MBA 2019-21 BATCH

SEMESTER III
GC 302 DECISION SCIENCE
UNIT 1.3.1: TRANSPORTATION

Dr.Yogesh Bhowte
MODELS: INTRODUCTION, NWCM

1 Dr. Yogesh W Bhowte

 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Introduction:
 F.L. Hitchcock presented a study, in 1941, entitled “ The
Distribution of a product from several sources to numerous

Dr.Yogesh Bhowte
localities”. This is considered as the first step in solving
the transportation problems.
 In 1947, Koopmans presented an independent study,
“Optimum Utilization of the Transportation System”
 These two contributions helped in the development of
transportation methods.

2
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Introduction:
 The general transportation problem is concerned with
determining an optimal strategy for distributing a

Dr.Yogesh Bhowte
commodity from a group of supply centres, such as
factories, called sources, to various receiving centers, such
as warehouses, called destinations, in such a way as to
minimise total distribution costs.
 Each source is able to supply a fixed number of units of the
product, usually called the capacity or availability, and each
destination has a fixed demand, often called the requirement.

3
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Setting up a Transportation problem
A concrete company transports concrete from three plants, 1, 2
and 3, to three construction sites, A, B and C.

Dr.Yogesh Bhowte
The plants are able to supply the following numbers of tons per
week:
Plant 1 2 3
Supply Capacity 300 300 100
The requirements of the sites, in number of tons per week, are:
Construction site Demand (requirement)
Site A B C
Demand 200 200 300 4
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Setting up a Transportation problem
The cost of transporting 1 ton of concrete from each plant to
each site is shown in the below given table

Dr.Yogesh Bhowte
Cost/ton Plants
Sites A B C
1 4 3 8
2 7 5 9
3 4 5 5
For computational purposes it is convenient to put all the
above information into a table, In this table each row
represents a source and each column represents a
destination. 5
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Setting up a Transportation problem
The required matrix
To A B C Supply

Dr.Yogesh Bhowte
From
1 4 3 8 300

2 7 5 9 300

3 4 5 5 100

Demand 200 200 300 700

6
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
The Transportation problem
To A B C Supply
From

Dr.Yogesh Bhowte
1 C11 C12 C13
2 C21 C22 C23
3 C31 C32 C33
Demand

C11 is the cost of transporting one unit from plant 1 to site A

C12 is the cost of transporting one unit from plant 1 to site B
and so on.
7
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
General Structure of Transportation problem

To W1 W2 W3 Supply

Dr.Yogesh Bhowte
From

F1 X11
C11
X12
C12 C13 s1
F2 C21 C22 C23 s2
X23

F3 C31 s3
X31 C32 C33
Demand d1 d2 d3 ϵ s1….n =
ϵd1…..m 8
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Terminology of Transportation Problem:
1. Balanced Transportation Problem:
When the total supply capacity of all supply points is equal to

Dr.Yogesh Bhowte
the total demand of all destinations, it is called as balanced
transportation problem.
2. Unbalanced Transportation Problem:
When the total supply capacity of all supply points is not
equal to the total demand of all destinations, it is either less
than the total demand or more than the total demand, it is
called as unbalanced transportation problem.

9
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Terminology of Transportation Problem:
3. Dummy Source or destination: In order to balance the
unbalanced transportation problem, we need to add either a

Dr.Yogesh Bhowte
dummy source or a dummy destination to the problem with
zero cost in each cell of the dummy row/ column.
4. Initial Feasible solution: It is the solution that satisfies the
supply and demand conditions, yet it may or may not be
the optimum solution. There are three methods of obtaining
the initial feasible solution: a) North West Corner Method
(NWCM), b) Least Cost Method (LCM), c) Vogel’s
Approximation Method (VAM).
10
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Terminology of Transportation Problem:
5. Optimum Solution:
It is the feasible solution which also gives a transportation plan

Dr.Yogesh Bhowte
with minimum costs. The methods of obtaining the optimum
solution are: a) Stepping Stone Method, b) Modified
Distribution Method (MODI method).

11
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
General Procedure for solving a Transportation Problem:
Step1: Define the objective function to be minimized with the
constraints imposed on the problem.

Dr.Yogesh Bhowte
Step2: Set up the Transportation Table with m rows ,
representing sources and n columns, depicting destinations.
Step 3: Develop initial feasible solution to the problem.
Step 4: Test the feasibility of the initial solution. The initial
solution is feasible if the solution has number of allocations
= m+n-1, i.e. the independent allocated ( occupied) cell =
m+n-1. The allocated cells are called occupied cell and
others are called as unoccupied cells.
12
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
General Procedure for solving a Transportation Problem:
Step 5: Test the solution if feasible, for optimality, for that find
the opportunity costs for all unoccupied cells. If all

Dr.Yogesh Bhowte
unoccupied cells have opportunity costs >= o, i.e. non
negative, it indicates the solution is optimum. If any or
some unoccupied cells have negative opportunity costs then
further the solution to be improved.
Step 6: If the solution is not optimum, we need to improve it
by using Stepping Stone Method or MODI method
Step 7: Repeat step 4,5 and 6 till we get optimum solution.

13
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Methods of obtaining Initial Feasible Solution:
North West Corner Method (NWCM):
Steps in NWCM:

Dr.Yogesh Bhowte
Step 1: Select the North West corner cell in the transportation
table and allocate as many units as possible to it .
Step 2: Reduce the supply and demand of corresponding row
and column
Step 3: Cover the row/ column where the supply/demand gets
exhausted to get the reduced matrix
Step 4: Go to step 1 and repeat the process till all demand and
supply get exhausted .
14
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Practical Examples on NWCM:
Qu.1) Obtain the initial solution for the following
transportation problem by using NWCM

Dr.Yogesh Bhowte
1 2 3 Supply
A 10 3 9 400
B 12 10 5 300
C 8 11 12 300
Demand 200 300 500

Solution: Check whether the problem is balanced one. As the

total supply= total demand the problem is a balanced 15
transportation problem.
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Solution: Reconstruct the matrix and solve the TP

Dr.Yogesh Bhowte
1 2 3 Supply
A 10 3 9 400
200
200
B 12 10 5 300
C 8 11 12 300
Demand 200 300 500 1000
0
16
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Solution:

Dr.Yogesh Bhowte
1 2 3 Supply
A 10 3 9 400
200 200
200
0
B 12 10 5 300
C 300
Demand 200 8 300 11 500 12 1000
0 100
17
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Solution:
1 2 3 Supply
A 10 3 9 400

Dr.Yogesh Bhowte
200 200
200
0
B 12 10 5 300
100 200
C 300
8 11 12
Demand 200 300 500 1000
0 100
0
18
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Solution:
1 2 3 Supply
A 10 3 9 400

Dr.Yogesh Bhowte
200 200
200
0
B 12 10 5 300
100 200 200
C 300
8 11 12
Demand 200 300 300
500 1000
0 100
0
19
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Solution: Reconstruct the matrix and solve the TP

Dr.Yogesh Bhowte
1 2 3 Supply
A 10 3 9 400
200 200
B 12 10 5 300
100 200
C 8 11 12 300
300
Demand 200 300 500 1000

20
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Solution: The initial solution as per NWCM

Dr.Yogesh Bhowte
Supply To Units Cost/unit Total cost
From allotted
A 1 200 10 2000
A 2 200 3 600
B 2 100 10 1000
B 3 200 5 1000
C 3 300 12 3600
Total 1000 Total 8200
Costs 21
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Practical Examples on NWCM:
 Qu.2) Find the initial basic feasible solution of the following
transportation problem

Dr.Yogesh Bhowte
D1 D2 D3 D4 Supply
O1 10 20 5 7 10
O2 13 9 12 8 20
O3 4 15 7 9 30
O4 14 7 1 0 40
O5 3 12 5 19 50
Demand 60 60 20 10 22
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Solution: Check whether the given problem is balanced one
and then reconstruct the matrix and solve the TP
D1 D2 D3 D4 Supply

Dr.Yogesh Bhowte
O1 10 10 20 5 7 10 0
O2 13 9 12 8 20
O3 4 15 7 9 30
O4 14 7 1 0 40

O5 3 12 5 19 50

Demand 60 50 60 20 10 150 23
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Solution: Check whether the given problem is balanced one
and then reconstruct the matrix and solve the TP
D1 D2 D3 D4 Supply

Dr.Yogesh Bhowte
O1 10 10 20 5 7 10 0
O2 20 13 9 12 8 20 0
O3 4 15 7 9 30
O4 14 7 1 0 40
O5 12 5 19 50
3
Demand 60 50 60 20 10 150
24
30
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Solution: Check whether the given problem is balanced one
and then reconstruct the matrix and solve the TP
D1 D2 D3 D4 Supply

Dr.Yogesh Bhowte
O1 10 10 20 5 7 10 0
O2 20 13 9 12 8 20 0
O3 4 15 7 9 30 0
30
O4 14 7 1 0 40
O5 12 5 19 50
3
Demand 60 50 60 20 10 150
25
30 0
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Solution: Check whether the given problem is balanced one
and then reconstruct the matrix and solve the TP
D1 D2 D3 D4 Supply

Dr.Yogesh Bhowte
O1 10 10 20 5 7 10 0
O2 20 13 9 12 8 20 0
O3 4 15 7 9 30 0
30
O4 14 7 1 0 40 0
40
O5 12 5 19 50
3
Demand 60 50 60 20 20 10 150
26
30 0
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Solution: Check whether the given problem is balanced one
and then reconstruct the matrix and solve the TP
D1 D2 D3 D4 Supply

Dr.Yogesh Bhowte
O1 10 10 20 5 7 10 0
O2 20 13 9 12 8 20 0
O3 30 4 15 7 9 30 0
O4 40 0
14 40 7 1 0
O5 50 30
3 20 12 20 5 19 10 0
10
Demand 60 50 60 20 20 0 10 0 150
30 0 0 27
 302 DECISION SCIENCE:
UNIT 1.3.1: TRANSPORTATION MODELS
Solution: The initial solution as per NWCM
Supply To Units Cost/unit Total cost
From allotted

Dr.Yogesh Bhowte
O1 D1 10 10 100
O2 D1 20 13 260
O3 D1 30 4 120
O4 D2 40 7 280
O5 D2 20 12 240
O5 D3 20 5 100
O5 D4 10 19 190
28
Total 150 Total 1290
 Dr.Yogesh Bhowte
End of Lecture 1.3.1

29