DISTRIBUTION

MODELS
MGT 208 MANAGEMENT SCIENCE
Learning Objectives:
At the end of the lessons, the students are expected to:
1.formulate distribution models;
2.analyze and solve transportation problems; and
3.analyze and solve assignment problems.
DISTRIBUTION MODEL
◦ A distribution problem is a special type of linear programming problem.
There are two main types of distribution problems:
 Transportation Problem
 Assignment Problem
Transportation Problem
◦ items are allocated from sources to destinations at a minimum cost.
◦ It is formulated for a class of problems with the following unique
characteristics:
(1) A product is transported from a number of sources to a number of
destinations at the minimum possible cost; and
(2) each source is able to supply a fixed number of units of the product,
and each destination has a fixed demand for the product.
Transportation Problem
◦ The transportation problem was first formulated by Frank Lauren
Hitchcock in 1941 who also proposed a solution procedure similar
to the general Simplex method.
◦ The usual objective in a transportation problem is to minimize the
cost of shipping goods from the origins to the destinations.
For Example:
◦ Wheat is harvested in the Midwest and stored in grain elevators in three different cities—Kansas City, Omaha, and Des
Moines. These grain elevators supply three flour mills, located in Chicago, St. Louis, and Cincinnati. Grain is shipped to
the mills in railroad cars, each car capable of holding 1 ton of wheat. Each grain elevator is able to supply the following
number of tons (i.e., railroad cars) of wheat to the mills on a monthly basis:

The cost of transporting 1 ton of wheat from each grain elevator

(source) to each mill (destination) differs, according to the distance
and rail system. These costs are shown in the following table:

Each mill demands the following

number of tons of wheat per month:
 Mill A B C
Grain SUPPLY
Elevator
Chicago St. Louis Cincinnati

1 Kansas $6 $8 $10 150

2 Omaha $7 $11 $11 175

3 Des Moines $4 $5 $12 275

DEMAND 200 100 300 600

600
◦ If the total supply equals the total demand, the model is termed
balanced transportation model. In real-life situations the problem is
usually unbalanced, i.e. the total demand exceeds the total supply, or
the total supply exceeds the total demand.

◦ Unbalanced models can be transformed into balanced by introducing

a dummy source or destination. Whereas shipments from a dummy
source correspond to unsatisfied requirements, shipments to a
dummy destination represent remains of suppliers.
 Unbalanced Transportation Model

◦ DEMAND > SUPPLY ◦ DEMAND < SUPPLY

Add a dummy row Add a dummy
with a cost zero and supply column with a cost zero
equals to (demand – and demand equals to
supply). (supply - demand).
Northwest Corner Rule
◦ The procedure for constructing an initial basic feasible solution selects the
basic variables one at a time. The method begins with an allocation at the top
left-hand corner of the tableau and proceeds systematically along either a row
or a column and make allocations to subsequent cells until the bottom right-
hand corner is reached, by which time enough allocations will have been made
to constitute an initial solution.
 Mill A B C
Grain SUPPLY
Elevator
Chicago St. Louis Cincinnati

1 Kansus $6 $8 $10 150

2 Omaha $7 $11 $11 175

3 Des Moines $4 $5 $12 275

DEMAND 200 100 300

 Mill A B C
Grain SUPPLY
Elevator
Chicago St. Louis Cincinnati
150
1 Kansus $6 $8 $10 150

50 100 25
2 Omaha $7 $11 $11 175

275
3 Des Moines $4 $5 $12 275

DEMAND 200 100 300

Minimum Cost Method(MCM)
◦ Find the cell with the lowest unit cost. Should there be a tie, choose randomly.
Place in this cell a value that exceeds neither supply nor demand constraint.
Repeat this procedure until all supplies and demands have been allocated.
 Mill A B C
Grain SUPPLY
Elevator
Chicago St. Louis Cincinnati

1 Kansus $6 $8 $10 150

2 Omaha $7 $11 $11 175

3 Des Moines $4 $5 $12 275

DEMAND 200 100 300

Vogel’s Approximation Method (VAM)
1. Subtract the lowest and second lowest values in each row and column.
Select the cell in the row and column with the largest opportunity cost
(largest difference).
2. Insert the value in the selected cell the highest value that satisfies the supply
and demand. Adjust the amount of supply (or demand) accordingly.
3. Remove rows with no available supply and columns with no unsatisfied
demand.
4. Repeat steps 1 to 3 for the remaining rows and columns until all cells are
used up.
 A B C
SUPPLY
Chicago St. Louis Cincinnati

1 Kansus $6 $8 $10 150

2 Omaha $7 $11 $11 175

3 Des Moines $4 $5 $12 275

DEMAND 200 100 300

Stepping Stone Method (SSM)
1. Select an unused square to be evaluated.
2. Trace a closed path beginning with unused square (water square)
and finally returning back to same unused square.
Rules for Closed Path
a) Only right angle turn is allowed.
b) Only stepping at stone square is allowed.
c) The path may skip over stone square as well as water square.
d) Assign (+) and (-) sign alternatively starting (+) sign at unused square (either
clockwise or anticlockwise)
e) Calculate improvement indices. If all are either positive or 0 then our solution is
optimal otherwise chose the most negative valued closed path and make
following improvements.
f) Chose minimum value from cells having (-) sign. Add this to the cells having
(+) signs and subtract from the cells having (-) signs.
 Mill A B C
Grain SUPPLY
Elevator
Chicago St. Louis Cincinnati
150
1 Kansus $6 $8 $10 150

175
2 Omaha $7 $11 $11 175

25 100 150
3 Des Moines $4 $5 $12 275

DEMAND 200 100 300

WATER SQUARE CHANGE IN COST

1,A 6-4+12-10 = 4
1,B
2,B
2,C
 Mill A B C
Grain SUPPLY
Elevator
Chicago St. Louis Cincinnati
150
1 Kansus $6 $8 $10 150

175
2 Omaha $7 $11 $11 175

25 100 150
3 Des Moines $4 $5 $12 275

DEMAND 200 100 300

WATER SQUARE CHANGE IN COST

1,A 6-4+12-10 = 4
1,B 8-5+12-10 = 5
2,B
2,C
 Mill A B C
Grain SUPPLY
Elevator
Chicago St. Louis Cincinnati
150
1 Kansus $6 $8 $10 150

175
2 Omaha $7 $11 $11 175

25 100 150
3 Des Moines $4 $5 $12 275

DEMAND 200 100 300

WATER SQUARE CHANGE IN COST

1,A 6-4+12-10 = 4
1,B 8-5+12-10 = 5
2,B 11-7+4-5 = 3
2,C
 Mill A B C
Grain SUPPLY
Elevator
Chicago St. Louis Cincinnati
150
1 Kansus $6 $8 $10 150

175
2 Omaha $7 $11 $11 175

25 100 150
3 Des Moines $4 $5 $12 275

DEMAND 200 100 300

WATER SQUARE CHANGE IN COST

1,A 6-4+12-10 = 4
1,B 8-5+12-10 = 5
2,B 11-7+4-5 = 3
2,C 11-7+4-12 = -1
 Mill A B C
Grain SUPPLY
Elevator
Chicago St. Louis Cincinnati
150
1 Kansus $6 $8 $10 150

175
2 Omaha $7 $11 $11 175

25 100 150
3 Des Moines $4 $5 $12 275

DEMAND 200 100 300

WATER SQUARE CHANGE IN COST

1,A 6-4+12-10 = 4
1,B 8-5+12-10 = 5
2,B 11-7+4-5 = 3
2,C 11-7+4-12 = -1
 Mill A B C
Grain SUPPLY
Elevator
Chicago St. Louis Cincinnati
150
1 Kansus $6 $8 $10 150

25 150
2 Omaha $7 $11 $11 175

175 100
3 Des Moines $4 $5 $12 275

DEMAND 200 100 300

WATER SQUARE CHANGE IN COST

1,A 6-10+11-7= 0
1,B
2,B
3,C
 Mill A B C
Grain SUPPLY
Elevator
Chicago St. Louis Cincinnati
150
1 Kansus $6 $8 $10 150

25 150
2 Omaha $7 $11 $11 175

175 100
3 Des Moines $4 $5 $12 275

DEMAND 200 100 300

WATER SQUARE CHANGE IN COST

1,A 6-10+11-7= 0
1,B 8-5+4-7+11-10 = 1
2,B
3,C
 Mill A B C
Grain SUPPLY
Elevator
Chicago St. Louis Cincinnati
150
1 Kansus $6 $8 $10 150

25 150
2 Omaha $7 $11 $11 175

175 100
3 Des Moines $4 $5 $12 275

DEMAND 200 100 300

WATER SQUARE CHANGE IN COST

1,A 6-10+11-7= 0
1,B 8-5+4-7+11-10 = 1
2,B 11-7+4-5 = 3
3,C
 Mill A B C
Grain SUPPLY
Elevator
Chicago St. Louis Cincinnati
150
1 Kansus $6 $8 $10 150

25 150
2 Omaha $7 $11 $11 175

175 100
3 Des Moines $4 $5 $12 275

DEMAND 200 100 300

WATER SQUARE CHANGE IN COST

1,A 6-10+11-7= 0
1,B 8-5+4-7+11-10 = 1
2,B 11-7+4-5 = 3
3,C 12-4+7-11 = 8
 Mill A B C
Grain SUPPLY
Elevator
Chicago St. Louis Cincinnati
150
1 Kansus $6 $8 $10 150

25 150
2 Omaha $7 $11 $11 175

175 100
3 Des Moines $4 $5 $12 275

DEMAND 200 100 300

WATER SQUARE CHANGE IN COST

1,A 6-10+11-7= 0
1,B 8-5+4-7+11-10 = 1
2,B 11-7+4-5 = 3
3,C 12-4+7-11 = 8

Z=
Assignment Problem
The assignment problem refers to the class of linear programming
problems that include determining the most efficient assignment of
people to projects, salespeople to territories, contracts to bidders, jobs
to machines, and etc. The goal of the method is to minimize the total
costs or total time of performing the tasks at hand.
For example:
◦ The Atlantic Coast Conference (ACC) has four basketball games on a particular night. The conference office wants to
assign four teams of officials to the four games in a way that will minimize the total distance traveled by the officials.
The supply is always one team of officials, and the demand is for only one team of officials at each game. The
distances in miles for each team of officials to each game location are shown in the following table
Hungarian Method
Step 1: Find the minimum of each row, and subtract from each row the minimum
value.
Step 2: Find the minimum of each column, and subtract from each column the
minimum value.
Step 3: Find the minimum number of vertical/ horizontal lines required to cover zeros
in the matrix.
- if the number of lines is equal to m, the optimal solution is available among
the covered zeros otherwise proceed to step 4.

Step 4: Find the minimum uncovered values. Then, subtract the minimum from all
uncovered values and add it to the corner points. Then go back to step 3.