Transportation-Introduction

Getting Started

The transportation problem is a special type of linear programming problem where the
objective is to minimize the cost of distributing a product from a number of sources or origins to a number
of destinations.

A firm has 3 factories located at A, E, and K which produce the same product. There are four
major product district centers situated at B, C, D, and M. Average daily product at A, E, K is 30, 40, and 50
units respectively. The average daily requirement of this product at B, C, D, and M is 35, 28, 32, 25 units
respectively. The cost in Rs. of transportation per unit of product from each factory to each district centre is
given below:

Factories B C D M Supply

A 6 8 8 5 30

E 5 11 9 7 40

K 8 9 7 13 50

Demand 35 28 32 25

The problem is to determine the name of product, no. of units of product to be transported from each
factory to various district centres at minimum cost .

Factories B C D M Supply

A x11 x12 x13 x14 30

 E x21 x22 x23 x24 40

K x31 x 32 x 33 x 34 50

Demand 35 28 32 25

Xij = No. of unit of product transported from ith factory to jth district centre.

Total transportation cost:

Minimize = 6x11 + 8x12 + 8x13 + 5x14 +…
+ 5x21 + 11x22 + 9x23 + 7x24
+ 8x31 + 9x32 + 7x33 + 13x34

subject to :
x11 + x12 + x13 + x14 = 30
x21 + x22 + x23 + x24 = 40
x31 + x32 + x33 + x34 = 50
x11 + x21 + x31 = 35
x12 + x22 + x32 = 28
x13 + x23 + x33 = 32
x14 + x24 + x34 = 25

xij  0

Since no. of variables is very high, simplex method is not applicable.

Feasible condition:
Total supply = total demand.
Or  ai =  bj.

If total supply = total demand then it is a balanced transportation

problem.
There will be (m + n – 1) basic independent variables out of m * n
variables.

Methods for finding the initial basic feasible solution:

 North West Corner Rule

 Matrix Minimum Method

 Vogel Approximation Method

 North West Corner Rule

The North West corner rule is a method for computing a basic feasible solution of a
transportation problem where the basic variables are selected from the North – West corner ( i.e., top left
corner ).

Steps

1. Select the north west (upper left-hand) corner cell of the transportation table and allocate as many
units as possible equal to the minimum between available supply and demand requirements, i.e.,
min(s1, d1).

2. Adjust the supply and demand numbers in the respective rows and columns allocation.

3. If the supply for the first row is exhausted then move down to the first cell in the second row.

4. If the demand for the first cell is satisfied then move horizontally to the next cell in the second
column.

5. If for any cell supply equals demand then the next allocation can be made in cell either in the next
row or column.

6. Continue the procedure until the total available quantity is fully allocated to the cells as required.

Example:

Retail shops

Factories 1 2 3 4 Supply

1 3 5 7 6 50

2 2 5 8 2 75

3 3 6 9 2 25

Demand 20 20 50 60
Solution:

Table 1

Retail shops

Factories 1 2 3 4 Supply

1 3 20 5 20 7 10 6 50

2 2 5 8 40 2 35 75

3 3 6 9 2 25 25

Demand 20 20 50 60

Starting from the North west corner, we allocate x11 = 20. Now demand for the first column is satisfied,
therefore, eliminate that column.

Proceeding in this way, we observe that x12 = 20, x13 = 10, x23 = 40, x24 = 35, x34 = 25.

Delete the row if supply is exhausted.

Delete the column if demand is satisfied.

Here, number of retail shops(n) = 4, and

Number of factories (m) = 3

Number of basic variables = m + n – 1 = 3 + 4 – 1 = 6.

Initial basic feasible solution:

20 * 3 + 20 * 5 + 10 * 7 + 40 * 8 + 35 * 2 + 25 * 2
= 670

Matrix Minimum Method

 Matrix minimum method is a method for computing a basic feasible solution of a transportation
problem where the basic variables are chosen according to the unit cost of transportation.

Steps

1. Identify the box having minimum unit transportation cost (cij).

2. If there are two or more minimum costs, select the row and the column corresponding to the lower
numbered row.

3. If they appear in the same row, select the lower numbered column.

4. Choose the value of the corresponding xij as much as possible subject to the capacity and
requirement constraints.

5. If demand is satisfied, delete the column .

6. If supply is exhausted, delete the row.

7. Repeat steps 1-6 until all restrictions are satisfied.

Example:

Retail shops

Factories 1 2 3 4 Supply

1 3 5 7 6 50

2 2 5 8 2 75

3 3 6 9 2 25

Demand 20 20 50 60
Solution:

Table 1

Retail shops

Factories 1 2 3 4 Supply

1 3 5 20 7 30 6 50

2 2 20 5 8 2 55 75

3 3 6 9 20 25 25

Demand 20 20 50 60

We observe that c21 =2, which is the minimum transportation cost. So, x21 = 20.

Proceeding in this way, we observe that x24 = 55, x34 = 5, x12 = 20, x13 = 30, x33 = 20.

Number of basic variables = m + n –1 = 3 + 4 – 1 = 6.

The initial basic feasible solution:

20 * 2 + 55 * 2 + 5 * 2 + 20 * 5 + 30 * 7 + 20 * 9 = 650.

Vogel Approximation Method

The Vogel approximation method is an iterative procedure for computing a basic feasible solution of the
transportation problem.

Steps

1. Identify the boxes having minimum and next to minimum transportation cost in each row and write
the difference (penalty) along the side of the table against the corresponding row.

2. Identify the boxes having minimum and next to minimum transportation cost in each column and
write the difference (penalty) against the corresponding column

3. Identify the maximum penalty. If it is along the side of the table, make maximum allotment to the
box having minimum cost of transportation in that row. If it is below the table, make maximum
allotment to the box having minimum cost of transportation in that column.
 4. If the penalties corresponding to two or more rows or columns are equal, select the top most row
and the extreme left column.

Example:
Consider the transportation problem presented in the following table:

Destination

Origin 1 2 3 4 Supply

1 20 22 17 4 120

2 24 37 9 7 70

3 32 37 20 15 50

Demand 60 40 30 110 240

Solution:

Table 1

Destination

Origin 1 2 3 4 Supply Penalty

1 20 22 40 17 4 120 80 13

2 24 37 9 7 70 2

3 32 37 20 15 50 5

Demand 60 40 30 110 240

Penalty 4 15 8 3

The highest penalty occurs in the second column. The minimum cij in this column is c 12 (i.e., 22). Hence,
x12 = 40 and the second column is eliminated.

Now again calculate the penalty.

Table 2

Destination

Origin 1 2 3 4 Supply Penalty

1 20 22 40 17 4 80 120 13

2 24 37 9 7 70 2

3 32 37 20 15 50 5

Demand 60 40 30 110 240

Penalty 4 - 8 3

The highest penalty occurs in the first row. The minimum cij in this row is c14 (i.e., 4). So x14 = 80 and the
first row is eliminated.

Final table
Now we are assuming that you can calculate the values yourself.

Destination

Origin 1 2 3 4 Supply Penalty

1 20 22 40 17 4 80 120 3 13 - - - -

2 24 10 37 9 30 7 30 70 2 2 2 17 24 24

3 32 50 37 20 15 50 5 5 5 17 32 -

Demand 60 40 30 110 240

4 15 8 3

4 - 8 3

8 - 11 8

Penalty

8 - - 8

8 - - -

24 - - -

The initial basic feasible solution:

22 * 40 + 4 * 80 + 24 * 10 + 9 * 30 + 7 * 30 + 32 * 50 = 3520.

Degenerate Transportation Problem

If the basic feasible solution of a transportation problem with m origins and n destinations has fewer than
m + n – 1 positive xij (occupied cells), the problem is said to be a degenerate transportation problem.

Degeneracy can occur at two stages:

1. At the initial solution

2. During the testing of the optimum solution

A degenerate basic feasible solution in a transportation problem exists if and only if some partial sum of
availability’s (row(s)) is equal to a partial sum of requirements (column(s)).
Example:

Dealers

Factory 1 2 3 4 Supply

A 2 2 2 4 1000

B 4 6 4 3 700

C 3 2 1 0 900

Requirement 900 800 500 400

Solution:
Here, S1 = 1000, S2 = 700, S3 = 900
R1 = 900, R2 = 800, R3 = 500, R4 = 400

Since R3 + R4 = S3 so the given problem is a degeneracy problem.

Now we will solve the transportation problem by Matrix Minimum Method.

To resolve degeneracy, we make use of an artificial quantity(d). The quantity d is so small that it does not
affect the supply and demand constraints.

Degeneracy can be avoided if we ensure that no partial sum of s i (supply) and rj (requirement) are the
same. We set up a new problem where:

si = si + d i = 1, 2, ....., m
rj = rj
rn = rn + md

Table 1

Dealers

Factory 1 2 3 4 Supply

A 2 900 2 100+d 2 4 1000 +d

B 4 6 700–d 4 2d 3 700 + d

C 3 2 1 500 –2d 0 400+3d 900 +d

Requirement 900 800 500 400 + 3d

Substituting d = 0.

Table 2

Dealers

Factory 1 2 3 4 Supply

A 2 900 2 100 2 4 1000

B 4 6 700 40 3 700

C 3 2 1 500 0 400 900

Requirement 900 800 500 400 + 3d

Initial basic feasible solution:

2 * 900 + 2 * 100 + 6 * 700 + 4 * 0 + 1 * 500 + 0 * 400 = 6700.

Now degeneracy has been removed.

To find the optimum solution, you can use any one of the following:

 Stepping Stone Method.

 MODI Method.

Unbalanced Transportation Problem

If the total supply is not equal to the total demand then the problem is known as unbalanced transportation
problem. If the total supply is more than the total demand, we introduce an additional column, which will
indicate the surplus supply with transportation cost zero. Similarly, if the total demand is more than the
total supply, an additional row is introduced in the table, which represents unsatisfied demand with
transportation cost zero.

Example:

Warehouses

Plant W1 W2 W3 Supply

A 28 17 26 500

B 19 12 16 300

Demand 250 250 500

Solution:
The total demand is 1000, whereas the total supply is 800.
Total demand > total supply.
So, introduce an additional row with transportation cost zero indicating the unsatisfied demand.

Warehouses

Plant W1 W2 W3 Supply

A 28 17 26 500

B 19 12 16 300

Unsatisfied demand 0 0 0 200

Demand 250 250 500 1000

Now, solve the above problem with any one of the following methods:

 North West Corner Rule

  Matrix Minimum Method

 Vogel Approximation Method

Try it yourself.

Maximization In A Transportation Problem

Example:

A firm has three factories X, Y and Z. It supplies goods to four dealers spread all over the country. The
production capacities of these factories are 200, 500 and 300 per month respectively.

Factory A B C D Capacity

X 12 18 6 25 200

Y 8 7 10 18 500

Z 14 3 11 20 300

Demand 180 320 100 400

Determine a suitable allocation to maximize the total net return.

Solution:
Maximization transportation problem can be converted into minimization transportation problem by
subtracting each transportation cost from maximum transportation cost.

Here, the maximum transportation cost is 25. So subtract each value from 25.

Table 1

Factory A B C D Capacity

X 13 7 19 0 200

Y 17 18 15 7 500
Z 11 22 14 5 300

Demand 180 320 100 400

Now, solve the above problem by any one of the following methods:

 North West Corner Rule

 Matrix Minimum Method

 Vogel Approximation Method

Try it yourself.

Stepping Stone Method

It is a method for computing optimum solution of a transportation problem.

Steps

Step 1
Determine an initial basic feasible solution using any one of the following:

 North West Corner Rule

 Matrix Minimum Method

 Vogel Approximation Method

Step 2
Make sure that the number of occupied cells is exactly equal to m+n-1, where m is the number of rows
and n is the number of columns.

Step 3
Select an unoccupied cell.

Step 4
Beginning at this cell, trace a closed path using the most direct route through at least three occupied cells
used in a solution and then back to the original occupied cell and moving with only horizontal and vertical
moves. The cells at the turning points are called "Stepping Stones" on the path.
Step 5
Assign plus (+) and minus (-) signs alternatively on each corner cell of the closed path just traced, starting
with the plus sign at unoccupied cell to be evaluated.

Step 6
Compute the net change in the cost along the closed path by adding together the unit cost figures found in
each cell containing a plus sign and then subtracting the unit costs in each square containing the minus
sign.

Step 7
Check the sign of each of the net changes. If all the net changes computed are greater than or equal to
zero, an optimum solution has been reached. If not, it is possible to improve the current solution and
decrease the total transportation cost.

Step 8
Select the unoccupied cell having the most negative net cost change and determine the maximum number
of units that can be assigned to a cell marked with a minus sign on the closed path corresponding to this
cell. Add this number to the unoccupied cell and to all other cells on the path marked with a plus sign.
Subtract this number from cells on the closed path marked with a minus sign.

Step 9
Repeat the procedure until you get an optimum solution.

Example 1:
Consider the following transportation problem (cost in rupees)

Depot

Factory D E F G Capacity

A 4 6 8 6 700

B 3 5 2 5 400

C 3 9 6 5 600
Requirement 400 450 350 500 1700

Solution:
First, find out an initial basic feasible solution by Matrix Minimum Method

Table 1

Depot

Factory D E F G Capacity

A 4 6 450 8 6 250 700

B 3 50 5 2 350 5 400

C 3 350 9 6 5 250 600

Requirement 400 450 350 500 1700

Here, m + n - 1 = 6. So the solution is not degenerate.

Table 2
The cell AD (4) is empty so allocate one unit to it. Now draw a closed path from AD.

Please note that the right angle turn in this path is

 permitted only at occupied cells and at the original
unoccupied cell.

The increase in the transportation cost per unit quantity of reallocation is

+4 – 6 + 5 – 3 = 0.

This indicates that every unit allocated to route AD will neither increase nor decrease the transportation
cost. Thus, such a reallocation is unnecessary.

Table 3
Choose another unoccupied cell. The cell BE is empty so allocate one unit to it.
Now draw a closed path from BE

The increase in the transportation cost per unit quantity of reallocation is

+5 – 6 + 6 – 5 + 3 – 3 = 0

This indicates that every unit allocated to route BE will neither increase nor decrease the transportation
cost. Thus, such a reallocation is unnecessary.

The allocations for other unoccupied cells are:

Unoccupied Increase in cost per unit of Remarks

cells reallocation

CE +9 – 6 + 6 – 5 = 4 Cost Increases

CF +6 – 3 + 3 – 2 = 4 Cost Increases

AF +8 – 6 +5 – 3 + 3 – 2 = 5 Cost Increases

BG +5 – 5 + 3 – 3 = 0 Neither increase nor decrease

Since all the values of unoccupied cells are greater than or equal to zero, the solution obtained is
optimum.

Minimum transportation cost is:

6 * 450 + 6 * 250 + 3 * 250 + 2 * 250 +3 *350 +5 * 250 = Rs. 7350

Stepping Stone Method

Example 2:

Consider the following transportation problem (cost in rupees)

Distributor

Factory D E F Supply

A 2 1 5 10

B 7 3 4 25

C 6 5 3 20

Requirement 15 22 18 55

Find out the minimum cost of the given transportation problem.

Solution:
First, find out an initial basic feasible solution by Matrix Minimum Method.

Table 1

Distributor

Factory D E F Supply

A 2 1 10 5 10
B 7 13 3 12 4 25

C 62 5 3 18 20

Requirement 15 22 18 55

Here, m + n - 1 = 5. So the solution is not degenerate.

The cell AD (2) is empty so allocate one unit to it. Now draw a closed path.

Table 2

The increase in the transportation cost per unit quantity of reallocation is:
+ 2 – 1 + 3 – 7 = - 4.

The allocations for other unoccupied cells are following:

Unoccupied Increase in cost per unit of Remarks

cells reallocation

AF +5 – 1 + 3 – 7 + 6 – 3 = 3 Cost
Increases

CE +5 - 3 + 7 – 6 = 3 Cost
Increases

BF +4 – 7 + 6 – 3 = 0 Cost
Increases
This indicates that the route through AD would be beneficial to the company. The maximum amount that
can be allocated to AD is 10 and this will make the current basic variable corresponding to cell AE non
basic.

Table 3 shows the transportation table after reallocation.

Table 3

Distributor

Factory D E F Supply

A 2 10 1 5 10

B 73 3 22 4 25

C 62 5 3 18 20

Requirement 15 22 18 55

Since the reallocation in any other unoccupied cell cannot decrease the transportation cost, the minimum
transportation cost is:
2 * 10 + 7 * 3 + 3 * 22 + 6 * 2 + 3 * 18 = Rs.173

Modified Distribution Method (MODI)

It is a method for computing optimum solution of a transportation problem.

STEPS

Step 1
Determine an initial basic feasible solution using any one of the three methods given below:

 North West Corner Rule

 Matrix Minimum Method

 Vogel Approximation Method

Step 2
Determine the values of dual variables, ui and vj, using ui + vj = cij

Step 3
Compute the opportunity cost using cij – ( ui + vj ).

Step 4
Check the sign of each opportunity cost. If the opportunity costs of all the unoccupied cells are either
positive or zero, the given solution is the optimum solution. On the other hand, if one or more unoccupied
cell has negative opportunity cost, the given solution is not an optimum solution and further savings in
transportation cost are possible.

Step 5
Select the unoccupied cell with the smallest negative opportunity cost as the cell to be included in the next
solution.

Step 6
Draw a closed path or loop for the unoccupied cell selected in the previous step. Please note that the right
angle turn in this path is permitted only at occupied cells and at the original unoccupied cell.

Step 7
Assign alternate plus and minus signs at the unoccupied cells on the corner points of the closed path with
a plus sign at the cell being evaluated.

Step 8
Determine the maximum number of units that should be shipped to this unoccupied cell. The smallest
value with a negative position on the closed path indicates the number of units that can be shipped to the
entering cell. Now, add this quantity to all the cells on the corner points of the closed path marked with
plus signs and subtract it from those cells marked with minus signs. In this way an unoccupied cell
becomes an occupied cell.

Step 9
Repeat the whole procedure until an optimum solution is obtained.

Example:
A company is spending Rs. 1000 on transportation of its units from these plants to four distribution
centres. The supply and requirement of units, with unity cost of transportation are given as:
 Distribution centres

D1 D2 D3 D4 Supply

P1 19 30 50 12 7

Plants P2 70 30 40 60 10

P3 40 10 60 20 18

Requirement 5 8 7 15

Determine the optimum solution of the above problem.

Solution:
Now, solve the above problem by Matrix Minimum Method.

Table 1

Distribution centres

D1 D2 D3 D4 Supply

P1 19 30 50 12 7 7

Plants P2 70 3 30 40 7 60 10

P3 40 2 10 8 60 20 8 18

Requirement 5 8 7 15

The solution is basic feasible as there are m + n – 1, i.e., 4 + 3 – 1 = 6 allocations in independent

solutions.
Initial basic feasible solution:
12 * 7 + 70 * 3 + 40 * 7 + 40 * 2 + 10 * 8 + 20 * 8 = Rs. 894.

Calculating ui and vj using ui + vj = cij

Substituting u1 = 0, we get

u1 + v4 = c14  0 + v4 = 12 or v4 = 12
u2 + v4 = c24  u2 + 12 = 60 or u2 = 38
u2 + v3 = c23  38 + v3 = 40 or v3 = 2
u3 + v4 = c34  u3 + 12 = 20 or u3 = 8
u3 + v2 = c32  8 + v2 = 10 or v2 = 2
u3 + v1 = c31  8 + v1 = 40 or v1 = 32

Table 2

Distribution centres

D1 D2 D3 D4 Supply ui

P1 19 30 50 12 7 7 0

Plants P2 70 3 30 40 7 60 10 38

P3 40 2 10 8 60 20 8 18 8

Requirement 5 8 7 15

vj 32 2 2 12

Calculating opportunity cost using cij – ( ui + vj )

Unoccupied cells Opportunity cost

(P1, D1) C11 – ( u1 + v1 ) = 19 – (0 + 32) = –13

(P1, D2) C12 – ( u1 + v2 ) = 30 – (0 + 2) = 28

(P1, D3) C13 – ( u1 + v3 ) = 50 – (0 + 2) = 48

(P2, D2) C22 – ( u2 + v2 ) = 30 – (38 + 2) = –10

(P2, D4) C14 – ( u2 + v4 ) = 60 – (38 + 12) = 10

(P3, D3) C33 – ( u3 + v3 ) = 60 – (8 + 2) = 50

Table 3

Distribution centres

D1 D2 D3 D4 Supply ui

–13 28 48
P1 19 30 50 12 7 7 0

Plants P2 70 3 –10
30 40 7 10
60 10 38

P3 40 2 10 8 50
60 20 8 18 8

Requirement 5 8 7 15

vj 32 2 2 12

Table 4
Choose the smallest negative value from opportunity cost (i.e., –13). Now draw a closed path from P1D1 .

Choose the smallest value with a negative position on the closed path(i.e., 2), it indicates the number of
units that can be shipped to the entering cell. Now, add this quantity to all the cells on the corner points of
the closed path marked with plus signs and subtract it from those cells marked with minus signs. In this
way an unoccupied cell becomes an occupied cell.

Now again calculate the values for ui and vj.

Table 5

Distribution centres

D1 D2 D3 D4 Supply ui

P1 19 2 28
30 61
50 12 5 7 0

Plants P2 70 3 –23
30 40 7 –3
60 10 51

13
P3 40 10 8 63
60 20 10 18 8

Requirement 5 8 7 15

vj 19 2 –11 12

Now again we draw a closed path.

Table 6
 Table 7

Distribution centres

D1 D2 D3 D4 Supply ui

P1 19 5 8
30 28
50 12 2 7 0

33
Plants P2 70 30 3 40 7 30
60 10 18

23
P3 40 10 5 40
60 20 13 18 –2

Requirement 5 8 7 15

vj 19 12 22 12

Since all the current opportunity costs are non–negative, this is the optimum solution.
So the minimum transportation cost is:
19 * 5 + 12 * 2 + 30 * 3 + 40 * 7 + 10 * 5 + 20 * 13 = Rs. 799