CHAPTER 4

Transportation Problems
 4.1 Introduction
• The transportation problem deals with the distribution of goods from several
points of supply (sources) to a number of points of demand (destinations). The
objective of such a problem is to schedule shipments from sources to
destinations so that total transportation and production costs are minimised.
• The assignment problem refers to the class of linear programming problems that
involve determining the most efficient assignment of people to projects,
salespeople to territories, contracts to bidders, jobs to machines and so on. The
objective is most often to minimise total costs or total time of performing the
tasks at hand.
 4.2 Transportation Problems
The transportation problems are usually referred to distribution-type problems in
which supplies of goods that are held at various locations are to be distributed to
other receiving locations.

4.2.1 Formulating a Transportation Problem

1. Supply quantity (capacity) of each source (si); i = 1, ..., m, where m is the
number of sources.
2. Demand quantity of each destination (dj); j = 1, ..., n, where n is the number of
destinations.
3. Unit transportation cost (cij) for each source-destination route.
 4.2.1 Formulating a Transportation Problem

Schematic Diagram of a General Transportation Tableau

Transportation Problem
 4.2.1 Formulating a Transportation Problem
Example 4.1
Consider a transportation problem as given in table below and construct the
corresponding linear programming model.

Solution 4.1
 4.2.2 The Transportation Algorithm
Two phases in the transportation algorithm for solving transportation problems.
1. Determine a basic feasible starting solution.
• Northwest corner method
• Least-cost method
• Vogel approximation method (VAM)
2. Determine an optimal solution or allocation using a (balanced) starting
solution obtained in (1).
• Stepping-Stone method
• Modified distribution (MODI) method
4.2.3 Starting Procedures (1): Northwest Corner Method
4.2.4 Starting Procedures (2): Least-cost Method
4.2.5 Starting Procedures (3): Vogel Approximation
Method
 4.2.6 Unbalanced Transportation Problem
2 cases :
• Total supply exceeds total demand - to balance the problem, create a dummy
(fictitious) destination that has a demand equal to (total supply – total
demand).
• Total supply less than total demand - to balance the problem, create a dummy
(fictitious) source which is able to supply an amount (total demand – total
supply).
 4.2.7 Optimal Allocation (1): Stepping-stone Method
Steps to test for possible improvement :
1. Select an unoccupied square to be evaluated.
2. Beginning at this square, trace a closed path back to the original square via
squares that are currently being occupied (only horizontal and vertical moves
are allowed).
3. Beginning with a plus (+) sign at the unoccupied square, place alternate
minus (−) signs and plus signs on each corner square of the closed path just
traced.
4. Calculate an improvement index by adding together the unit cost values
found in each square containing a plus sign and then subtracting the unit cost
values in each square containing a minus sign.
5. Repeat steps l to 4 until an improvement index has been calculated for all
unoccupied squares. If all indices computed are greater than or equal to zero,
an optimal solution has been reached. If not, it is possible to improve the
current solution.
4.2.7 Optimal Allocation (1): Stepping-stone Method
Balanced northwest corner starting solution
 4.2.7 Optimal Allocation (1): Stepping-stone Method
Steps to obtain an improved solution :
1. Select an unoccupied square (route) with negative improvement index. If
there were more than one negative index, select the one with the largest
negative index.
2. Allocate the maximum allowable number of units (or quantity) on the new
route (the selected unoccupied square). That quantity is found by referring to
the closed path of plus and minus signs drawn for the route and selecting the
smallest number found in those occupied squares containing minus signs.
3. To obtain a new solution, the number selected in Step 2 is added to all
squares on the closed path with plus signs and subtracted from all squares
with minus signs.
4. To determine whether the new solution is optimal or otherwise further
improvement is possible, we return to the Five Steps given earlier.
 4.2.7 Optimal Allocation (1): Stepping-stone Method
Second solution

Third and final solution

Total transportation
cost = (3x35) + (8×5)
+ (4×50) + (2×55) +
(10x15) + (0x10) =
$605
 4.2.8 Optimal Allocation (2): MODI Method
Steps of modified distribution method :
Let Ri = value assigned to row i and Kj = value assigned to column j
1. Compute the values of Ri and Kj for each row and column by setting R1 = 0 and using Ri + Kj
= cij only for occupied squares.
2. Compute the improvement index for each unoccupied square, I ij = cij – Ri – Kj. If all indices
are more than or equal to zero, then the current solution is optimal. Otherwise, if there is
one or more negative index, go to step 3.
3. Select the square with the largest negative index (becomes occupied in the next tableau).
Trace a closed path back to this square via occupied squares, with only horizontal and
vertical moves. For a feasible solution, these closed paths exist and are unique.
4. Beginning with a plus (+) sign at the selected square, label alternate minus (−) signs and
plus signs on each corner square of the closed path. Select the corner square with minus
sign and minimum allocated value (becomes unoccupied in the next tableau).
5. Set up a new transportation tableau. Add or subtract the value currently allocated in the
selected corner square with each value allocated in the other corner squares (according to
sign). The values in the other occupied squares remain the same. The new tableau is now
obtained. Go to step (1).
 4.2.8 Optimal Allocation (2): MODI Method
First Transportation Tableau
 4.2.8 Optimal Allocation (2): MODI Method
Second Transportation Tableau
 4.2.8 Optimal Allocation (2): MODI Method
Third and Final Transportation Tableau

Total transportation cost = (3x35) + (8×5) + (4×50) + (2×55) + (10x15) + (0x10) =

$605
 4.2.9 Maximisation Transportation Problems
Example 4.10
Consider the following (balanced) transportation problem with unit
profit ($) for each route. Find the optimal allocation from the three
sources to the three destinations that maximises the total profits.
 4.2.9 Maximisation Transportation Problems
Solution 4.10
Multiply all unit profits by -1, and then proceed using the least-cost method.

Least-Cost Starting Solution

 4.2.9 Maximisation Transportation Problems
Solution 4.10
Optimal Transportation Tableau

Total profit (maximised) = 550(15) + 120(13) + 700(14) + 350(11) + 80(12) = $24,420

4.2.10 Degeneracy And Alternative Optimal Solutions
1. Degeneracy - the current solution is not basic, i.e. the number of occupied
squares in a transportation tableau is less than (m + n – 1)
2. Alternative Optimal Solutions - there is a zero under a non-basic variable in
final row (Cj – Zj)
 4.2.11 Sensitivity Analysis
1. Sensitivity on Costs
• Sensitivity on cij when the square is unoccupied
• Sensitivity on cij when the square is occupied
2. Sensitivity on Supplies and Demands
• Increase in si and dj where the square is occupied
• Increase in si and dj where the square is unoccupied