INTRODUCTION

Introduction Continued
• The transportation algorithms help to minimize the total cost
of transporting a homogenius commodity(product) from
supply centers to demand centers.However it can also be
applied to the maximization of total value of utility.There are
various types of transportation models and the simplest of
them was first presented by F L Hitchcock (1941).It was
further developed by TC Koopmans (1949) and G B
Dantzig(1951).Several extension of transportation models and
methods have been subsequently developed.
MATHEMATICAL MODEL OF TRANSPORTATION
PROBLEM(Introduction)
 A Mathematical Model Of Transportation
Problem(Illustrative Example)
• A company has three production facilities S1,S2 and
S3 with production capacity of 7.,9 and 18 units(in
100’s per week),respectively.These units are to be
shipped to four warehouses D1,D2,D3 and D4 with
requirement of 5,6,7 and 14 units(in 100’s)per week
respectively.The transportation costs (in rupees) per
unit between factories to warehouses are given in
the table below.
 Table

D1 D2 D3 D4 Supply
(availablity)
S1 19 30 50 10 7
S2 70 30 40 60 9
S3 40 8 70 20 18
Demand 5 8 7 14 34
(requirement

Formulate this transportation problem as an LP model to minimize the total transportation

cost
Model Formulation
Initial Solution Condition
 The transportation algorithm
• The algorithm to solve a transportation problem may be sumarized
into the following steps.
Step1: Formulate the problem and arrange the data in
tabular form
The formulation of the transportation problem is similar to the LP
problem formation.In transportation problem the objective
function
is the total transportation cost and the constraints are the
amount of supply and demand available at each sourceand
destination respectively.
A dairy firm has three plants located in a state. The daily milk production
at each plant is as follows :
Plant 1: 6 million litres , Plant 2: 1 million litres , and Plant 3: 10 million
litres .

Each day, the firm must fulfil the needs of its four distribution centres.
The minimum requirement of each centre is as follows :

Distribution centre 1 : 7 million litres , Distribution centre 2: 5

million litres ,
Distribution centre 3: 3 million litres , and Distribution centre 4: 2
million litres .

Cost (in hunderds of rupees) of shipping one million litre from each plant
to each distribution centre is given in the following table :
 Distribution Centre.

D₁ D₂ D₃ D₄
P₁ 2 3 11 7
P₂ 1 0 6 1
P₃ 5 8 15 9

Find the initial basic feasible solution for given problem by using following
methods :
(a) North-west corner rule .
(b) Least cost method.
(c) Vogel’s approximation method.

Solution (a) North- West Corner Rule

 Solution (a) North- West Corner Rule

D₁ D₂ D₃ D₄
• Distribution Centre. Supply
P₁ 2 6 3 11 7 6=a₁

P₂ 1 1 0 6 1 1=a₂

P₃ 5 8 5 15 3 9 10=a₃
2

Demand 7= b₁ 5= b₂ 3=b₃ 2=b₄

 North-West Corner Rule .

(i) Comparing a₁ and b₁, since a₁ < b₁ ; allocate x₁₁ = 6. This exhausts the
supply at P₁ and leaves 1 unit as unsatisfied demand at D₁ .

(ii) Move to cell (P₂, D₁). Compare a₂ and b₁ (i.e 1 and 1). Since a₂= b₁,
allocate x₂₁ = 1.

(iii) Move to cell (P₃, D₂). Since supply at P₃, is equal to the demand at
D₂,D₃, D₄, therefore , allocate x₃₂ = 5, x₃₃= 3 and x₃₄=2.

It may be noted that the number of allocated cells (also called basic cells)
are 5 which is one less than the required number m + n – 1 ( 3+ 4 – 1 = 6).
Thus , this solution is the degenerate solution . The transportation cost
associated with this solution is:
Total cost = Rs( 2 * 6 + 1*1+ 8*5 + 15*3+ 9*2)*100= Rs 11600.
 (b)Least Cost Method .

Distribution Centre .

D₁ D₂ D₃ D₄ Supply
P₁ 2 3 11 7 6
6
P₂ 1 0 6 1 1
1
P₃ 5 8 15 9 10
1 4 3 2

Demand 7 5 3 2
 Least Cost Method.

(i) The lowest unit cost in table is 0 in cell (P₂, D₂), therefore the maximum
possible allocation that can be made is 1 unit. Since this allocation exhausts
the supply at plant P₂, therefore row 2 is crossed off.
(ii) The next lowest unit cost is 2 in cell ( P₁, D₁ ). The maximum possible
allocation that can be made is 6 units. This exhausts the supply at plant P₁,
therefore , row P₁ is crossed off.
(iii) Since the total supply at plant P₃ is now equal to the unsatisfied demand
at all the four distribution centres , therefore , the maximum possible
allocations satisfying the supply and demand conditions are made in cells
(P₃, D₁), (P₃, D₂), ( P₃, D₃) and (P₃, D₄).

The number of allocated cells in this case are six, which is equal to the
required number m + n- 1 (3 + 4 – 1= 6). Thus, this solution is non-degenerate.
The transportation cost associated with this solution is
Total cost = Rs( 2*6 + 5*1 + 8*4 + 15 *3 + 9*2) * 100 = Rs 11,200 .
 (c) Vogel’s Approximation Method :

• First calculating penalties as per rules and then allocations are made in
accordance of penalties as shown in table.

D₁ D₂ D₃ D₄
P₁ 2 3 11 7
1 5
P₂ 1 0 6 1
1
P₃ 5 6 8 15 9
3
1
Dem 7 5 3 2
and 1 3 5 6
Col.p 3 5 4 2
lt. 5 4 2
 VAM Method

• The number of allocated cells in table are six, which is equal to the
required number m+n-1(3+4-1=6), therefore , this solution is non-
degenerate. The transportation cost associated with this solution is :
• Total cost = Rs (2*1 + 3*5 + 1*1 + 5*6 + 15*3+ 9*1) *100 = Rs 10,200.
• Remark : Total transportation cost found by VAM is lower than the
costs of transportation determined by the NWCR and LCM methods.
Therefore , it is of advantage to use this method in order to reduce
computational time required to obtain optimum solution.
 Prohibited Transportation Routes Problem
If situations like road hazards (snow, flood, etc.), traffic regulations, etc., arise, then it may
not be possible to transport goods from certain sources to certain destinations. Such
situations can be handled by assigning a very large cost, say M (or ∞ ) to such a route(s) (or
cell)

Example: Consider the problem of scheduling the weekly production of certain items for the next four weeks.

The production cost of the item is Rs 10 for the first two

weeks and Rs 15 for the last two weeks.

The weekly demands are 300, 700, 900 and 800,which must be met.

The plant can produce a maximum of 700 units per week.

In addition, the company can use overtime during the
second and third week.

This increases the weekly production by an additional 200 units, but the production cost
also increases by Rs 5.Excess production can be stored at a unit cost of Rs 3 per week.

How should the production be scheduled so as to minimize the total cost?

 The given information is presented as a transportation problem in above Table.
The cost elements in each cell are determined by adding the production cost, the overtime cost of
Rs 5, and the storage cost of Rs 3
Thus, in the first row, the cost of Rs 3 is added during second week onward. Since the output of any
period cannot be used in a period preceding it, the cost element is written in the appropriate cells.
A dummy column has been added because the supply exceeds demand.
Apply Vogel’s method to get initial solution of the given transportation problem and
apply MODI method to get optimal transportation schedule.
Degeneracy occurs at the initial basic feasible solution stage. Degeneracy may be removed by adding ∆
in the cell (R2, Dummy).

The optimal solution is shown in below

 The production schedule is given in below Table:

The total minimum cost for the optimal production schedule given in above table is
Total cost = 10 × 300 + 16 × 200 + 19 × 100 + 10 × 700 + 15 × 700 + 15 × 700
= Rs 36,100
QUESTION: Consider a firm having two factories. The firm is to ship its
products from the factories to three retail stores. The number of units
available at factories X and Y are 200 and 300, respectively, while those
demanded at retail stores A, B and C are 100, 150 and 250, respectively.
Rather than shipping the products directly from factories to retail stores, it is
asked to investigate the possibility of trans-shipment. The transportation
cost (in rupees) per unit is given in the table:
The number of units available at X and Y are 200 and 300, respectively and the demand at A, B
and C is 100, 150 and 250, respectively. The maximum amount which can be transported through
a factory or retail store is the total supply and demand, i.e. N = 500 units. If all these 500 units are
not transported through a factory or retail store, then the remaining units will play the role of
dummy. The trans-shipment table is shown in Table 9.54 where 500 units have been added to the
supply and demand at factory and to a retail store.
The initial solution to trans-shipment problem given in Table 9.55 can be obtained by putting 500 units to
each route on the diagonal and making allocation in the matrix, by using Vogel’s approximation method.

Applying the MODI method to test the optimality of the solution given in Table 9.55. Since the
opportunity cost corresponding to each unoccupied cell is positive, the solution given in Table 9.55 is
also optimal. In order to interpret the optimal solution, allocations in the diagonal cells are ignored as
these values show the extra dummies that have been added in order to allow as much as flow
possible.