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Prepared by:

MARITESS B. PANABANG lectured by

MARIA NORIZA Q. HERRERA

Dept. of Agribusiness Management & Entrepreneurship

CEM, UP Los Baos

INTRODUCTION

The

of LP that deals with shipping/distribution of

goods/commodity from several points of

supply (sources) to a number of points of

demand (destinations)

The objective is to schedule shipments from

sources to destinations so that total

transportation costs are minimized.

INTRODUCTION

o

when a firm is trying to decide where to

locate a new facility.

Good financial decisions concerning

facility location also attempt to minimize

total transportation and production costs

for the entire system.

DEFINITION

s1

Units of

supply

s2

sm

c11

cmn

d1

d2

dn

each represented by a node.

o The arcs represent the routes linking the

sources and the destinations.

Units of

demand

DEFINITION

s1

Units of

supply

s2

sm

c11

cmn

d1

d2

dn

source i to destination j is cij.

o The amount of supply at source i is si

and the amount of demand at

destination j is dj

Units of

demand

DEFINITION

s1

Units of

supply

The

s2

sm

c11

cmn

d1

d2

dn

the number of units to ship from source i to

destination j, denoted by xij, that will

minimize transportation cost while satisfying

supply and demand constraints.

Units of

demand

DEFINITION

s1

Units of

supply

Note

s2

sm

c11

cmn

d1

d2

dn

shipping cost is proportional to the number

of units shipped on a given route.

Units of

demand

SAMPLE PROBLEM

and New Orleans, and two major distribution center

in Denver and Miami. The capacities of the three

plants during the next quarter are 1000, 1500,1200

cars. The quarterly demands at the two distribution

centers are 2300 and 1400 cars. The mileage chart

and the per unit shipping cost from the plants to the

distribution centers are on the table.

Los Angeles

Detroit

New Orleans

Denver

1000, $80

1250, $100

1275, $102

Miami

2690, $215

1350, $108

850, $68

SAMPLE PROBLEM

1000

1500

80

215

Los Angeles

100

2

108

2300

Denver

Detroit 102

1200

68

New Orleans

Construct

1400

Miami

from this network model.

TRANSPORTATION TABLEAU

Sources

1

2

:

m

Demand

1

c11

x11

c21

x21

:

Destination

2

c12

x12

c22

x22

:

cm1

xm1

d1

cm2

xm2

d2

n

c1n

x1n

c2n

x2n

s1

s2

:

:

cmn

Supply

xmn

dn

sm

SAMPLE PROBLEM

Destination

Sources

Denver

Miami

80

215

Los Angeles

x11

x12

100

108

Detroit

x21

x22

102

68

New

Orleans

x31

x32

Demand

2300

1400

Supply

1000

1500

1200

3700

TRANSPORTATION MODEL

Min Z = 80x11 + 215x12 + 100x21 + 108x22 + 102x31 +68x32

subject to:

(supply constraints)

x11 + x12 =1000

x21 +x22 =1500

x31 +x32 =1200

(demand constraints)

x11 +x21 +x31 =2300

x12 +x22 +x32 =1400

(non-negativity)

xij >0, i= 1, 2, 3; j=1, 2

TRANSPORTATION MODEL

The

method. However, its special structure

allows us to solve the problem more

efficiently using the transportation

simplex/algorithm.

The transportation simplex is based on the

assumption that the model is balanced,

means that the total demand equals the

total supply.

DUMMMY NODES

If

augment it with a dummy destination (or

dummy source) to restore balance.

In the MG model, suppose that the Detroit

plant capacity is 1300 cars.

Because total demand exceeds total supply,

introduce a dummy source with a capacity

of 200 cars.

DUMMY NODES

Destination

Sources

Denver

Miami

80

215

Los Angeles

x11

x12

100

108

Detroit

x21

x22

102

68

New

Orleans

x31

x32

0

0

Dummy

x41

x42

Demand

2300

1400

Supply

1000

1300

1200

200

3700

DUMMY NODES

The

plant to each destination is 0, because the

dummy plant does not exist and no actual

shipping will take place.

However, in some cases, this unit

transportation cost may also assume positive

values.

In cases wherein the supply exceeds the

demand, introduce a dummy destination whose

demand is equal to the excess supply.

The unit transportation costs to the dummy

destination are 0 unless it is required to impose

other conditions.

TRANSPORTATION ALGORITHM

Find an initial solution

1. Northwest corner method

2. Least-cost (greedy) method

3. Vogel approximation method (VAM).

The three methods, differ in the quality of

the starting basic solution they produce, in

the sense that a better starting solution

yields a smaller objective value.

1.

TRANSPORTATION ALGORITHM

2.

3.

4.

Stepping-stone method

Modified distribution (MODI) method

Develop an improved solution.

Stepping-stone method

Steps 2 and 3 are repeated until an

optimal solution is reached.

grain from three silos to four mills. The supply and

the demand (both in truckloads) together with the

unit transportation costs per truckload (in 000

pesos) on the different routes are given below:

Silos

1

2

3

Demand

Mill

Supply

10

12

4

5

2

7

14

15

20

9

16

15

11

20

18

15

15

25

10

50

Northwest

corner method

The method starts at the northwest corner

cell of the tableau

PROCEDURE:

1. Exhaust the supply of each row before

moving down to the next row and

exhaust the demand requirements of

each column before moving to the next

column to the right.

2. Check that all supply and demand

requirements are met.

Northwest corner method

Sources

(Silos)

1

2

3

Demand

Destination (Mills)

1

2

3

10

2

20

5

10

12

7

9

5

15

4

14

16

5

15

15

Supply

4

11

20

5

18

10

15

15

25

10

50

This

route/cell to see if shipping one unit on that

route would increase or decrease total cost

Involves generating improvement indices (Iij)

for each unused cells

To be able to use either the MODI or

stepping-stone the solution to be improved

should satisfy the rim requirement: # of

occupied cells = (# of rows + # of columns) 1

Stepping-stone

1.

2.

3.

method

Select an unused square to be evaluated.

Beginning at this square, trace a closed

path back to the original square via squares

that are currently being used and moving

with only horizontal and vertical moves.

Beginning with a plus (+) sign at the

starting unused square, place alternate

minus (-) signs and plus signs on each

square of the closed path just traced.

Stepping-stone

4.

5.

method

Calculate an improvement index by adding

together the unit cost figures found in each

square containing a plus sign and then

subtracting the unit costs in each square

containing a minus sign.

Repeat steps 1 to 4 until an improvement

index has been calculated for all unused

squares. If all Iij 0 (min); Iij 0 (max), an

optimal solution has been reached. If not, it

is possible to improve the current solution

and decrease total shipping costs.

Sample

Stepping-stone

method

1. Choose the route (unused square) with

the largest negative (positive for max)

improvement index.

2. Using the closed path of this route, select

the smallest number () found in the

squares with minus sign.

3. Change the shipping route by adding to

squares in the closed path with plus

signs and subtracting from squares with

minus sign.

Improved solution

Sources

(Silos)

1

Destination (Mills)

1

2

3

10

2

20

2

3

Demand

Supply

4

11

12

20

14

16

18

15

15

15

15

25

10

50

We

because the preceding solution did not

satisfy the rim requirement.

The solution is degenerate.

Degeneracy occurs if the filling of an empty

cell results in two (or more) filled cells

becoming empty simultaneously.

To correct this problem, a zero should be

put in one (or more) of the previously filled

squares (usually the one with the lower cost.

OPTIMAL SOLUTION IS FOUND

Sources

(Silos)

1

Destination (Mills)

1

2

3

10

2

20

2

3

Demand

Supply

4

11

12

20

14

16

18

15

15

15

15

25

10

50

OPTIMAL SOLUTION

The following table summarizes the optimal solution:

From

silo

To

mill

# of

truckloads

Unit cost

Total

cost

Degeneracy

generating an initial solution

To correct the problem, we can place a zero

in an unused square

With a northwest corner method, this zero

is placed adjacently to one of the filled

cells so the stair-step pattern continues.

With the least cost method, this zero is

placed in the unused cell with the least

cost

Warehouse

1

2

3

Demand

Customer

1

2

8

2

0

100

10

9

100

7

10

100

100

Supply

3

6

9

20

7

80

100

100

120

80

300

Multiple

more improvement indices in the optimal

solution stages are equal to zero

Multiple

management with greater flexibility in

selecting and using resources

When

filled, the square with the largest

improvement index is selected

The

problem has been found when all

improvement indices are negative or zero

At

in which one of the sources is unable to ship

to one or more of the destinations

The problem is said to have an

unacceptable or prohibited route

A prohibited route is assigned a very large

cost (M) to prevent it from being used, in

maximization problems, this cost is given a

negative sign, to denote a very bad profit

A

importance to a company

When deciding as to where to locate facilities,

several alternative locations are ordinarily

considered and evaluated

Even though a wide variety of subjective factors

are considered, including quality of labor

supply, presence of labor unions, community

attitude and appearance, utilities, and

recreational and educational facilities for

employees, a final decision also involves

minimizing total shipping and production costs.

The

cost for the entire system will be the one

recommended.

The analysis involves solving several

transportation problems (each

transportation problem incorporating one of

the facilities being evaluated) to find the

new facility with lowest system cost.

SAMPLE PROBLEM

computer components at its plant in Cincinnati, Salt

Lake City and Pittsburgh. These plants have not

been able to keep up with demand for orders at

Hardgraves four warehouses in Detroit, Dallas,

New York and Los Angeles. As a result, the firm has

decided to build a new plant to expand its

productive capacity. The two sites being considered

are Seattle and Birmingham; both cities are

attractive in terms of labor supply, municipal

services and ease of factory financing.

SAMPLE PROBLEM

Warehouse

Monthly

Demand

(Units)

Production

Plant

Monthly

Supply

Cost to

Produce 1

Unit ($)

Detroit

10,000 Cincinnati

15,000 48

Dallas

6,000 50

New York

15,000 Pittsburgh

14,000 52

Los Angeles

9,000

35,000

46,000

Supply needed from new plant = 46,000 35,000 = 11,000 units per

month

Estimated production cost per unit at proposed plants

Seattle

$53

Birmingham

$49

SAMPLE PROBLEM

Detroit

Dallas

New York

Los

Angeles

Cincinnati

$25

$55

$40

$60

Salt Lake

35

30

50

40

Pittsburgh

36

45

26

66

Seattle

60

38

65

27

Birmingham

35

30

41

50

Which of the new locations will yield the lowest cost for the firm in

combination with the existing plants and warehouses? Note that the cost

of each individual plant-to warehouse route is found by adding shipping

costs to the respective unit production costs.

To determine which new plant shows the lowest total systemwide cost of

distribution and production, we solve two transportation problems one

for each of the two possible combinations

LEAST-COST METHOD

This

by concentrating on the cheapest routes

PROCEDURE:

1. Assign as much as possible to the cell

with the smallest unit cost (break ties

arbitrarily).

2. Satisfied row or column is crossed out

and the amounts of supply and demand

are adjusted accordingly.

LEAST-COST METHOD

If

simultaneously, only one is crossed out.

3. Look for the uncrossed-out cell with the

smallest unit and repeat the process until

exactly one row or one column is left

uncrossed out

LEAST-COST METHOD

Sources

(Silos)

1

Destination (Mills)

1

2

3

10

2

20

2

3

Demand

Supply

4

11

12

20

14

16

18

15

15

15

15

25

10

50

LEAST-COST METHOD

Sources

(Silos)

1

2

3

Demand

Destination (Mills)

Supply

1

2

3

4

10

2

20

11

15

15

12

7

9

20

25

0

15

10

4

14

16

18

10

5

5

5

15

15

15

50

This

an initial solution by taking into account the

costs associated with each route alternative

PROCEDURE:

1. For each row and column, find the

difference between the two lowest unit

shipping costs. This represents the

opportunity cost of not using the best

route.

Sources

(Silos)

1

2

Destination (Mills)

Supply

1

2

3

4

10

2

20

11

15

12

20

14

16

18

3

Demand

15

15

15

25

10

10

50

PROCEDURE:

2.

3.

4.

greatest opportunity cost.

Assign as many units as possible to the

lowest-cost square in the row or column

selected.

Eliminate any row or column that has just

been completely satisfied by the

assignment made. This can be done by

placing Xs in each appropriate square.

Sources

(Silos)

1

2

3

Demand

Destination (Mills)

Supply

1

2

3

4

10

2

20

11

15

X

12

7

9

20

25

X

4

14

16

18

10

5

5

15

15

15

50

6

8

2

10

PROCEDURE:

5.

6.

rows or columns eliminated in the

preceding step.

Return to step 2 for the rows and columns

remaining and repeat the steps until an

initial feasible solution has been obtained.

Sources

(Silos)

1

2

3

Demand

Destination (Mills)

Supply

1

2

3

4

10

2

20

11

15

X

12

7

9

20

25

X

4

14

16

18

10

5

5

15

15

15

50

6

8

2

10

Sources

(Silos)

1

Destination (Mills)

1

2

3

10

2

20

2

3

Demand

Total cost =

Supply

4

11

12

20

14

16

18

15

15

15

15

25

10

50

Method

Northwest

corner

Least-cost

VAM

Total Cost of

Initial Solution

# of Tableaus

3

2

2

MODI METHOD

The

to compute improvement indices quickly for

each unused square without drawing all of

the closed paths.

It can often provide considerable time

savings over stepping-stone method for

solving transportation problems

This method only requires us to trace one

closed path, this is used to determine what

changes to be made to obtain an improved

solution

MODI METHOD

We

let

Ri = value assigned to row i

Kj = value assigned to column j

Cij = cost in square ij (cost of shipping from

source i to destination j)

PROCEDURE:

1. For used squares, set Ri + Kj = Cij

2. After all the equations have been written, set

R1 = 0

3. Solve the system of equations for R and K

values

MODI METHOD

PROCEDURE:

4.

4.

unused square using the formula:

Iij = Cij Ri - Kj

Select the best negative index and proceed

to improving the solution as you did using

the stepping-stone method.

time an improved solution is obtained

MODI METHOD

Initial solution using the northwest corner method

Sources

(Silos)

1

Destination (Mills)

1

2

3

10

2

20

2

3

Demand

Supply

4

11

12

20

14

16

18

15

15

15

15

25

10

50

MODI METHOD

Improvement Indices

MODI METHOD

Improved solution

Sources

(Silos)

1

Destination (Mills)

1

2

3

10

2

20

2

3

Demand

Supply

4

11

12

20

14

16

18

15

15

15

15

25

10

50

ASSIGNMENT ALGORITHM

DEFINITION

o

involve determining the most efficient

assignment of

o

people to projects,

o

salespeople to territories,

o

contracts to bidders,

o

jobs to machines, etc.

The objective is most often to minimize

total costs or total time of performing the

tasks at hand.

DEFINITION

One

problems is that only one job or worker is

assigned to one machine or project.

The assignment model is a special case of

the transportation model in which all supply

and demand amounts are equal to 1.

Hence, the transportation simplex can be

used to solve the assignment model but it

would have a severe degeneracy problem

Jobs

Workers

1

2

:

n

1

c11

c21

:

cn1

2

c12

c22

:

cn2

:

cn3

n

c1n

c2n

:

cnn

defined as the cost of assigning worker i to job

j, where i,j (1, 2, , n)

SAMPLE PROBLEM

projects to repair: (1) a radio, (2) a toaster oven,

and (3) a broken coffee table. Three repair persons,

each with different talents and abilities, are

available to do the jobs. The Fix-It-Shop owner

estimates what it will cost in wages to assign each

of the workers to each of the three projects. The

costs, which are shown in the table on the next

slide, differ because the owner believes that each

worker will differ in speed and skill on these varied

jobs. The owners objective is to assign the three

projects to the workers in a way that will result in

the lowest total cost to the shop.

SAMPLE PROBLEM

Person

Adam

Ben

Carlo

1

11

8

9

Project

2

14

10

12

3

6

11

7

SOLVING

ASSIGNMENT PROBLEMS

Complete

Enumeration

List all possible assignments and their

respective costs

Works well for small problems but quickly

becomes inefficient as assignment

problems become larger

For example, a problem involving the

assignment of four workers to four

projects requires that we consider 4! Or

24 alternatives

Project Assignment

1

2

3

Adam

Ben

Carlo

Adam

Carlo

Ben

Ben

Adam

Carlo

Ben

Carlo

Adam

Carlo

Adam

Ben

Carlo

Ben

Adam

Labor

Cost

11+10+7

11+12+11

8+14+7

8+12+6

9+14+11

9+10+6

Total

Cost

28

34

29

26

34

25

SOLVING

ASSIGNMENT PROBLEMS

Hungarian

Provides us with an efficient means of

finding the optimal solution without having

to make a direct comparison of every

option

Operates on a principle of matrix

reduction, which means that by

subtracting and adding appropriate

numbers in the cost table or matrix, we

can reduce the problem to a matrix of

opportunity costs

HUNGARIAN METHOD

1.

a. For the original cost matrix, identify each

rows minimum and subtract it from all

entries of the row

Person

Adam

Ben

Carlo

1

11

8

9

Project

2

14

10

12

3

6

11

7

HUNGARIAN METHOD

b.

each columns minimum and subtract it

from all the entries of the column

Person

Adam

Ben

Carlo

1

5

0

2

Project

2

8

2

5

3

0

3

0

HUNGARIAN METHOD

2.

whether optimal assignment can be made

Draw the minimum number of horizontal

and vertical lines covering all 0 entries

Person

Adam

Ben

Carlo

1

5

0

2

Project

2

6

0

3

3

0

3

0

HUNGARIAN METHOD

number of rows or columns in the table, an

optimal assignment can be made.

If the number of lines is less than the

number of rows or columns, proceed to

step 3

HUNGARIAN METHOD

3.

Select the smallest uncovered element

and subtract it from every uncovered

element and then add it to every

element at the intersection of two lines

Person

Adam

Ben

Carlo

1

5

0

2

Project

2

6

0

3

3

0

3

0

HUNGARIAN METHOD

Person

Adam

Ben

Carlo

Person

Adam

Ben

Carlo

1

5

0

2

Project

2

6

0

3

3

0

3

0

1

3

0

0

Project

2

4

0

1

3

0

5

0

HUNGARIAN METHOD

Repeat step 2

Project

Person

1

2

3

Adam

3

4

0

Ben

0

0

5

Carlo

0

1

0

Since the number of lines is equal to the

number of rows/columns, an optimal

assignment can be made

Select a row or column that contains only one zero

cell

An assignment can be made to that cell, and then

draw lines through its row and column

From the uncovered rows and columns continue

the above steps

Person

Adam

Ben

Carlo

1

3

0

0

Project

2

4

0

1

3

0

5

0

HUNGARIAN METHOD

Therefore,

assign Adam to Project 3, Ben to Project 2

and Carlo to Project 1.

The total labor costs of this assignment is

P25.

NOTE:

the original cost table

SPECIAL CASES

1.

A balanced assignment problem is one

in which the number of rows equals the

number of columns

We have an unbalanced assignment

problem if the number of people or

objects to be assigned does not equal

the number of tasks or clients or

machines listed in the columns

SPECIAL CASES

1.

If the number of rows is more than the

number of columns, add a dummy

column (i.e., dummy task)

If the number of columns exceeds the

number of rows, add a dummy row (i.e.,

dummy person

Since the dummy task or person is

really nonexistent, it is reasonable to

enter zeros in its row or column as the

cost or time estimate

SPECIAL CASES

2.

Some assignment problems are

phrased in terms of maximizing the

payoff, profit, or effectiveness

Maximization assignment problems

should first be converted to minimization

problems before we can use the

Hungarian method

This is done by subtracting each rating

from the largest rating in the table

The

patrol four sectors of the North Sea. In some

areas, ships are to be on the outlook for illegal

fishing boats, and in other sectors to watch for

enemy submarines, so the commander rates

each ship in terms of its probable efficiency in

each sector. These relative efficiencies are

illustrated in the table on the next slide. On the

basis of the ratings shown, the commander

wants to determine the patrol assignments

producing the greatest overall efficiencies

Sector

Ship

1

2

3

4

A

20

60

80

65

B

60

30

100

80

C

50

80

90

75

D

55

75

80

70

Sector

Ship

1

2

3

4

A

20

60

80

65

B

60

30

100

80

C

50

80

90

75

D

55

75

80

70

Sector

Ship

1

2

3

4

A

80

40

20

35

B

40

70

0

20

C

50

20

10

25

D

45

25

20

30

After converting the maximizing efficiency table

into the minimizing opportunity cost table above,

we can now use the assignment algorithm

SOURCES

Operations Research) Lecture Notes.

Quantitative Analysis for Management Studies. 9th

edition. New Jersey: Prentice Hall.

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