OR CH 3
OR CH 3
OR CH 3
Department of Management
MBA Program
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By: Nuru Mohammed (Ph.D.)
2021/2022
Asella, Ehiopia
Nuru M.(Ph.D.)
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Chapter 3
Distribution Models
(Transportation and Assignment models)
Chapter Objectives:
At the end of this chapter you should be able to;
Recognize and formulate a transportation problem involving a large number of shipping routes.
Recognize and formulate an Assignment problem.
Solve a transportation problem.
Solve an assignment problem.
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3.1 Introduction
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Distribution model include both Transportation and Assignment models
Are another important application of linear programming.
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3.1. Transportation Model
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3.1.1 Mathematical model of transportation problem
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• It mainly aims to minimize transportation costs considering;
– A set of origin or supplies
– A set of destination or demands, and
– The unit transportation costs, for each origin-destination combination
eg : Shipments from warehouses to retail stores, Factories to warehouses within departments.
• To develop a TM the following set of information are required:
– Supply quantity (capacity) of each origin.
– Demand quantity of each destination.
– Unit transportation cost for each origin-destination rout.
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e.g; A company has three production facilities and the product are to be
shipped to four warehouses. The per week production capacity of each
factory, the demand of each warehouses, and per unit transportation
costs of each rout are indicated in the following table.
Required
1.Formulate LP model to minimize the total transportation cost?
2. Formulate TM model to minimize the total transportation cost?
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7 Solution
1. The LP model.
Let 𝑋𝑖𝑗 = amount to be transported from 𝐹𝑠 to 𝑊𝑠 .
𝑍𝑀𝑖𝑛𝑖𝑚𝑖𝑧𝑎𝑡𝑖𝑜𝑛 = 19𝑋11 +30𝑋12 +50𝑋13 +10𝑋14 +70𝑋21 +30𝑋22 +40𝑋23 +60𝑋24 +40𝑋31 +8𝑋32 +70𝑋33 +20𝑋34
Subjected to
𝑋11 +𝑋12 +𝑋13 +𝑋14 =7
𝑋21 +𝑋22 +𝑋23 +𝑋24 =9 Supply
𝑋31 +𝑋32 +𝑋33 +𝑋34 = 18
𝑋11 +𝑋21 +𝑋31 =5
𝑋12 +𝑋22 +𝑋32 =8 Demand
𝑋13 +𝑋23 +𝑋33 = 7
𝑋14 +𝑋24 +𝑋34 = 14
Nuru M.(Ph.D.)
𝑋11 , 𝑋12 , 𝑋13 , 𝑋14 , 𝑋21 , 𝑋22 , 𝑋23 , 𝑋24 , 𝑋31 , 𝑋32 , 𝑋33 , 𝑋34 > 0
Continued…
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The data can be summarized in a transportation table.
Draw a table, considering the following points
1. List the destination across the top of the table.
2. List the DD of corresponding destination across the bottom of the table
3. List down the sources to the left hand side of the table.
4. List down the SS corresponding Source to the right hand side of the table.
5. Write the per unit cost of every rout at the upper right corner of the corresponding cell.
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3.1.2 Assumptions of a Transportation Model
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3.1.3 Solution of a Transportation Model
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Algorithm
Summarized into the following steps:
1. Formulate the problem and arrange the data in the matrix form.
2. Obtain an initial basic feasible solution
A. North-West Corner Method, The Initial feasible Solution should satisfy;
B. Least Cost Method, and 1.Satisfy all the SS and DD constraints (rim).
2.Number of occupied cells=m+n-1
C. Vogel’s Approximation (or Penalty)
3. Test the initial solution for optimality
Involves a cost evaluation of empty cells
i. The Stepping-stone method
ii. The Modified Distribution (MODI) method
4. Updating the solution: Repeat Step 3 until an optimal solution is reached
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A necessary and sufficient condition for a feasible solution is:
Total supply = Total demand
Any feasible Soln must have exactly (m+𝒏 − 𝟏) non-negative basic variables
Remarks;
1.When SS=DD, the problem is called balanced, otherwise it is unbalanced.
Unbalanced TP can be made balanced using a dummy SS or DD center.
2.Cells with allocation is called occupied cells, otherwise non-occupied
3.Occupied cell is < m+𝒏 − 𝟏, the Soln is degenerate, otherwise non-
degenerate
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2. Obtain an initial basic feasible solution
A. North-West Corner Method (NWCM)
Step 1: Start with the upper left (north-west) cell and allocate as many as possible.
Step 2: Move vertically down or horizontally to the right or diagonally down.
Step 3: Continue the procedure step by step till an allocation is made.
Total cost = 5 × 19 + 2 × 30 + 6
× 30 + 3 × 40 + 4 × 70
+ 14 × 20 = 1,015 birr
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B. An intuitive approach or Least Cost Method (LCM)
Step 1: Select a cell with the lowest cost and allocate as much as possible.
In case of a tie, then select the cell where the maximum allocation
Close the existed row or column.
Step 2: Select a cell with the next lowest cost and allocate as much as possible.
Step 3: Repeat the procedure until SS and DD is satisfied.
Total cost = 7 × 10 + 2 × 70 + 7 × 40 + 3
× 40 + 8 × 8 + 7 × 20 = 814
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C. Vogel’s Approximation Method (VAM)
Also referred as penalty or regret.
Preferred over NWCM and LCM.
Allocation is made on the basis of the opportunity cost, that would have been
incurred if minimum unit cost were missed.
An initial solution of VAM is nearer to optimal or optimal solution itself.
Steps;
Step 1: Calculate the penalties for each row (column)- d/c b/n the smallest and next
smallest unit cost.
Step 2: Select a row/column with the largest penalty and allocate as much as possible
in the cell that has the least cost.
Step 3: Adjust the SS and DD and cross out the satisfied row or column.
Step 4: Repeat Steps 1 to 3 until all SS and DD are satisfied.
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The initial feasible solution for the exercise above
Total cost = 5 × 19 + 2 × 10 + 7 × 40 + 2
× 60 + 8 × 8 + 10 × 20 = 779
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3. Test for optimality
It begins by calculating an opportunity cost associated with each
unoccupied cell.
Cell with the largest negative value will be considered in the new table.
Two methods of testing for optimality;
i. The Stepping-stone method
ii. The MODI method
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i. The Stepping-stone method
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The stepping Stone Path (Loop)
An ordered sequence of at least four different cells is called a loop (stepping
step path) if:
– Any two consecutive cells lie in either the same row/ column
– No three consecutive cells lie in the same row/column
– The last cell in the sequence has a row/column in common with the first
cell.
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Consider the initial feasible solution with NWCM, evaluate for optimality
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ii. MODI Method
Step 1: Calculate row index (𝑟𝑖 )and column index (𝑐𝑖 ) considering occupied
cells.
To start with, any one of 𝑟𝑖 or 𝑐𝑖 is assigned the value zero.
It is better to assign zero to 𝑟1
Calculate other indices using a relationship 𝑟𝑖 + 𝑐𝑖 =𝑐𝑖𝑗 , for all occupied cell .
Step 2: For unoccupied cells, calculate the opportunity cost.
Opportunity cost (C) = 𝑐𝑖𝑗 -(𝑟𝑖 + 𝑐𝑖 )
Indicate a per unit reduction (increase) if the rout is used
Step 3: Examine sign of each C, if is C
> 0, solution is optimal
= 0, alternative solution exists.
< 0, improved solution is possible.
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Consider the initial feasible solution with NWCM, evaluate for optimality
Empty Cell C = 𝑐𝑖𝑗 - (𝑟𝑖 + 𝑐𝑖 )
𝐹1 𝑊3 50-(0+40)=10
𝐹1 𝑊4 10-(0-10)=20
𝐹2 𝑊1 70-(0+19)=51
𝐹2 𝑊4 60-(0-10)=70
𝐹3 𝑊1 40-(30+19)=-9
𝐹3 𝑊2 8-(30+30)=-52
Therefore, Since there is a negative evaluation result the table is not optimal.
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4. Updating the solution
Whether Steppingstone or MODI method is used, the stepping Stone Path is
required to result an improved solution.
Step 1: Construct a closed-path for the unoccupied cell with largest negative cell
evolution result
Step 2: Select the smallest quantity amongst the cells marked with minus sign.
Step 3: Add it to cells marked with plus, and subtract it from the cells marked with
minus and calculate the new total transportation cost.
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Eg. Consider the above example and developed the improved solution
Cell 𝐹3 𝑊2 has the largest per unit reduction(-52)
The closed-path looks as follows The smallest allocation on the negative side of
the loop is 4, after considering this amount the
table looks
Nuru M.(Ph.D.)
TC= 5×19 +2×30+6×30+3×40+4×70+14×20 = 1,015 birr TC= 5X19+2X30+2X30+4X8+7X40+14X20= 807 birr
Continued…
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Repeat Step 3 until an optimal solution is reached.
Use steeping stone or MODI method Empty Cell C = 𝑐𝑖𝑗 - (𝑟𝑖 + 𝑐𝑖 )
𝐹1 𝑊3 50-(0+40)=10
𝐹1 𝑊4 10-(0-42)=-32
𝐹2 𝑊1 70-(0+19)=51
𝐹2 𝑊4 60-(0-42)=18
𝐹3 𝑊1 40-(-22+19)=43
𝐹3 𝑊3 70-(-22+40)=52
Still there are negative cell evaluation result, the table is not optimal.
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Cell 𝐹1 𝑊4 has a negative evaluation result (-32)
2 is the smallest allocation on the negative side of the loop
The steeping stone loop looks like The improved solution looks like looks
Nuru M.(Ph.D.)
TC= 5X19+2X30+6X8+7X40+12X20+2X10= 743 birr
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Check for optimality
Use steeping stone or MODI method
Empty Cell C = 𝑐𝑖𝑗 - (𝑟𝑖 + 𝑐𝑖 )
𝐹1 𝑊2 30-(0-2)=32
𝐹1 𝑊3 50-(0+8)=42
𝐹2 𝑊1 70-(32+19)=19
𝐹2 𝑊4 60-(32+10)=18
𝐹3 𝑊1 40-(10+19)=11
𝐹3 𝑊3 70-(10+8)=52
There is no negative cell evaluation result, therefore, the solution is optimal and the optimal TC is 743
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birr
3.1.4 Special Issues in transportation Problem
28 Assignment
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3.2 Assignment Problem
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NB. If a constant is added to or subtracted from every element of a row or column, then it
would not change optimal assignments and value of objective function
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3.2.2 Solution methods of assignment problem
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It can be solved by any of the following methods:
Enumeration method: all possible assignments is prepared & select the best
A problem with “n” jobs/works, will have n! possible assignments
Simplex method: formulated as a 0 or 1 integer LPP, with “nxn” number of
DV and n+n or 2n number of equations.
Transportation method: can also be solved by using MODI method.
It may result degenerate solution (multiple assignment is not possible)
Hungarian method:
By Hungarian mathematician D. Konig.
Efficient method.
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Hungarian method:
works on the principle of reducing the cost matrix to an opportunity costs
matrix.
Opportunity costs: relative penalties associated with assigning a resource to an
activity.
Show the relative penalties associated with assigning a resource to an activity.
Reduces the cost matrix to the extent of having at least one zero in each row
and column.
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The steps for minimization case is summarized as follows;
Step 1: Develop the cost matrix from the given problem (if necessary add dummy rows or
columns.
Step 2: Find the opportunity cost matrix.
Subtract the smallest element of every row from each element of that row.
Subtract the smallest element of every column from each element of that column.
Step 3: Cross a row or column with two or more zeros
If the number of lines = number of rows, make the assignment, if not
Step 4: Identify the smallest uncovered cost, subtract it from all uncovered cost, and add it
to the cost at the interception of the crossing lines.
Then make Assignment.
Identify a row or column with one zero and assign, and then with two zeros, three
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eg. A computer center has three expert programmers. It wants three
application programmes to be developed. The manager estimates
the computer time in minutes required by the experts for the
application programmes as follows:
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Solution
Row Reduction
Select row minimum
Deduct the row min from ever element of the corresponding row
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Column reduction
Select row minimum
Deduct the row min from ever element of the corresponding column
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Cross all zeros
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Interpretation and total cost
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Special Issue of Assignment Model
40 Assignment
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Any Question?
Nuru M.(Ph.D.)