MBA –LSCM

MODULE 3

Dr. Neeraj Anand

Prof. & HoD –DoTM, SoB
 Module 2
Session 17
Modes of Transportation
Methods of Transportation

Dr. Neeraj Anand

Nov., 2020
"Commodities are transported while people travel "
Modes of Transport
1. Road Transport
2. Rail Transport
3. Water Transport
4. Air Transport
5. Pipeline Transport
6. Intermodal Transport
Modes of Transport
Road Transport
• Most widely used mode
• Modal split is largest for trucks, more than 75%
volume is contributed to roads.
• Most convenient method.
• Most suitable for shorter routes (Less than 245 Km)
• Trucks – Door to door service
• Rail Road trucks (Kirloskar Brothers)
• Rivigo model (Newer business model)
Trailers
• 48’ and 53’ trailers suitable for long distance
• The standard pallet-rack measures 48 inches by 40 inches (length by
width)
• Empty truck Wt.: 36000 lbs
• Freight Wt.: 44000 lbs
Rail Transport
• Railroads account for the most ton-miles
of freight transported in the U.S.
• Rail cars:
• Carry three times the amount of
trucks
• Have very high economies of scale
• Are very cost efficient for long
distances
• Are three times more fuel efficient
than trucks
• Takes much more time to transport rail
cars (often over a week)
• Often transfer from one train to
another before reaching final
destination
• DFC (Dedicated Freight Corridors)
are under construction in India
Western Corridor – Dadri to Mumbai
Eastern Corroidor- Amritsar to Kolkata
https://www.railway-
technology.com/projects/dedicatedrailfreight/
Water Transport
• IWAI (Inland Waterway Authority of India) is the regulating body. First shipment took place
Between Varanasi to Haldia port.
• Most important, most commonly used for international trade
• ships account for 90% of int’l trade
• Limited by geographic area (water access only)
• Oceans, lakes, rivers
• Two main modes of water transport:
• Container ships
• Bulk carriers
• Kuhne Nagel, Allcargo, Maersk are leading logistics
companies for ocean shipping.
Allcargo is World’s no. 1 LCL consolidator company
• Having 300 Offices
Air Transport
• Not very common for freight transportation, wide body planes are used for
shipping cargo.
• Changi, Frankfurt airport are busy cargo airports in the world.
• Top choice for time-sensitive shipments (medical supplies), Electronic items
and gem stones are also shipped through this mode. Jaipur imports gem
stones from Tanzania and other countries and exports coloured gem stones to
other countries. Surat exports diamond jewellery.
• Some passenger airlines have a cargo division and freight can be transported
in the cargo bay on passenger aircrafts
Air Transport
• DHL Aviation provides services to various logistics service providers
across the globe.
• FedEx is another major logistics company contributing to air
transport.
 Transportation Models
• Introduction to TRANSPORTATION MODELS
• Types of TRANSPORTATION PROBLEM
• Mathematical Model of TRANSPORTATION PROBLEM
• TRANSPORTATION METHODS
• APPLICATIONS of TRANPORTATION MODEL
 INTRODUCTION
Transportation problem is one of the subclass of L.P.Ps in which the

objective is to transport various quantities of a single homogeneous

commodity, that are initially stored at various origins, to different

destination in such a way that the total transportation cost is

minimum. To achieve this objective, we must know the following:

1. The amount and location of available supplies and the quantities

demanded

2. The cost that result from transporting one unit of commodity

from various origins to various destinations
Contd..
The basic transportation problem was developed in1941 by
F.L.Hitchcock. However it could be solved for optimally as an answer
to complex business problem only in 1951, when George B. Dantzig
applied the concept of Linear Programming in solving the
Transportation models.
 (Contd.)
• An interactive procedure that finds the least costly means of moving products from a
series of sources to a series of destinations

• Can be used to
help resolve
distribution
and location
decisions
• MPT- cars are
exported by Maruti/
Volkswagen using
RORO.
 Demand
&
Transport Demand

• "At any one price, there is some quantity of a product which an

individual consumer is willing and able to purchase over a given
period of time. If the price changes, the quantity purchased will
change too.
• Economists call the relationship between the demand of a commodity
and the quantity QUAN purchased during some specified period of
time at the reasonable price for that commodity
 Transport Demand

Transport Demand is usually categorized as:

• Commodity or Goods movements, i.e. quantified by mass, weight,
volume or number of items.
• Person Travel, Passengers, Passenger Trips, People Movements, etc
 Types Of Transportation Problem
• Balanced Transportation Problem
• Unbalanced Transportation Problem
• Minimization Transportation Problem
• Maximization Transportation Problem
• Prohibited/Restricted Transportation Problem
• Transshipment Problem
 Mathematical Model of Transportation
Problem
Let ai = quantity of commodity available at origin i,
bj = quantity of commodity needed at destination j,
cij = cost of transporting one unit from origin i to destination j,
and xij = quantity transported from origin i to destination j
Then the problem is to determine the transportation schedule so as
to minimize the total transportation cost satisfying supply and
demand constraints.
 (Contd.)
Mathematically, the problem may be stated as a linear programming problem as follows :
m n

Minimize z = ∑ ∑xij cij subject to constraints :

i=1 j=1

∑ xij = ai , i= 1,2,….m
j=1

∑ xij = bj , j= 1,2……..n and

i=1

xij ≥ o , for all i and j

 (Contd.)
• To facilitate presentation and solution, the transportation problem
is generally portrayed in a tabular form as shown below:
Destination Supply
1 2 ….. n
1 C11 C12 ….. a1
C1n
Origin 2 C21 C22 ….. a2
C2n
….. …… …….. …… ….
……
m Cm1 Cm2 …… am
Cmn

Demand b1 b2 …… bn
 Methods of Transportation
Step 1. Formulate the problem and set up in the matrix form
Step 2. Obtain an initial basic feasible solution by using
NWCM/LCM/VAM.
Step 3. Test the initial solution for optimality by applying
MODI/Stepping Stone method.
Step 4. Updating the solution for obtaining the optimal solution.
 Applications
The common uses are for Planning, Design, Operations and
Management. Each of the functions requires that the models reflect
behavior of the chosen system and scenario. Each of the comments
below applies equally to the four activities mentioned above.
However the costs and difficulties of complicated modeling should be
matched with the expected payoff from the exercise.
Freighters are used for shipping goods through air for export/import.
Indigo and other airlines have started using Passenger planes for cargo
also, known as Combo model.
 Solution by
NORTH WEST CORNER METHOD

• It is a simple method to obtain an initial solution.

• This method does not take into account the cost of transportation on
any route of transportation.
 City 1 City 2 City3 City4 SUPPLY

Plant 1 $8 35 $6 $10 $9 35
Plant 2 $9 10 $12 20 $13 20 $7 50
Plant3 $14 $9 $16 10 $5 30 40

DEMAND 45 20 30 30 125

• The Transportation cost from

Plant 1―City 1: 35*8=280
Plant 2 ― City 1: 10*9=90
Plant 2 ― City2: 20*12=240
Plant 2― City3: 20*13=260
Plant 3 ― City3:10*16=160
Plant 3 ― City4:30*5=150
Therefore total transportation cost comes out to be:1180 11180
 Solution by
LEAST COST METHOD
Since the objective of transportation problem is to minimize the total
transportation cost, we must try to transport as much as possible
through those routes (cells) where the unit transportation cost is
lowest.
This method takes into account the minimum unit cost of
transportation for obtaining initial solution .
 City 1 City 2 City3 City4 SUPPLY

Plant 1 $8 15 $6 20 $10 $9 35
Plant 2 $9 30 $12 $13 20 $7 50
Plant3 $14 $9 $16 10 $5 30 40

DEMAND 45 20 30 30 125

The Transportation cost from

Plant 1―City 1: 15*8=120
Plant 1 ― City 2: 20*6=120
Plant 2 ― City1: 30*9=270
Plant 2― City3: 20*13=260
Plant 3 ― City3:10*16=160
Plant 3 ― City4:30*5=150
Therefore total transportation cost comes out to be:
$1080$1080
 Solution by
VOGEL's APPROXIMATION METHOD
Vogel’s approximation (penalty or regret) method is a heuristic
method and is preferred to the other two methods. In this method,
• Each allocation is made on the basis of the opportunity cost that
would have been incurred if allocations in certain cells with unit
transportation cost were missed . Allocation are made to minimize
the penalty cost.
• It gives an initial solution which is closer to an optimal solution or is
the optimal solution itself.
 City 1 City 2 City3 City4 SUPPLY

Plant 1 $8 $6 10 $10 25 $9 35
Plant 2 $9 45 $12 $13 5 $7 50
Plant3 $14 $9 10 $16 $5 30 40

DEMAND 45 20 30 30 125

The Transportation cost from

Plant 1―City 2: 10*6=60
Plant 1 ― City 3: 25*10=250
Plant 2 ― City1: 45*9=405
Plant 2― City3: 5*13=65
Plant 3 ― City2: 10*9=90
Plant 3 ― City4: 30*5=150
Therefore total transportation cost comes out to be: $ 1020 $1020
Reference
• https://www.railway-technology.com/projects/dedicatedrailfreight/
• https://creativecommons.org
• https://aviationcargo.dhl.com/
• https://www.allcargologistics.com/
THANK YOU