What comes to the mind

when we look at the way

Flipkart is doing business?
The E-Commerce business…
…runs on a thin margin!
Therefore, the challenge before …

Sachin Bansal and Binny Bansal is to see

that the whole operations are running at
MINIMUM COST!!!
Sachin Bansal & Binny Bansal( Co-
Founder)
Sachin Bansal is an Indian billionaire
technology entrepreneur. He is best
known as the co-founder of  Flipkart,
that was acquired by  Walmart  (77%
stake) at $16 billion in 2018.During his
over 11-year career at Flipkart, Bansal
was CEO and chairman. In 2018,
Bansal exited Flipkart following the
Walmart deal.
One of the cost challenge is …
… transportation cost of the goods!

How to minimize this

transportation cost is one
of the biggest challenge?
Warehouses
of Flipkart are
located in the
following
cities, often
near airports.

Bangalore
Chennai
Delhi
Hyderabad
Mumbai
Noida
Pune
Kolkata
The Challenge is …
From which warehouse to which
destination how many units so that
the overall cost of transportation is
MINIMUM!!!!
Meet another
manager, who
is also facing
similar
problem…
From which route to supply goods to various
destinations so that the total logistic and
distribution cost is minimum!!!
Such Problems are called …
Transportation Problem
It is a problem involving distributing
any commodity from any group of
supply centers, called sources, to any
group of receiving centers, called
destinations, in such a way as to
minimize the total distribution cost
(shipping cost).
Assumptions of Transportation
Problem…
1. One commodity is to be transported.
2. There are m Sources and n Destinations.
3. Supply of each source and demand of each destination are given.
4. The total of demand is equal to total of supply.
5. Partial transportation of goods is not allowed.
6. Cost of distributing or transporting one unit from one source to
one destination is given.
7. The objective is to minimize the total distribution or
transportation cost.
8. There is complete certainty.
The Transportation Problem Model
is ….
Dest Dest Dest Dest Supply
1 2 3 4
Source 1 c11 c12 c13 c14 s1

Source 2 c21 c22 c23 c24 s2

Source 3 c31 c32 c33 c34 s3

Demand d1 d2 d3 d4
 Now, the challenge is how
to solve the

Transportation
Problem

How to solve?
We can obtain Initial Solution
using –
•North-West Corner Method
•Least Cost method
•Vogel’s Approximation
Method
We can obtain Initial Solution
using –
•North-West Corner Method
•Least Cost method
•Vogel’s Approximation
Method

We can obtain Optimum

Solution using –
•Stepping Stone
Method
•MODI
 Let’s get more insight into MODI
Method!!!!!
Consider the following Transportation
Problem:

  D1 D2 D3 Supply

S1 19 30 50 7

S2 70 30 40 9

Demand 5 4 7 16
 Let’s get more insight into MODI
Method!!!!!
Its Linear Programming formulation is as
thus :
MIN IMIZ E COS T  19 X 11  30 X 12  50 X 13  70 X 21  30 X 12  40 X 23
S ubject to
X 11  X 12  X 13  7
X 21  X 22  X 23  9
X 11  X 21  5
X 12  X 22  4
X 13  X 23  7
X ij  0; i  1,2 an d j  1,2,3
Let’s get more insight into MODI
Method!!!!!
Its Dual can be formulated as thus :
M AXIM IZ E Z *  7U 1  9U 2  5V1  4V 2  7V 3
S u bject to
U 1  V1  19
U 1  V 2  30
U 1  V 3  50
U 2  V1  70
U 2  V2  30
U 2  V3  40
U i  Un restricted Variables ; i  1, 2 an d
V j - Un restricted Variables ; j  1,2,3
Recall that …
IfPrimal has a non-zero Decision
Variable, then associated
Slack/Surplus in Dual will have a
zero VALUE! (Why?).

This property provides us the

following equation for all BASIC
CELLS:
U i  V j  C ij
Note that …
Ui+Vjin MODI is same as Zj of
Linear Programming.

And, Cij-Zj of Linear Programming is

C ij  (U i  V j )

of Linear Programming.
NOW, LET’S MOVE TO
SOME SPECIAL CASES…
Do we always get the VALUES of
Ui+Vj ?
Not Really!!!!

Ithappens in a situation we have

DEGENERACY in Transportation
Problem!

If
number of basic cells are less than
m+n-1, then we have degeneracy.
Some points to remember…
Every Transportation Problem has a
solution!!!!

It
can have multiple solution whenever
we get Cij - Ui+Vj = 0 for a non-basic cell.
Degeneracy in Transportation
Problem …
If there is a degeneracy in
Transportation Problem then one can not
find all values of Ui+Vj and as a
consequence, the whole process to get
optimum solution comes to a halt!

The way-out …… Create a BASIC CELL

by putting a very very small quantity
which is for all calculation purposes is
ZERO but theoretically it is not zero!
Some Special Cases…
Maximization Problem

Unbalanced Transportation Problem

Impossible routes.

Given Routes.

Conditional Allocations: Maximum, Only,

Minimum
Now, the time is for – Post
Optimality Analysis!!!!
Consider the following:
 That’s all about
Transportation Problem!!!

Any Question …???