40 43 190
500
Demand 80 90 110 220 500

Required: Based on the information of the above transportation table, find the basic feasible
solution by using the following methods:
A. Northwest Corner Method (NWCM)
B. Least Cost Method (LCM) and
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C. Vogel’s Approximation Method (VAM)

Solution:
A. North-West Corner Method (NWCM)
Warehouse
Factory A B C D Supply
X 42 40 38 37 160
80 80 0
Y 40 49 52 51 150
10 110 30 0
Z 39 38 40 43 190
190 0
Demand 500
80 90 110 220 500
0 0 0 0

 Thus, The Total Transportation Cost is:

= (80 x 42) + (80 x 40) + (10 x 49) + (110 x 52) + (30 x 51) + (190 x 43)
= 3360 + 3200 + 490 + 5720 + 1530 + 8170
= 22,470.
B. Least Cost Method (LCM)
Warehouse
Factory A B C D Supply
X 42 40 38 37 160
160 0
Y 40 49 52 51 150
90 60 0
Z 39 38 40 43 190
80 90 20 0
Demand 500
80 90 110 220 500
0 0 0 0
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 Thus, The Total Transportation Cost is:

= (37 160) + (52 90) + (51 60) + (39 80) + (38 90) + (40 20)
= 5920 + 4680 + 3060 + 3120 + 3420 + 800
= 21,000
 Note that this method has reduced the total transportation cost in comparison to the NWC
method.
C. Vogel’s Approximation Method (VAM)
Warehouse (1) (5) (3)
RD
Factory A B C D Supply
1 2 3 4 5
X (2) 42 40 38 37 160 1 1 ---- --- ----
160
Y 40 49 52 51 150 9 2 2 2 2
80 10 60 70
Z (4) 39 38 40 43 190 1 2 2 5 ----
80 110 80
500
Demand 80 90 110 220 60 500
1 1 2 2 6
2 ---- 2 2 6
CD 3 ---- 11 12 8
4 ---- 11 ---- 8
5 --- 49 ---- 51

 Thus, The Total Transportation Cost is:

= (160 x 37 + (80 x 40) + (10 x 49) + (60 x 51) + (80 x 38) + (110 x 40)
= 5920 + 3200 + 490 + 3060 + 3040 + 4400
= 20,110
 This is the lowest total transportation cost among the three methods.
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3.3 Methods of Finding Optimal Solution (Test for Optimality)

Once the initial basic feasible solution is determined for transportation problem, the next duty is
performing the optimality test to find whether the obtained feasible solution is optimal or not.
This can be done by two methods.
1. Stepping Stone Method, and
2. Modified Distribution Method, (MODI)
These methods reveal whether the initial basic feasible solution is optimal or not. They also
improve the solution until the optimal solution is obtained. The Stepping Stone method is applied
to a problem of small dimension as its application to a problem of large dimension is quite
tedious and cumbersome. The MODI method is usually preferred over the Stepping Stone
method.
Conditions for Performing Optimality Test
An optimality test can be applied to that feasible solution which satisfies the following
conditions:
a. It contains exactly (m + n−1) allocations where m and n represent the number of
rows and columns, respectively, of the transportation table.

b. These allocations are independent.

Let us now discuss the methods of performing optimality test and hence finding optimal
solutions for each of these methods.
3.3.1 Stepping Stone Method

To give an optimality test to the solution obtained, we have to find the opportunity cost of empty
cells. As the transportation problem involves decision making under certainty, we know that an
optimal solution must not incur any positive opportunity cost. Thus, we have to determine
whether any positive opportunity cost is associated with a given progarmme, i.e., for empty cells.
Once the opportunity costs of all empty cells are negative, the solution is said to be optimal. In
case anyone cell has got positive opportunity cost, then the solution is to be modified. The
Stepping stone method is used for finding the opportunity costs of empty cells. Every empty cell
is to be evaluated for its opportunity cost.
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The Steps of Stepping Stone Method:

1. Determine an initial basic feasible solution (by using Northwest Corner Method, Least Cost
Method or Vogel’s Approximation Method).

2. Evaluate all unoccupied cells for the effect of transferring one unit from an occupied cell to
the unoccupied cell as follows:

a. Select or identify all unoccupied cell to be evaluated.

b. Starting from this cell, form a closed path (or loop) through at least three
occupied cells. The direction of movement is immaterial because the result will
be the same in both directions. Note that except for the evaluated cell, all cells at
the corners of the loop have to be occupied.

c. At each corner of the closed path, assign plus (+) and minus (−) sign
alternatively, beginning with the (+) sign for the unoccupied cell to be
evaluated.

d. Compute the net change in cost with respect to the costs associated with each cell
traced in the closed path.

e. Repeat steps 2(a) to 2(d) until the net change in cost has been calculated for all
occupied cells.

3. If all net changes are positive or zero, an optimal solution has been arrived at. Otherwise go
to the next step.
4. If some net changes are negative, select the unoccupied cell having the most negative net
change. If two negative values are equal, select the one that results in moving more units into
the selected unoccupied cell with the minimum cost.
5. Assign as many units as possible to this unoccupied cell.
6. Go to Step 2 and repeat the procedure until all unoccupied cells are evaluated and the value
of net change, i.e., net evaluation is positive or zero.
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3.3.2 Modified Distribution (MODI) Method

The Modified Distribution Method (MODI) is an improved form of the Stepping Stone Method
for obtaining an optimal solution of a transportation problem. The difference between the two
methods is that in the Stepping Stone Method, closed loops are drawn for all unoccupied cells for
determining their opportunity costs. However, in the MODI Method, the opportunity costs of all
the unoccupied cells are calculated and the cell with the highest negative opportunity cost is
identified without drawing any closed loop. Then only one loop is drawn for the highest negative
opportunity cost.
The Steps of Modified Distribution (MODI) Method:
1) Develop an initial solution using one of the three methods available (Northwest Corner
Method, Modified Distribution (MODI) Method or Vogel’s Approximation Method).
2) Compute Ui and Vj values for each row and column by applying the formula Ui + Vj = Cij
.to each cell that has an allocation.
3) Compute the cost change, Kij, for each empty cell using Kij = Cij – (Ui + Vj).
I. If all Δij 0, an optimal solution has been arrived at.

II. If some of Δijs are negative, the current solution is not optimal. Then select the
cell having the most negative Δij and tick it.

4) Allocate as much as possible to the empty cell that will result in the greatest net decrease
in cost (most negative Kij). Allocate according to the Stepping-Stone Path for the selected
cell.
5) Repeat steps 2 through 4 until all Kij values are positive or zero.

The Modified Distribution (MODI) Method of evaluating a transportation problem solution for
optimality involves the use of index numbers that are established for the rows and columns.
These are based on the unit cost of the occupied cells.

 Row index (ri) + Column index (ki) = Cell Cost (cij)

 The process always begins by assigning a value of zero as the index number of row-1.
 Cell evaluation (ceij) = Cell cost – (Row index /ri – Column index /ki)
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Example 4: A company is spending 1000 on transportation of its units from three plants to four
distribution centers. The availability of unit per plant and requirement of units per distribution center,
with unit cost of transportation are given as follows:
Centers (D)
Plants D1 D2 D3 D4 Availability
P1 19 30 50 12 7
P2 70 30 40 60 10
P3 40 10 60 20 18
35
Requirement 5 8 7 15 35
Required: Perform the following
A. Find the Initial Basic Feasible Solution Using One of the Three Methods.
B. Test the Optimality of the Solution Using Stepping Stone Method.
C. Test the Optimality of the Solution Using Modified Distribution Method.
Solution:
A) The Initial Basic Feasible Solution is (By applying Northwest Corner Method):
 Initial Feasible Solution Obtained by Using Northwest Corner Method
Centers (D)
Plants D1 D2 D3 D4 Availability
P1 19 30 50 12 7 2
5 2 0
P2 70 30 40 60 10 4
6 4 0
P3 40 10 60 20 18 15
3 15
5 8 6 7 3 15 35
Requirement 0 0 0 0 35

TC = (5 x 19) + (2 x 30) + (6 x 30) + (4 x 40) + (3 x 60) + (15 x 20)

= 95 + 60 + 180 + 160 + 180 + 300 = 975
 This solution has 3 rows and 4 columns and 6 occupied cells (3 + 4 – 1 = 6)
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B) Test of Optimality Using Stepping Stone Method

Centers (D)
Plants D1 D2 D3 D4 Availability
P1 19 30 50 12 7 2
5 2 0
P2 70 30 40 60 10 4
6 4 0
P3 40 10 60 20 18 15
3 15
5 8 6 7 3 15 35
Requirement 0 0 0 0 35
From the initial basic feasible solution table above; the unoccupied cells are six; (P1D3,
P1D4, P2D1, P2D4, P3D1 and P3D2):
1. Loop for Unoccupied Cell (P1D3)
Centers (D)
Plants D1 D2 D3 D4 Availability
P1 19 (-) 30 50 (+) 12 (+) 7 2
5 2 0
P2 70 30 40 60 10 4
6 (+) 4 (-) 0
P3 40 10 60 20 18 15
3 15
5 8 6 7 3 15 35
Requirement 0 0 0 0 35

P1D3
+ -
50 40
30 30
+80 - 70
Difference = + 10
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 Interpretation: If we use this path (P1D3) for reallocation the total cost would increase
by $ 10 per unit. Hence, this path would be undesirable.
2. Loop for Unoccupied Cell (P1D4)
Centers (D)
Plants D1 D2 D3 D4 Availability
P1 19 (-) 30 50 (+) 12 (+) 7 2
5 2 0
P2 70 30 40 60 10 4
6 (+) 4 (-) 0
P3 40 10 60 20 18 15
3 (+) 15 (-)
5 8 6 7 3 15 35
Requirement 0 0 0 0 35

P1D4
+ -
12 20
60 30
30 30
+ 102 - 80
Difference = + 22
 Interpretation: If we use this path (P1D4) for reallocation the total cost would increase
by $ 22 per unit. Hence, this path would be undesirable.
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3. Loop for Unoccupied Cell (P2D1)

Centers (D)
Plants D1 D2 D3 D4 Availability
P1 (-) 19 (+) 30 50 (+) 12 (+) 7 2
5 2 0
P2 70 30 40 60 10 4
(+) 6 (-) 4 (-) 0
P3 40 10 60 20 18 15
3 15
5 8 6 7 3 15 35
Requirement 0 0 0 0 35

P2D1
+ -
70 30
30 19
100 49
Difference = + 51
 Interpretation: If we use this path (P2D1) for reallocation the total cost would increase
by $ 51 per unit. Hence, this path would be undesirable.
4. Loop for Unoccupied Cell (P2D4)
Centers (D)
Plants D1 D2 D3 D4 Availability
P1 19 30 50 12 7 2
5 2 0
P2 70 30 40 60 10 4
6 4 (-) (+) 0
P3 40 10 60 20 18 15
3 (+) 15 (-)
5 8 6 7 3 15 35
Requirement 0 0 0 0 35
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P2D4
+ -
60 20
60 40
120 60
Difference = + 60
 Interpretation: If we use this path (P2D4) for reallocation the total cost would increase
by $ 60 per unit. Hence, this path would be undesirable.
5. Loop for Unoccupied Cell (P3D1)
Centers (D)
Plants D1 D2 D3 D4 Availability
P1 (-) 19 (+) 30 50 12 (+) 7 2
5 2 0
P2 70 (-) 30 (+) 40 60 10 4
6 4 0
P3 40 10 60 20 18 15
(+) 3 (-) 15
5 8 6 7 3 15 35
Requirement 0 0 0 0 35

P3D1
+ -
40 60
40 30
30 19
+ 110 - 109
Difference = + 1
 Interpretation: If we use this path (P3D1) for reallocation the total cost would increase
by $ 1 per unit. Hence, this path would be undesirable.
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6. Loop for Unoccupied Cell (P3D2)

Centers (D)
Plants D1 D2 D3 D4 Availability
P1 19 30 50 12 7 2
5 2 0
P2 70 (-) 30 40 (+) 60 10 4
6 4 0
P3 40 10 60 20 18 15
(+) 3 (-) 15
5 8 6 7 3 15 35
Requirement 0 0 0 0 35

P3D2
+ -
10 60
40 30
50 90
Difference = - 40
 Interpretation: The negative value for cell P3D2 indicates an improved solution is
possible. For each unit can shift into that cell (P3D2), the total cost will decrease by $ 40
per unit. Hence, this path would be preferable for reallocation.
 The (+) signs in the path indicate units to be added whereas the (-) signs indicate units to
be subtracted.
 The limit of subtraction is the smallest quantity in a negative position along the cell path.
 In this case there are two negative quantities, 6 and 3, because 3 is the smallest quantity,
that amount will be shifted in the following manner:
Subtract 3 units from each cell on the path with a (-) sign, and add 3 units
to the quantity of each cell with a (+) sign in it. The result is shown in the
following table.
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Improved or Reallocation Table (by making new allocation for the unoccupied cell P3D2)
Centers (D)
Plants D1 D2 D3 D4 Availability
P1 19 30 50 12 7
5 2
P2 70 30 40 60 10
3 7
P3 40 10 60 20 18
3 15
35
Requirement 5 8 7 15 35

TC = (5 x 19) + (2 x 30) + (3 x 30) + (7 x 40) + (3 x 10) + (15 x 20)

= 95 + 60 + 90 + 280 + 30 + 300 = 855
 Student Activity: Re-Test the optimality of the above improved solution by following
the same procedure of the previous test. The optimality test is reach at the final or optimal
solution when you found non-negative number or when all values be positive or zero.
C) Test of Optimality Using Modified Distribution (MODI) Method
 Initial Feasible Solution Obtained by Using Northwest Corner Method
Centers K1 = 19 K2 = 30 K3 = 40 K4 = 0
D1 D2 D3 D4 Availability
Plants
R1 = 0 P1 19 30 50 12 7 2
5 2 0
R2 = 0 P2 70 30 40 60 10 4
6 4 0
R3 = 20 P3 40 10 60 20 18 15
3 15
5 8 6 7 3 15 35
Requirement 0 0 0 0 35
TC = (5 x 19) + (2 x 30) + (6 x 30) + (4 x 40) + (3 x 60) + (15 x 20)
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= 95 + 60 + 180 + 160 + 180 + 300 = 975

 This solution has 3 rows and 4 columns and 6 occupied cells (3 + 4 – 1 = 6)
Cell Evaluation for all empty cells; (P1D3, P1D4, P2D1, P2D4, P3D1 and P3D2):
P1D3 = CC – (RI + CI) = 50 – (0 + 40) = 50 – 40 = 10
P1D4 = CC – (RI + CI) = 12 – (0 + 0) = 12 – 0 = 12
P2D1 = CC – (RI + CI) = 70 – (0 + 19) = 70 – 19 = 51
P2D4 = CC – (RI + CI) = 60 – (0 + 0) = 60 – 0 = 60
P3D1 = CC – (RI + CI) = 40 – (20 + 19) = 40 – 39 = 1
P3D2 = CC – (RI + CI) = 10 – (20 + 30) = 10 – 50 = -40 (Improved route)

When cell evaluations are positive or zero, an optimal solution has been found. If one or more is
negative, the cell with the largest negative value should be brought into solution because that
route has the largest potential for improvement per unit. In this case, it is found that cell P3D2
had an evaluation of (-40), which represented an improvement potential of $40 per unit. Hence,
an improvement solution is possible.
Loop for Unoccupied Cell (P3D2)
Centers (D)
Plants D1 D2 D3 D4 Availability
P1 19 30 50 12 7 2
5 2 0
P2 70 (-) 30 40 (+) 60 10 4
6 4 0
P3 40 10 60 20 18 15
(+) 3 (-) 15
5 8 6 7 3 15 35
Requirement 0 0 0 0 35

 In this case there are two negative quantities, 6 and 3, because 3 is the smallest quantity,
that amount will be shifted in the following manner:
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Subtract 3 units from each cell on the path with a (-) sign, and add 3 units
to the quantity of each cell with a (+) sign in it. The result is shown in the
following table.
 Distribution Plan after Reallocation of 3 Units to cell P3D2
Centers K1 = 19 K2 = 30 K3 = 40 K4 = 40
D1 D2 D3 D4 Availability
Plants
R1 = 0 P1 19 30 50 12 7 2
5 2 0
R2 = 0 P2 70 30 40 60 10 4
3 7 0
R3 = -20 P3 40 10 60 20 18 15
3 15
5 8 6 7 3 15 35
Requirement 0 0 0 0 35

TC = (5 x 19) + (2 x 30) + (3 x 30) + (7 x 40) + (3 x 10) + (15 x 20)

= 95 + 60 + 90 + 280 + 30 + 300 = 855
Cell evaluation:
P1D3 = CC – (RI + CI) = 50 – (0 + 40) = 50 – 40 = 10
P1D4 = CC – (RI + CI) = 12 – (0 + 40) = 12 – 40 = -28 (Improved route)
P2D2 = CC – (RI + CI) = 70 – (0 + 19) = 70 – 19 = 51
P2D4 = CC – (RI + CI) = 60 – (0 + 40) = 60 – 40 = 20
P3D1 = CC – (RI + CI) = 40 – (-20 + 19) = 40 – (-1) = 41
P3D3 = CC – (RI + CI) = 60 – (-20 + 40) = 60 – 20 = 40
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 Loop for P1D4

Centers K1 = 19 K2 = 2 K3 = 12 K4 = 12
D1 D2 D3 D4 Availability
Plants
R1 = 0 P1 19 30 (-) 50 12 (+) 7 2
5 2 0
R2 = 28 P2 70 30 40 60 10 4
3 7 0
R3 = 8 P3 40 10 60 20 18 15
5 (+) 13 (-)
5 8 6 7 3 15 35
Requirement 0 0 0 0 35

 In this case there are two negative quantities, 2 and 15, because 2 is the smallest quantity,
that amount will be shifted in the following manner:
Subtract 2 units from each cell on the path with a (-) sign, and add 2 units
to the quantity of each cell with a (+) sign in it. The result is shown in the
following table.
Cell evaluation:
P1D2 = CC – (RI + CI) = 30 – (0 + 2) = 30 – 2 = 28
P1D3 = CC – (RI + CI) = 50 – (0 + 12) = 50 – 12 = 38
P2D1 = CC – (RI + CI) = 70 – (28 + 19) = 70 – 47 = 23
P2D4 = CC – (RI + CI) = 60 – (28 + 12) = 60 – 40 = 20
P3D1 = CC – (RI + CI) = 40 – (8 + 19) = 40 – 27 = 13
P3D3 = CC – (RI + CI) = 60 – (8 + 12) = 60 – 20 = 40
 Since, all values of cell evaluation are positive the solution had been optimal.
TC = (5 x 19) + (2 x 12) + (3 x 30) + (7 x 40) + (5 x 10) + (13 x 20)
= 95 + 24 + 90 + 280 + 50 + 260 = 799
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3.4 Variation in Transportation (Some Special Cases)

We now consider some special cases of the transportation problem such as unbalanced
transportation problem, case of degeneracy, case of alternative solution, maximization
transportation problem and problems with prohibited routes.
1. Unbalanced Transportation Problem: The transportation problems where in the total
capacity of all sources and total requirement (demand) of all destinations are not equal is
called the unbalanced transportation problem. If the total capacity of sources is greater
than (less than) the total requirement at destination, we add a dummy destination (source) in
the transportation table with zero transportation cost so that the problem becomes balanced.
The augmented problem is then solved by the methods explained earlier.
Example 6: A company has factories at X, Y and Z which supply warehouses at A, B, C and
D. The monthly factory capacities are 160, 150 and 190 units, respectively. Monthly
warehouse requirements are 80, 90, 110 and 160, respectively. Unit shipping costs (in
rupees) are as follows:
Warehouse
Factory A B C D Capacity
X 42 48 38 37 160
Y 40 49 52 51 150
Z 39 38 40 43 190
500
Requirement 80 90 110 160 440
Determine the optimum distribution for this company to minimize shipping costs.
Solution: Here;
 The total capacity of sources (Factories) is 160 + 150 + 190 = 500. It is greater than
 The total requirement of all the destinations (Warehouses), which is 80 + 90 + 110 + 160
= 440.
 Here the total capacity is greater than the total requirement by 60 units.
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 Therefore, we add a dummy destination in the transportation table with zero

transportation cost and take 60 as its requirement.
 Thus, the problem becomes balanced, i.e., the total capacity and total requirement are
equal. The balanced problem is as follows:
Warehouse
Factory A B C D Dummy Capacity
X 42 48 38 37 0 160
Y 40 49 52 51 0 150
Z 39 38 40 43 0 190
500
Requirement 80 90 110 160 60 500

We can solve this problem using VAM to determine the basic feasible solution and then use the
MODI method to find the optimal solution. We have solved this problem in Example 3. You may
like to try the remaining solution yourself.
2. Degeneracy: It may happen sometimes that the number of occupied cells is less than (m+n-
1). Such a solution is called a degenerate solution. We handle such a situation by
introducing an infinitesimally small allocation say (e) in the least cost and independent cell.
This means that if ‘e’ is added to or subtracted from any quantity, the quantity remains
unaltered, i.e., the value of ‘e’ is nothing but zero. But we do not write ‘0’ in place of ‘e’ as it
is one of the allocations and will not come into counting if it is written as zero. So we write
‘e’ and not zero in its place and count it as one of the allocations.
Test of Degeneracy:
Number of occupied cells must equal (R + C – 1)
Where;
 R = Number of rows
 C = Number of columns
3. Alternative Optimal Solutions: Such solutions exist if all net-evaluations, i.e., ij= Cij - (ui
+ vj) 0 but one or more of them are equal to zero. To determine the alternative optimal
solution, we tick the cell having zero value of net-evaluation and make a closed loop
beginning from this cell. The transportation allocation might not be the same, yet the total
transportation cost is same.
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Example: Solve the following transportation problem (It has a multiple solution):
To A B C Capacity
From
X 4 2 8 100
Y 5 1 9 200
Z 7 6 3 200
Requirement 50 150 300 500
500

4. Prohibited Transportation Routes: Sometimes, in a transportation problem, some routes

may not be available. There could be several reasons for this such as bad road conditions or
strike, etc. To handle such a situation, a very large cost (or a negative profit for maximization
problem) represented by ∞ or M is assigned to each such route which is not available. Due to
assignment of very large cost, such routes would automatically be eliminated in the final
solution.
Solve the Following Transportation Problem:
Go downs
Factory 1 2 3 4 5 6 Stock
Availability
1 7 5 7 7 5 3 60
2 9 11 6 11 M 5 20
3 11 10 6 2 2 8 90
4 9 10 9 6 9 12 50
60 20 40 20 40 40

3.5 Maximization Transportation Problem: The data given in the transportation problems may
be such that we have to maximize it. This may be possible if instead of costs, the profits (or
anything else like revenue which needs maximization) are given in the cells. To handle such a
problem, we find the opportunity loss matrix by subtracting the value of each cell from the
largest value chosen from amongst all the given cells. When the value of a cell is subtracted from
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the highest value, it gives the loss of amount caused by not getting the opportunity which would
have given the highest value. The matrix so obtained is known as the opportunity loss matrix. It
is handled in the same way as the minimization problem.

1.6 Assignment Problem

Assignment Problems are a special case of linear programming problems. Assignment problems
are characterized by a need to pair items in one group with items in another group in a one-for-
one matching. For example, a manager may be faced with the task of assigning four jobs to four
machines, one job to a machine. Another manager may be faced with the task of assigning five
projects to five staff members, with each staff member responsible for a single project.
Assignment problems deal with the question of how to assign n items (e.g. jobs) to n machines
(or workers) in the best possible way. Mathematically an assignment is nothing else than a
bijective mapping of a finite set into itself.

The assignment problem is a special case of the transportation problem, which can be solved
using algorithms that solve transportation problems. But, due to the specifics of the problem,
there are more efficient algorithms to solve it.
Assumption of assignment problems are:
 One worker to one job assignment.
 One job to one worker assignment.
 Objective is minimizing the total cost.
3.6.1. Comparison between Transportation Problem and Assignment Problem

Now let us see what are the similarities and differences between Transportation problem and
Assignment Problem.

Similarities Between Transportation Problem and Assignment Problem:

a. Both are special types of linear programming problems.
b. Both have objective function, structural constraints, and non-negativity
constraints. And the relationship between variables and constraints are linear.
c. The coefficients of variables in the solution will be either 1 or zero in both cases.
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d. Both are basically minimization problems. For converting them into maximization
problem same procedure is used.
Differences Transportation Problem:
a. The problem may have rectangular matrix or square matrix.
b. The rows and columns may have any number of allocations depending on the rim
conditions.
c. The basic feasible solution is obtained by northwest corner method or matrix
minimum method or VAM
d. The optimality test is given by stepping stone method or by MODI method.
e. The basic feasible solution must have m + n – 1 allocation.
f. The rim requirement may have any numbers (positive numbers).
g. In transportation problem, the problem deals with one commodity being moved
from various origins to various destinations.
Differences Assignment Problem:
a. The matrix of the problem must be a square matrix.
b. The rows and columns must have one to one allocation. Because of this property,
the matrix must be a square matrix.
c. The basic feasible solution is obtained by Hungarian method or Flood's technique
or by Assignment algorithm.
d. Optimality test is given by drawing minimum number of horizontal and vertical
lines to cover all the zeros in the matrix.
e. Every column and row must have at least one zero. And one machine is assigned
to one job and vice versa.
f. The rim requirements are always 1 each for every row and one each for every
column.
g. Here row represents jobs or machines and columns represent machines or jobs.
3.6.2 Methods of Solving the Assignment Problem
The assignment method is based on minimization of opportunity costs that would result from
potential pairings. There is additional cost that would be incurred if the lowest cost assignment is
not made, either in terms of jobs (i.e., rows) or employees (i.e., columns).
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Hungarian Method: The Hungarian method is a combinatorial optimization algorithm which

was developed by Harold Kuhn in 1955. This method was originally invented for the best
assignment of a set of persons to a set of jobs. It is a special case of the transportation problem.
The algorithm finds an optimal assignment for a given n x n cost matrix.
 Step-1: Arrange your information in a cost matrix with the "people" on the left and the
"activity" along the top, with the "cost" for each pair in the middle.
 Step-2: Ensure that the matrix is square by the addition of dummy rows or columns if
necessary. Conventionally, each dummy entry is the same as the largest number in the
matrix.
 Step-3: Reduce the rows by subtracting the minimum value of each row from that row.
 Step-4: If there are columns without a zero, reduce the columns by subtracting the
minimum value of each column from that column.
 Step-5: Cover the zero elements with the minimum number of lines it is possible to cover
them with lines. If the number of lines is equal to the number of rows, then a solution is
found.
 Step-6: From the elements that are left, find the lowest value. Subtract this from every
uncovered element and add it to every element covered by two lines. Repeat steps 5 and 6
until an assignment is possible; this is when the minimum number of lines used to cover
all the 0's is equal to the max (number of people, number of assignments), assuming
dummy variables (usually the max cost) are used to fill in when the number of people is
greater than the number of assignments.

 Row Reduction: We can perform row reduction for each rows by identifying the lowest
cost for each row and, then, subtracting that value from each of the other costs in that row
to obtain job opportunity costs for all job assignments. This is usually referred to as a row
reduction.
 The procedure for a row reduction is summarized as follows:
1. Identify the minimum value in each row.
2. Subtract the minimum value in each row from all the values in that row.
3. Use the resulting values to develop a new table.
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 Column Reduction: We can perform column reduction for each column by identifying
the lowest cost for each column and, then, subtracting that value from each of the other
costs in that column to obtain job opportunity costs for all job assignments. This is
usually referred to as a column reduction.
 The Procedures for column reduction:
1. Identify the lowest-cost value in each column.
2. Subtract the lowest cost value in each column from each of the values in
that column.
3. Use the resulting values to form a new table
Example: In this example we have to assign 5 workers to 5 machines. Each worker causes
different costs for the machines. Our goal is to minimize the total cost in a way that each
machine goes to exactly 1 person and each person works at exactly 1 machine. For
comprehension: Worker 1 causes a cost of 65 for machine 1 and so on....
Machine 1 Machine 2 Machine 3 Machine 4 Machine 5
Worker 1 65 73 63 57 43
Worker 2 67 70 65 58 75
Worker 3 68 72 69 73 55
Worker 4 67 75 70 59 66
Worker 5 71 69 75 57 63

Solution: Here is the cost matrix and the minimum of each row:
Machine 1 Machine 2 Machine 3 Machine 4 Machine 5 Row Minima
Worker 1 65 73 63 57 43 43
Worker 2 67 70 65 58 75 58
Worker 3 68 72 69 73 55 55
Worker 4 67 75 70 59 66 59
Worker 5 71 69 75 57 63 57
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 Step-1: Subtract the row minimum from each row.

Machine 1 Machine 2 Machine 3 Machine 4 Machine 5 Row Minima
Worker 1 65-43 =22 73-43 =30 63-43 =20 57-43 =14 43-43 =0 43
Worker 2 67-58 =9 70-58 =12 65-58 =7 58-58 =0 75-58 =17 58
Worker 3 68-55 =13 72-55 =17 69-55 =14 73-55 =18 55-55 =0 55
Worker 4 67-59 =8 75-59 =16 70-59 =11 59-59 =0 66-59 =7 59
Worker 5 71-57 =14 69-57 =12 75-57 =18 57-57 =0 63-57 =6 57
Column Min 8 12 7 0 0

 Note: The first three columns of costs have no zero, so we need to use the rule of column
minima.
 Step-2: Subtract 8 from the first column, 12 from the second column, and 7 from the
third column.
Machine 1 Machine 2 Machine 3 Machine 4 Machine 5
Worker 1 22-8 = 14 30-12 = 18 20-7 =13 14 0
Worker 2 9-8 = 1 12-12 = 0 7-7 = 0 0 17
Worker 3 13-8 = 5 17-12 = 5 14-7 = 7 18 0
Worker 4 8-8 = 0 16-12 = 4 11-7 = 4 0 7
Worker 5 14-8 = 6 12-12 = 0 18-7 = 11 0 6
Column Min 8 12 7 0 0

 Step-3: Cover the 0's with minimum number of lines.

Machine 1 Machine 2 Machine 3 Machine 4 Machine 5

Worker 1 14 18 13 14 0
Worker 2 1 0 0 0 17
Worker 3 5 5 7 18 0
Worker 4 0 4 4 0 7
Worker 5 6 0 11 0 6
 The fact that all the zeros have been covered with only four lines, we must go to the next
step, because number of lines is less than number of rows.
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 Step-4: The lowest uncovered entry is 5, so we subtract 5 from all uncovered entries
in the above table and add to entries which are covered by two lines (at
intersections).
Machine 1 Machine 2 Machine 3 Machine 4 Machine 5
Worker 1 14-5 = 9 18-5 = 13 13-5 = 8 14-5 = 9 0
Worker 2 1 0 0 0 17+5 = 22
Worker 3 5-5 = 0 5-5 = 0 7-5 = 2 18-5 = 13 0
Worker 4 0 4 4 0 7+5 = 12
Worker 5 6 0 11 0 6

 Step-5: We need at least five lines cover all the zeros.

Machine 1 Machine 2 Machine 3 Machine 4 Machine 5

Worker 1 9 13 8 9 0
Worker 2 1 0 0 0 22

Worker 3 0 0 2 13 0

Worker 4 0 4 4 0 12

Worker 5 6 0 11 0 6

Thus, worker-machine relation and total cost is depicted as follows:

Worker-Machine Relation Unit Cost

 Worker 1 with Machine 5 ----------------------------43

 Worker 2 with Machine 3 -----------------------------65
 Worker 3 with Machine 2 -----------------------------72
 Worker 4 with Machine 1 -----------------------------67
 Worker 5 with Machine 4 -----------------------------57

Total Cost ----------------------------------------- 304

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3.7 Special Cases in Assignment Problems

Certain situations can arise in which the model deviates slightly from that previously described.
Among those situations are the following:
A. Unbalanced Assignment Problem: This is the number of rows does not equal to the
number of columns.
Example: Given the following unbalanced assignment problem, assign each machine to
each job.
Job
1 2 3 4
Machine A 15 19 12 16
B 23 21 18 17
C 20 16 11 19

Solution: Here the number of rows (3) is less than the number of columns (4), so we have
obligated to add one additional dummy row in order to balance the number of rows with
that of the number of columns.
Row and Column Balanced Table
Job
1 2 3 4
A 15 19 12 16
Machine B 23 21 18 17
C 20 16 11 19
Dummy 0 0 0 0
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Original Table with Row Minima

Job
1 2 3 4 Row Minima
A 15 19 12 16 12
Machine B 23 21 18 17 17
C 20 16 11 19 11
Dummy 0 0 0 0 0

Row Reduction Table

Job
1 2 3 4
A 3 7 0 4
Machine B 6 4 1 0
C 9 5 0 8
Dummy 0 0 0 0

Row Reduction Table with the Column Minima

Job
1 2 3 4
A 3 7 0 4
Machine B 6 4 1 0
C 9 5 0 8
Dummy 0 0 0 0
Column Minima 3 4 0 0
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Column Reduction Table

Job
1 2 3 4
A 0 3 0 4
Machine B 3 0 1 0
C 3 1 0 8
Dummy 0 0 0 0
From the above table:
 Job-1 was done by Machine-A
 Job-2 was done by Machine-B
 Job-3 was done by Machine-C
 Job-4 was done by Machine-D
B. Maximization Assignment Problem:
Example: The following table contains profit that would be realized from various
possible pairings. Prepare the table so that the optimal solution can be obtained using
the assignment method for minimization.
Job
1 2 3
Machine A 14 22 30
B 20 18 40
C 11 12 50

C. Undesirable Matches:
Example: Determine the optimal set of pairings given the following cost table. Note that
assignments B-3 is undesirable, as denoted by M in that position.
Job
1 2 3
Machine A 8 7 2
B 1 4 M
C 7 9 3
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D. Alternative Optimal Solutions:

Example: Given this final assignment table, identify two solutions.
Job
1 2 3
Machine A 4 0 0
B 0 3 2
C 1 0 0

Solution:
 The first assignment must be: A-2, B-1, and C-3
 The alternative assignment should be: A-3, B-1, and C-2

Exercise: A manager has prepared a table that shows the cost of performing each of four jobs by
each of four employees. According to the following table, Job 1 will cost $15 if done by
Employee A, $20 if it is done by Employee B, and so on. The manager has stated that his goal is
to develop a set of job assignments that will minimize the total cost of getting all four jobs done.
It is further required that the jobs be performed simultaneously, thus requiring one job being
assigned to each employee.

Employees
A B C D
1 $15 20 18 24
2 12 17 16 15
Job
3 14 15 19 17
4 11 14 12 13

 Required: Assign each jobs to each employees and calculate the total cost?