FORE SCHOOL OF MANAGEMENT
DECISION MAKING MODELS
TRANSPORTATION PROBLEM
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Submitted To: Dr. Hitesh Arora
Submitted By: Shalabh Madan 053043  IMGV
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While trying to find the best way.TRANSPORTATION PROBLEM
A transportation problem basically deals with the problem. We are to find the optimal supply from each plant to each city in order to incur least cost fulfilling the demand of each city. The associated supply of each plant and demand of each city is given in the table The cost of sending 1 million kwh of electricity from a plant to a city depends on the distance the electricity must travel. which aims to find the best way to fulfill the demand of n demand points using the capacities of m supply points.
CASE 1:
Power corp has three electric power plants that supply the electric needs of four cities.
Transportation Table
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. 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.
Xij = Amount of electricity produced at plant i and sent to city j.SOLUTION

DECISION VARIABLE: Since we have to determine how much electricity is sent from each plant to each city.
OBJECTIVE FUNCTION:
Since we want to minimize the total cost of shipping from plants to cities:
Minimize Z = 8X11 + 6X12 + 10X13 + 9X14 + 9X21 + 12X22 + 13X23 + 7X24 + 14X31 + 9X32 + 16X33 + 5X34
SUPPLY CONSTRAINTS
Since each supply point has a limited production capacity:
X +X +X +X < 35
11 12 13 14
X +X +X +X < 50
21 22 23 24
X +X +X +X < 40
31 32 33 34
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. X14 = Amount of electricity produced at plant 1 and sent to city 4.
4) (nonnegativity constraint)
LP FORMULATION OF POWER CORP PROBLEM Min Z = 8X +6X +10X +9X +9X +12X +13X +7X
11 12 13 14 21 22 23
24
+14X +9X +16X +5X
31 32 33
34
S.
Xij > 0 (i= 1.T.DEMAND CONSTRAINTS
Since each supply point has a limited production capacity:
X +X +X > 45
11 21 31
X +X +X > 20
12 22 32
X +X +X > 30
13 23 33
X +X +X > 30
14 24 34
And since negative amount of electricity cannot be shipped all Xij’s must be non negative.2.3. j= 1.: X +X +X +X < 35
11 21 31 12 22 32 13 23 33 14 24 34
(Supply Constraints)
X +X +X +X < 50 X +X +X +X < 40
4
.2.3.
4)
BALANCED TRANSPORTATION PROBLEM If Total supply equals to total demand.
METHODS TO FIND BASIC TRANSPORTATION PROBLEM There are three methods: 
FEASIBLE
SOLUTION
FOR
A
BALANCED
Northwest Corner Method Minimum Cost Method Vogel’s Method
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. If total supply exceeds total demand. we can balance the problem by adding dummy demand point. j= 1.2.X +X +X > 45
11 12 13 14 21 22 23 24 31 32 33 34
(Demand Constraints)
X +X +X > 20 X +X +X > 30 X +X +X > 30
Xij > 0 (i= 1.3.3.2. they are assigned a cost of zero. the problem is said to be a balanced transportation problem. Since shipments to the dummy demand point are not real.
8 9 14 45
6 12 9 20
10 13 16 30
9 7 5 30
35 50 40
35 10 20 20 10 x x x 30 x
x x x
After allocation through northwest method we get the above matrix. will be the
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demand of demand point 1 and the supply of supply point 1.NORTHWEST CORNER METHOD
Begin in the upper left (northwest) corner of the transportation tableau and set x
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as large as possible (here the limitations for setting x to a larger number. The cost incurred through this method is (35*8)+(9*10)+(20*12)+(20*13)+(10*16)+(30*5) This is equal to $1180
6
. Your x value cannot be
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greater than minimum of this 2 values).
8 9 14 45
6 12 9 20
10 13 16 30
9 7 5 30
35 50 40
15 30
20 20 10 30 x
x x x
x
x
x
After allocation through least cost method we get the above matrix. Then we will choose the cell with the minimum cost of shipping from the cells that do not lie in a crossedout row or column and we will repeat the procedure. which is the minimum of s and d
ij ij i j
After that.
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. To begin the minimum cost method. The cost incurred through this method is (15*8)+(9*30)+(20*6)+(20*13)+(10*16)+(30*5) This is equal to $1080.MINIMUM COST METHOD The Northwest Corner Method dos not utilize shipping costs. Then assign X its largest possible value. The minimum cost method uses shipping costs in order come up with a Basic feasible solution that has a lower cost. as in the Northwest Corner Method we should cross out row i and column j and reduce the supply or demand of the non crossedout row or column by the value of Xij. first we find the decision variable with the smallest shipping cost (X ). It can yield an initial Basic feasible solution easily but the total shipping cost may be very high.
including dummies.optimal starting solution. Ties may be broken arbitrarily.
8
.
The Vogel's approximation method (VAM) usually produces an optimal or near.
8 9 14 45
6 12 9 20
10 13 16 30
9 7 5 30
35 50 40
10 45 10 x x
25 5 30 x x
x x x
After allocation through Vogel’s approximation method we get the above matrix. Ties may be broken arbitrarily. Recalculate the differences between the two lowest cells remaining in all rows and columns.VOGEL’S APPROXIMATION METHOD In Vogel’s approximation method determine the difference between the lowest two cells in all rows and columns. If not. Identify the row or column with the largest difference. allocate as much as possible to the lowestcost cell in these rows or columns. The cost incurred through this method is (45*9)+(10*6)+(25*10)+(5*13)+(10*9)+(30*5) This is equal to $1020. If two or more differences are equal. Stop the process if all row and column requirements are met. Then again identify the row or column with the largest difference. Any row and column with zero supply or demand should not be used in calculating further differences. go to the next step. Allocate as much as possible to the lowestcost cell in the row or column with the highest difference.
Vi+ Uj= Cij So each value of Vi and Uj (from occupied cells) is computed by initially putting U4 =0 and calculating the rest. we have to add a new row above the table for cost factors and a new column to the left of the table. We will check the optimality for the result obtained by VAM.
Let Cij = cost of sending 1 million kwh of electricity from a plant to a city. Generally the Vogel’s method of approximation is the most optimal of the 3 methods discussed. We make use of Vi for cost factors of supply.MODI METHOD FOR CHECKING OPTIMALITY
In this method. The key to the use of MODI is to utilize the occupied cells for each Vi and Uj values. and Uj for cost factors of demand. and then use these values to calculate the net contribution of the vacant cells.
COST FOR OCCUPIED CELLS
6 9 9 4 4
10 13 5 8 0
2 5 5
COST FOR UNOCCUPIED CELLS
8 12 14 4 4 16 8
9 7
2 5 5
0
9
.
And the least cost incurred is $1020. as we see that the value of the net evaluation for each of the unoccupied cell is >= 0 we can say that the result obtained by Vogel’s approximation method is the optimal solution. to check the optimality we will calculate the net evaluation of the unoccupied cells. If all the net evaluation values comes out to be >0 then we can say that the result is optimal.
NET EVALUATION
2 3 5 3
7 2
Now.Now.
10
.
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. So. the result obtained from Vogel’s approximation method is optimum as we already calculated through MODI method. So.MANAGEMENT DECISION
The management of POWER CORP is to take a decision about how much electricity is to be supplied from a particular plant to a particular city. in order to incur least cost the management should supply
PLANT 1 TO CITY 2 = 10 PLANT 1 TO CITY 3 = 25 PLANT 2 TO CITY 1 PLANT 2 TO CITY 3 = 45 =5
PLANT 3 TO CITY 2 = 10 PLANT 3 TO CITY 4 = 30
And the total cost incurred would be $ 1020.
me.REFERENCES

R k Gupta. Problems in Quantitative techniques http://www.edu/~jensen/models/network/net8.org/Lesson18SpecialCasesInTransportationPro blems.utexas. Operation Research Gupta and Man Nohan .pdf
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.html http://businessmanagementcourses.
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http://www.html http://businessmanagementcourses.pdf
.utexas.me.org/Lesson18SpecialCasesInTransportationPr oblems.edu/~jensen/models/network/net8.