MBA-103 :U-4

TRANSPORTATION PROBLEM

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 Introduction

• Special class of linear programming

• The objective is to minimize the cost of

distributing a product from a number of
sources to a number of destinations

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 Example 1

Retail Agency
Factories Capacity
1 2 3 4 5
1 9 13 36 51
1 50
24 12 16 20 1
2 100
14 33 1 23 26
3 150

Require- 60 50 50 40 300
100
ment

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 Formulation
Capacity Constraints
x11 + x12 + x13 + x14 + x15 ≤ 50
x21 + x22 + x23 + x24 + x25 ≤ 100
x31 + x32 + x33 + x34 + x35 ≤ 150
Requirement Constraints
x11 + x21 + x31 ≥ 100
x12 + x22 + x32 ≥ 60
x13 + x23 + x33 ≥ 50 x11, x12, ……, x35 ≥ 0.
x14 + x24 + x34 ≥ 50
The problem has 8 constraints and 15
x15 + x25 + x35 ≥ 40 variables.

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 Pre-requisites for an LP

• All units available must be supplied.

• The number of constraints must equal the
number of rows and number of columns
when we set up our transportation
problem.
• Number of routes should equal the
number of sources (m) plus the number of
destinations (n) minus one, i.e. there will
be m + n – 1

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 Transportation method
• The steps involved in transportation method
are:
Step 1: Determine a basic feasible solution,
using any one of the following three methods:
• North West Corner Method
• Least Cost Method
• Vogel Approximation Method
Step 2: Determine the optimal solution using
the MODI (Modified Distribution Method) or U-
V Method.

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 North west corner method

• The steps involved in transportation

method are:
o The method starts at the North West
(upper left) corner cell of the table.
o Allocate as much as possible to the
selected cell, and adjust the associated
amounts of capacity (supply) and
requirement (demand) by subtracting
the allocated amount.

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 North west corner method
 Cross out the row (column) with zero supply or
demand to indicate that no further assignments
can be made in that row (column).
 If both the row and column becomes zero
simultaneously, cross out one of them only, and
leave a zero supply or demand in the uncrossed
out row (column).
 If exactly one row (column) is left uncrossed out,
then stop. Otherwise, move to the cell to the right
if a column has just been crossed or the one
below if a row has been crossed out. Repeat step1

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 Example 1

Retail Agency Capacity/

Factories
1 2 3 4 5 Suppy
1 9 13 36 51
1 50
50
24 12 16 20 1
2 100
14 33 1 23 26
3 150
Require-
100 60 50 50 40 300
ment/dema
nd

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 Example 1

Retail Agency
Factories Capacity
1 2 3 4 5
1 9 13 36 51
1 50
50
24 12 16 20 1
2 100
50
14 33 1 23 26
3 150

Require- 100 60 50 50 40 300

ment 50

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 Example 1

Retail Agency
Factories Capacity
1 2 3 4 5
1 9 13 36 51
1 50
50
24 12 16 20 1
2 100
50 50
14 33 1 23 26
3 150

Require- 100 60 50 50 40 300

ment 50

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 Example 1

Retail Agency
Factories Capacity
1 2 3 4 5
1 9 13 36 51
1 50
50
24 12 16 20 1
2 100 50
50 50
14 33 1 23 26
3 150
10
100 60 50 50 40 300
Require-ment 50 10

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 Example 1

Retail Agency
Factories Capacity
1 2 3 4 5
1 9 13 36 51
1 50
50
24 12 16 20 1
2 100 50
50 50
14 33 1 23 26
3 150 140
10 50
100 60 50 50 40 300
Requirement 50 10

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 Example 1

Retail Agency
Factories Capacity
1 2 3 4 5
1 9 13 36 51
1 50
50
24 12 16 20 1
2 100 50
50 50
14 33 1 23 26
3 150 140 90
10 50 50 40
100 60 50 50 40 300
Requirement 50 10

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 Retail Agency
Factories Capacity
1 2 3 4 5
1 9 13 36 51
1 50
50
24 12 16 20 1
2 100 50
50 50
14 33 1 23 26
3 150 140 90
10 50 50 40
100 60 50 50 40 300
Requirement 50 10
Total cost =50*1+ 50*24+50*12+10*33+1*50+50*23 +40*26=
4420
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Least cost method/ Matrix Minima
Method
• The steps involved are:
o Start by allocating as much as possible to
the cell with the smallest unit cost(least).
o If there are two or more minimum costs
then we should select the row and the
column corresponding to the lower
numbered row.
o If they appear in the same row we should
select the lower numbered column.

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 Least cost method

• Cross out the satisfied row or column, and

adjust the amounts of capacity and
requirement accordingly.
• If both a row and a column are satisfied
simultaneously, only one is crossed out.
• Next, we look for the uncrossed-out cell
with the smallest unit cost and repeat the
process until we are left at the end with
exactly one uncrossed-out row or column.

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 Example

Retail Agency
Factories Capacity
1 2 3 4 5
1 9 13 36 51
1 50
50

24 12 16 20 1
2 100

14 33 1 23 26
3 150

100 60 50 50 40 300
Requirement

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 Example (contd.)

Retail Agency
Factories Capacity
1 2 3 4 5
1 9 13 36 51
1 50
50
24 12 16 20 1
2 100
40
14 33 1 23 26
3 150

100
60 50 50 40 300
Requirement 50

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 Example (contd.)

Retail Agency
Factories Capacity
1 2 3 4 5
1 9 13 36 51
1 50
50
24 12 16 20 1
2 100 60
40
14 33 1 23 26
3 150
50
100
60 50 50 40 300
Requirement 50

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 Example (contd.)

Retail Agency
Factories Capacity
1 2 3 4 5
1 9 13 36 51
1 50
50
24 12 16 20 1
2 100 60
60 40
14 33 1 23 26
3 150 100
50
100
60 50 50 40 300
Require-ment 50

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 Example (contd.)
Retail Agency
Factories Capacity
1 2 3 4 5
1 9 13 36 51
1 50
50
24 12 16 20 1
2 100 60
60 40
14 33 1 23 26
3 150 100
50 50

Require- 100
60 50 50 40 300
ment 50

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 Example (contd.)
Retail Agency
Factories Capacity
1 2 3 4 5
1 9 13 36 51
1 50
50
24 12 16 20 1
2 100 60
60 40
14 33 1 23 26
3 150 100 50
50 50 50
100
60 50 50 40 300
Require-ment 50

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 Example (contd.)

Retail Agency
Factories Capacity
1 2 3 4 5
1 9 13 36 51
1 50
50
24 12 16 20 1
2 100 60
60 40
14 33 1 23 26
3 150 100 50
50 50 50

Require- 100
60 50 50 40 300
ment 50

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 Example (contd.)

• So, transportation cost is :

Z=1 * 50 + 12 * 60 + 1 * 40 + 14 * 50
+ 1 * 50 + 23 * 50 = 2710

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 Vogel Approximation
Method (VAM)
• The steps involved in this method are:
o For each row (column) with positive capacity
(requirement), determine a penalty by
subtracting the smallest unit cost element in
the row (column) from the next smallest unit
cost element in the same row (column).
o Identify the row or column with the largest
penalty among all the rows and columns.
o If the penalties corresponding to two or more
rows or columns are equal we select the
topmost row and the extreme left column.

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 Example

Destination

Origin 1 2 3 4 ai
20 22 17 4
1 120

25 37 9 7
2 70

32 37 20 15
3 50

bj 60 40 30 110 240

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 Example (contd.)

Destination
Row
Origin 1 2 3 4 ai penalty
20 22 17 4
1 120 17-4 = 13
40
25 37 9 7
2 70
9-7=2
32 37 20 15
3 50
20-15 =5
bj 60 40 30 110 240
Column 25-20 =5 37-22 =15 17-9=8 7-4= 3
Penalty

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 Example (contd.)

Destination Colum
n
Origin 1 2 3 4 ai penalty
20 22 17 4 120 17-4 =
1 80
40 80 13
25 37 9 7
2 70
9-7=2
32 37 20 15 20-15
3 50
=5
bj 60 40 30 110 240
Row 25-20
X 17-9=8 7-4= 3
Penalty =5

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 Example (contd.)

Destination Colum
n
Origin 1 2 3 4 ai penalty
20 22 17 4 120
1 X
40 80 80
25 37 9 7
2 70
30 9-7=2
32 37 20 15 20-15
3 50
=5
bj 60 40 30 110 30 240
Row 32-25
X 20-9=11 15-7= 8
Penalty =7

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 Example (contd.)

Destination Colum
n
Origin 1 2 3 4 ai penalty
20 22 17 4 120
1 X
40 80 80
25 37 9 7 70 25-
2
30 30 40 7=18
32 37 20 15 32-15
3 50
=17
bj 60 40 30 110 30 240
Row 32-25
X X 15-7= 8
Penalty =7

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 Example (contd.)

Destination Colum
n
Origin 1 2 3 4 ai penalty
20 22 17 4 120
1 X
40 80 80
25 37 9 7 70 25-
2
30 30 40 7=18
32 37 20 15 32-15
3 50
=17
bj 60 40 30 110 30 240
Row 32-25
X X 15-7= 8
Penalty =7

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 Example (contd.)

Destination
Column
Origin 1 2 3 4 ai penalty
20 22 17 4 120
1 X
40 80 80
25 37 9 7 70 40
2
10 30 30 10 nil
32 37 20 15
3 50
nil
bj 60 40 30 110 30 240
Row 32-25
X X X
Penalty =7

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 Example (contd.)

Destination
Column
Origin 1 2 3 4 ai penalty
20 22 17 4 120
1 X
40 80 80
25 37 9 7 70 40
2
10 30 30 10 X
32 37 20 15
3 50
nil
bj 60 50 40 30 110 30 240
Row X X X X
Penalty

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 Example (contd.)

Destination
Column
Origin 1 2 3 4 ai penalty
20 22 17 4 120
1 X
40 80 80
25 37 9 7 70 40
2
10 30 30 10 X
32 37 20 15
3 50
50 X
bj 60 50 40 30 110 30 240
Row X X X X
Penalty

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 Example (contd.)
Since
Rim requirement =m+n-1 =3+4-1=6
Rim requirement = Stone square
6 = 6
The above solution is non-degenerate so
The transportation cost is:
Z = 22 * 40 + 4 * 80 + 10 *25 + 9 * 30
+ 7 * 30 + + 32 * 50 = 3530.

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Step 2: Determine the optimal
solution
• MODI method or u-v method: Example

Retail Agency
Capacit
Factories 1 2 3 4 5
y
1 9 13 36 51
1 50
50
24 12 16 20 1
2 100
60 40
14 33 1 23 26
3 150
50 10 50 40
Requirement 100 70 50 40 40 300

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Step 2: Determine the optimal
solution
From duality theory: Cij = ui + vj
C11 = u1 + v1 = 1
C22 = u2 + v2 = 12
C25 = u2 + v5 = 1 Here ui and vj are dual
C31 = u3 + v1 = 14 variable associated with
C32 = u3 + v2 = 33 row i and column j.
C33 = u3 + v3 = 1
C34 = u3 + v4 = 23

Since there are m + n (8) unknowns and m + n – 1 (7) equations

Substitute u3 = 0

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Step 2: Determine the optimal
solution
Retail Agency
Capac
Factories 1 2 3 4 5 ui
ity
1 9 13 36 51
1 50
50 -13
24 12 16 20 1
2 100
60 40 -21
14 33 1 23 26
3 150
50 10 50 40 0
Require
100 70 50 40 40 300
ment
vj 14 33 1 23 22

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Step 2: Determine the optimal
solution

• If for all empty cells i.e. if xij=0, cij – ui – vj

≥ 0, then the corresponding solution of
the transportation problem is optimum.
• If one or more cij – ui – vj < 0, select the
cell with the least value of cij – ui – vj and
allocate as much as possible subject to
the row and column constraints.

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Step 2: Determine the optimal
solution
Computing cij – ui – vj for each non-empty cell
Cell(1,2)= c12-u1-v2 = 9+13-33 = -11
Cell(1,3)= c13-u1-v3 = 13+13-1 = 25
Cell(1,4)= c14-u1-v4 = 36+13-23 = 26
Cell(1,5)= c15-u1-v5 = 51+13-22 = 42
Cell(2,1)= c21-u2-v1 = 24+21-14 = 31
Cell(2,3)= c23-u2-v3 = 16+21-1 = 36
Cell(2,4)= c24-u2-v4 = 20+21-23 = 18
Cell(3,5)= c35-u3-v5 = 26-0-22 = 4

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Step 2: Determine the optimal
solution
Retail Agency
Capaci
Factories 1 2 3 4 5 ty ui
- 1 + 9 13 36 51
1 50
50 -11 25 26 42 -13
+ 24 - 12 16 20 1
2 100
31 60 36 18 40 -21
14 33 1 23 26
3 150
50 10 50 40 4 0
Requireme 100 70 50 65 40 300
nt
vj 14 33 1 23 22

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Step 2: Determine the optimal
solution
Following simple rules will help us
determine the closed loop path.
• There can be only one increasing and
one decreasing cell in any row or
column
• Except for the entering cell, all changes
must involve nonempty (basic) cells.

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Step 2: Determine the optimal
solution
Retail Agency
Capaci
Factories 1 2 3 4 5 ty ui
- 1 + 9 13 36 51
1 50
40 10 -11 25 26 42 -13
+ 24 - 12 16 20 1
2 100
31 60 36 18 40 -21
14 33 1 23 26
3 150
60 0 50 40 4 0
Requireme 100 70 50 65 40 300
nt
vj 14 33 1 23 22

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Step 2: Determine the optimal
solution

• Thus, the revised basic feasible solution is

as follows:
x11=40, x12=10, x22=60, x25=40, x31=60,
x33=50, x34=40
and revised cost is
Z= 1*40+ 9*10+12*60+ 1*40+ 14*60+
1*50+23*40= 2700

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 Unbalanced transportation
problem
 Total supply is not equal to the total demand,

 If the total supply is more than the total

demand, introduce an additional column which
will indicate the surplus supply with
transportation cost zero.

 Similarly, if the total demand is more than the

total supply, introduce an additional row which
will indicate unsatisfied demand with
transportation cost zero

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 Example
 Consider the following unbalanced
transportation problem given in Table
Warehouse
Plant W1 W2 W3 Supply
X 20 17 25 400
Y 10 10 20 500
Demand 400 400 500

In this problem the demand is 1300 whereas the total

supply is 900. Thus, we now introduce an additional row
with zero transportation cost denoting the unsatisfied
demand

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 Degenerate transportation
problem

• In a transportation problem, if a basic

solution with m origins and n
destinations has less than m + n -1
occupied cells, then the problem is
said to be a degenerate transportation
problem.

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 Example
 Consider the following degenerate
transportation problem given in Table
Warehouse
Plant W1 W2 W3 Supply
(aj)
X 20 17 25 400
Y 10 10 20 500
Unsatisfied 0 0 0 400
demand
Demand (bj) 400 400 500 1300

Problem is degenerate because:

a1 = 400 = b1
a2 + a3 = 900 = b2 + b3
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 Transshipment problem

 In transshipment problem, the distinction

between an origin and destination is
dropped so that from a transportation
problem with m origins and n
destinations we obtain a transshipment
problem with m + n origins and m + n
destinations.

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 Transshipment problem

Depot
Plant X Y Z Supply
A 1 3 15 150
B 3 5 25 300
Demand 150 150 150 450

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 Transshipment problem

A B X Y Z Supply
A 0 55 1 3 15 150 + 450 =
600
B 2 0 3 5 25 300 + 450 =
750
X 3 15 0 25 2 450
Y 25 3 2 0 3 450
Z 45 55 55 3 0 450
Deman 450 450 150+450 150 + 150 +
d = 600 450 = 450 =
600 600

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Limitations of transportation
problem

• Difficult to generalize the technique to

accommodate :
• Economy of scale the per-unit cost of
transportation on a link decreasing with
the volume
• Fixed-cost of transportation usually
involves fixed charges
• Invalid for multiple commodities

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