Qam ch08 1

Quantitative Analysis for Management
Thirteenth Edition
Module 8
Transportation Algorithms
Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved.
Learning Objectives
After completing this module, students will be able to:
M8.1 Use the northwest corner and stepping-stone
methods to solve transportation problems.
Introduction
• Linear programming can be used to solve distribution and
network models
• There are some specialized algorithms that can be used to
find the best solutions more quickly
• Often used instead of linear programming
The Transportation Algorithm (1 of 21)
• An iterative procedure to find the optimal solution to a
transportation problem
TABLE M8.1 Transportation Table for Executive Furniture
Corporation
TO WAREHOUSE WAREHOUSE WAREHOUSE
AT ALBUQUERQUE AT AT FACTORY
FROM BOSTON CLEVELAND CAPACITY
DES MOINES $5 $4 $3 Des Moines
100 capacity constraint
FACTORY
EVANSVILLE $8 $4 $3 Cell representing a
300
FACTORY source-to-
destination
FORT $9 $7 $5
LAUDERDALE 300 (Evansville to
FACTORY Cleveland) shipping
assignment that
WAREHOUSE could be made
300 200 200 700
REQUIREMENTS
Cost of shipping 1 unit from Fort Lauderdale Cleveland warehouse Total demand
factory to Boston warehouse demand and total supply
• Developing an Initial Solution: Northwest Corner Rule
1. Exhaust the supply (factory capacity) at each row
before moving down to the next row
2. Exhaust the (warehouse) requirements of each
column before moving to the right to the next column
3. Check that all supply and demands are met
TABLE M8.2 Initial Solution to Executive Furniture Problem
Using the Northwest Corner Method
TO ALBUQUERQUE BOSTON CLEVELAND FACTORY

FROM (A) (B) (C) CAPACITY
DES MOINES $5 $4 $3
100
(D) 100
EVANSVILLE $8 $4 $3
300
(E) 200 100
FORT LAUDERDALE $9 $7 $5
300
(F) 100 200
WAREHOUSE
300 200 200 700
REQUIREMENTS
Means that the firm is shipping 100 units

along the Fort Lauderdale-Boston route
• The cost of this shipping assignment
ROUTE UNITS PER-UNIT TOTAL COST

FROM TO SHIPPED x COST ($) = ($)
blank blank blank
D A 100 5 blank
500
E A 200 8 blank
1,600
E B 100 4 blank
400
F B 100 7 700
blank
F C 200 5 1,000
blank
Total 4,200
blank blank blank blank
• Stepping-Stone Method: Finding a Least-Cost Solution
– Iterative technique for moving from an initial feasible
solution to an optimal feasible solution
– Two distinct parts
 Testing current solution to determine if improvement
is possible
 Making changes to the current solution to obtain an
improved solution
• One rule must first be observed
The number of occupied routes (or squares) must always be
equal to one less than the sum of the number of rows plus
the number of columns
Occupied shipping Number Number of

= + − 1
routes (squares) of rows columns
5=3+3−1
• When the number of occupied routes is less than this, the
solution is called degenerate
• Testing the solution for possible improvement
– Test each unused shipping route (or square) in the
transportation table by asking
“What would happen to total shipping costs
if one unit of our product were tentatively shipped
on an unused route?”
• Five Steps to Test Unused Squares with the Stepping-
Stone Method
1. Select an unused square to be evaluated.
2. Beginning at this square, trace a closed path back to
the original square via squares that are currently
being used and moving with only horizontal and
vertical moves.
3. Beginning with a plus (+) sign at the unused square,
place alternate minus (−) signs and plus signs on
each corner square of the closed path.
4. Calculate an improvement index by adding together
the unit cost figures found in each square containing a
plus sign and then subtracting the unit costs in each
square containing a minus sign.
5. Repeat steps 1 to 4 until an improvement index has
been calculated for all unused 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 and decrease
total shipping costs.
TABLE M8.3
Evaluating
the Unused
Des Moines–
Boston
Shipping
Route
Improvement index (Iij) for Des Moines-Boston

route
Des Moines-Boston index = IDB = +$4 − $5 + $8 − $4 = +$3
TABLE M8.4 Evaluating the Des Moines–Cleveland (D–C)
Shipping Route
DES MOINES $5 $4 Start $3

100
(D) 100 − +
EVANSVILLE $8 $4 $3
300
(E) 200 + 100 −
300
(F) 100 + 200 −
WAREHOUSE
300 200 200 700
REQUIREMENTS
Closed path is + DC − DA + EA − EB + FB − FC
Des Moines–Cleveland = IDC
improvement index = +$3 − $5 + $8 − $4 + $7 − $5
= +$4
Evanston–Cleveland index = IEC
= +$3 − $4 + $7 − $5
= +$1
(closed path: + EC − EB + FB − FC)
Fort Lauderdale–Albuquerque index = IFA

= +$9 − $7 + $4 − $8
= −$2
(closed path: + FA − FB + EB − EA)
TABLE M8.5 Stepping-Stone Path Used to Evaluate Route
F–A

DES MOINES $5 $4 $3
100
(D) 100
EVANSVILLE $8 $4 $3
300
(E) 200 − 100 +
300
(F) + 100 − 200
WAREHOUSE
300 200 200 700
REQUIREMENTS
TABLE M8.6 Second Solution to the Executive Furniture
Problem

DES MOINES $5 $4 $3
100
(D) 100
EVANSVILLE $8 $4 $3
300
(E) 100 200
300
(F) 100 200
WAREHOUSE
300 200 200 700
REQUIREMENTS
D to B = IDB = +$4 − $5 + $8 − $4 = +$3
(closed path: +DB − CA + EA − EB)
D to C = IDC = +$3 − $5 + $9 − $5 = +$2
(closed path: +DC − DA + FA − FC)
E to C = IEC = +$3 − $8 + $9 − $5 = −$1
(closed path: +EC − EA + FA − FC)
F to B = IFB = +$7 − $4 + $8 − $9 = +$2
(closed path: +FB − EB + EA − FA)
TABLE M8.7 Path to Evaluate the E–C Route

DES MOINES $5 $4 $3
100
(D) 100
EVANSVILLE $8 $4 Start $3
300
(E) 100 − 200 +
300
(F) 100 + 200 −
WAREHOUSE
300 200 200 700
REQUIREMENTS
• Total cost of third solution
ROUTE DESKS PER-UNIT TOTAL COST

FROM TO SHIPPED x COST ($) = ($)
blank blank blank blank blank
D A 100 5 500
blank blank
E B 200 4 800
blank blank
E C 100 3 300
blank blank
F A 200 9 1,800
blank blank
F C 100 5 500
blank blank
Total 3,900
blank blank blank blank blank
TABLE M8.8 Third and Optimal Solution

DES MOINES $5 $4 $3
100
(D) 100
EVANSVILLE $8 $4 $3
300
(E) 200 100
300
(F) 200 100
WAREHOUSE
300 200 200 700
REQUIREMENTS
D to B = IDB = +$4 − $5 + $9 − $5 + $3 − $4 = +$2

(path: +DB − DA + FA − FC + EC − EB)
D to C = IDC = +$3 − $5 + $9 − $5 = +$2
(path: +DC − DA + FA − FC)
E to A = IEA = +$8 − $9 + $5 − $3 = +$1
(path: +EA − FA + FC − EC)
F to B = IFB = +$7 − $5 + $3 − $4 = +$1
(path: +FB − FC + EC − EB)
• Summary of Steps in Transportation Algorithm
(Minimization)
1. Set up a balanced transportation table.
2. Develop initial solution using the northwest corner
method.
3. Calculate an improvement index for each empty cell
using the stepping-stone method. If improvement
indices are all nonnegative, stop; the optimal solution
has been found. If any index is negative, continue to
step 4.
4. Select the cell with the improvement index indicating
the greatest decrease in cost. Fill this cell using a
stepping-stone path and go to step 3.
Special Situations with the Transportation
Algorithm (1 of 10)
• Unbalanced Transportation Problems
– Total demand is not equal to total supply
– Unbalanced problems handled by introducing
 Dummy sources or
 Dummy destinations
Algorithm (2 of 10)
• Demand less than supply
– Add dummy column representing a fake destination
• Demand greater than supply
– Add dummy row representing a fake source
Algorithm (3 of 10)
TABLE M8.9 Initial Solution to an Unbalanced Problem
Where Demand Is Less Than Supply
New Des Moines
capacity
TO ALBUQUERQUE BOSTON CLEVELAND DUMMY FACTORY
FROM (A) (B) (C) WAREHOUSE CAPACITY
DES MOINES 5 4 3 0
250
(D) 250
EVANSVILLE 8 4 3 0
300
(E) 50 200 50
FORT LAUDERDALE 9 7 5 0
300
(F) 150 150
WAREHOUSE
300 200 200 150 850
REQUIREMENTS
Total cost = 250($5) + 50($8) + 200($4) + 50($3) + 150($5) + 150($0) = $3,350
Algorithm (4 of 10)
TABLE M8.10 Unbalanced Transportation Table for Happy
Sound Stereo Company
TO PLANT
WAREHOUSE A WAREHOUSE B WAREHOUSE C
FROM SUPPLY
$6 $4 $9
PLANT W 200
$10 $5 $8
PLANT X 175
$12 $7 $6
PLANT Y 75
WAREHOUSE 450
250 100 150
DEMAND 500
Totals
do not
balance
Algorithm (5 of 10)
TABLE M8.11 Initial Solution to an Unbalanced Problem in
Which Demand Is Greater Than Supply
TO PLANT
WAREHOUSE A WAREHOUSE B WAREHOUSE C
FROM SUPPLY
$6 $4 $9
PLANT W 200
200
$10 $5 $8
PLANT X 175
50 100 25
$12 $7 $6
PLANT Y 75
75
0 0 0
DUMMY PLANT 50
50
WAREHOUSE
250 100 150 500
DEMAND
Total cost of initial solution = 200($6) + 50($10) + 100($5) + 25($8) + 75($6) + 50($0) = $2,850
Algorithm (6 of 10)
• Degeneracy in an initial solution
TABLE M8.12 Initial Solution of a Degenerate Problem
TO WAREHOUSE
CUSTOMER 1 CUSTOMER 2 CUSTOMER 3
FROM SUPPLY
8 2 6
WAREHOUSE 1 100
100
10 9 9
WAREHOUSE 2 120
100 20
7 10 7
WAREHOUSE 3 80
80
CUSTOMER
100 100 100 300
DEMAND
Algorithm (7 of 10)
• Degeneracy during later solution stages
TABLE M8.13 Bagwell Paint Transportation Table
Total shipping
cost = $2,700
TO FACTORY
WAREHOUSE 1 WAREHOUSE 2 WAREHOUSE 3
FROM CAPACITY
8 5 16
FACTORY A 70
70
15 10 7
FACTORY B 130
50 80 20
3 9 10
FACTORY C 80
50
WAREHOUSE
150 80 50 280
REQUIREMENT
Algorithm (8 of 10)
Factory A − Warehouse 2 index = + 2

Factory A − Warehouse 3 index = + 1
Factory B − Warehouse 3 index = − 15
Factory C − Warehouse 2 index = + 11
Only route with

a negative index
Algorithm (9 of 10)
• Degeneracy during later solution stages
TABLE M8.14 Tracing a Closed Path for the Factory B–

Warehouse 3 Route
TO
WAREHOUSE 1 WAREHOUSE 3
FROM
15 7
FACTORY B
50 − +
3 10
FACTORY C
30 + − 50
Algorithm (10 of 10)
• More Than One Optimal Solution
– Multiple solutions are possible
– May increase flexibility
• Maximization Transportation Problem
– Improvement indices are negative or zero
• Unacceptable or Prohibited Routes
– Assign a very high cost
• Other Transportation Methods
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Quantitative Analysis for Management

TO ALBUQUERQUE BOSTON CLEVELAND FACTORY

Means that the firm is shipping 100 units

ROUTE UNITS PER-UNIT TOTAL COST

Occupied shipping Number Number of

Improvement index (Iij) for Des Moines-Boston

DES MOINES $5 $4 Start $3

Fort Lauderdale–Albuquerque index = IFA

TO ALBUQUERQUE BOSTON CLEVELAND FACTORY

TO ALBUQUERQUE BOSTON CLEVELAND FACTORY

TO ALBUQUERQUE BOSTON CLEVELAND FACTORY

ROUTE DESKS PER-UNIT TOTAL COST

TO ALBUQUERQUE BOSTON CLEVELAND FACTORY

D to B = IDB = +$4 − $5 + $9 − $5 + $3 − $4 = +$2

Total cost = 250($5) + 50($8) + 200($4) + 50($3) + 150($5) + 150($0) = $3,350

Factory A − Warehouse 2 index = + 2

Only route with

TABLE M8.14 Tracing a Closed Path for the Factory B–

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