CHAPTER 03-1

The Transportation Model

Definition and Concepts

04 - 1
 Learning Objectives
When you complete this module you should be able to:
• Understand the concept of transportation problem (TP)
• Know application areas of TP
• Construct cost matrix and transportation table
• Find initial feasible solution to TP using northwest corner , Least
cost, and vogal’s approximation methods
• Solve TP using MoDI technique
• Formulate and solve TP using linear programming model
• Solve a TP problem using Excel Solver and GAMS softwares
• Know variation of TP – balanced and unbalanced TP.

04 - 2
 Definition and Concepts
 Consider a commodity which is produced at various centers called
SOURCES and is demanded at various centers called
DESTINATIONS.

Demand Location A
Demand Location B
Supply Location 3

Supply Location 2

Demand Location C
Supply Location 1

Demand Location D
04 - 3
 TP - Definition and Concepts
 Also consider that
 The production capacity of each source (availability) and the
requirement of each destination are known and fixed.
 The cost of transporting one unit of the commodity from each source
to each destination is also known.
 The commodity is required to be transported from various sources to
different destinations in such a way that the requirement of each
destination is satisfied and at the same time the total cost of
transportation is minimized.

This optimum allocation of the commodity from various sources to

different destinations is called Transportation Problem.

04 - 4
 TP - Definition and Concepts
Therefore, the objective of transportation problem is to minimize transportation
costs between Supply Locations (Factories) and Demand Locations
(Warehouses).

Demand Location B Demand Location A Supply Location 3

Supply Location 2

Supply Location 1 Demand Location C

Demand Location D

04 - 5
 Assumptions of TP
 Level of supply at each source and the amount of demand at each destination
are known.
 Shipping cost per item is known and remains constant (it is linear)
 Items to be shipped are homogeneous and shipping occurs simultaneously.
 Only one route between origin and destination (i.e. route is defined.)
 The total supply equals the total demand – Balanced TP.

04 - 6
 The Cost Matrix
Example 1. If the transportation cost per unit of product between Factories and
Warehouses are known, the cost matrix table is drawn as shown below:

Warehouse
Factory A B C D
Key: The transportation cost 1 4 7 7 1
to ship 1 unit of product 2 12 3 8 8
between Factory 1 and 3 8 10 16 5
Warehouse A is 4.
04 - 7
 Factory Capacity & Warehouse Demand

The factory capacity (supply units per period) and the Factory Supply
warehouse demand (units per period that can be 1 100
handled) are shown in the following tables:
2 200
3 150
Total 450
Warehouse
A B C D Total
Demand 80 90 120 160 450
Note: The total supply and total demand are equal – Balanced Transportation
Problem.
04 - 8
 Transportation Table
The three previous tables (all relevant data in TP) can be summarized in one
matrix as follows:

Warehouse
Factory A B C D Supply
1 4 7 7 1 100
2 12 3 8 8 200 Total
3 8 10 16 5 150 Supply
Demand 80 90 120 160 450
Total Demand 450

 The transportation problem is therefore best represented by such a table

called as The Transportation Table.
04 - 9
Optimal Solution to TP
Modified Distributed Approach (MODI)

03 - 2
 An Optimal Solution to TP – MODI Approach

 MODI is a manual technique of finding the optimal solution to the

transportation problem.
 The search for optimal solution to TP by MODI involves a two stage
process.

Stage I:
1. Determine an initial feasible solution.
Stage II:
1. Determine an Entering Variable from among the variables that
are not currently in the solution.
2. Determine a Leaving Variable from among the variables that are
currently in the solution and then find a new solution. .
3. If the optimality condition is satisfied then Stop. Otherwise go
back to Step 1.
04 - 11
 Methods for Initial Feasible solution to TP

 The different methods of obtaining initial basic feasible solution to a

balanced minimization transportation problem are
1. NORTH WEST CORNER RULE
2. LEAST COST METHOD
3. VOGEL’S APPROXIMATION METHOD

04 - 12
 1. North West Corner Method
 To find the basic feasible solution by the NWC method, the steps to follow are:
1. Begin in the upper left (northwest) corner of the transportation table and
set cell X11 as large as possible.
Note: Here the limitations for setting X11 to a larger number will be the
demand of demand point 1 and the supply of supply point 1. Your X11 value
can not be greater than minimum of this 2 values.
i.e. X11 =min(a1, b1)
a) if min(a1, b1) =a1, then X11 = a1, reduce b1 by a1 and cross out the first
row and move to the second row [i.e. cell (2,1)].
b) if min(a1, b1) = b1, then X11 = b1, reduce a1 by b1 cross out the first
column and move to the second column[i.e. cell (1,2)].
c) if min(a1, b1) = a1 = b1, then X11 = a1= b1, cross out the first row and the
second row and move to the cell (2,2).
2. Repeat step 1 until all allocations have been assigned.

04 - 13
 1. North West Corner Method- Examples
Example1. According to the steps shown in the previous slide, we can set X11=3
(meaning demand of demand point 1 is satisfied by supply point 1).

3 5 2 3

3 2

X 5 2 3 04 - 14
 1. North West Corner Method- Examples
 After we check the east and south cells, we saw that we can go
east (meaning supply point 1 still has capacity to fulfill some
demand).
3 2 X

X 3 2 3

3 2 X

3 3

X X 2 3 04 - 15
 1. North West Corner Method- Examples
 After applying the same procedure, we saw that we can go south
this time (meaning demand point 2 needs more supply by supply
point 2).

3 2 X

3 2 1

X X X 3

3 2 X

3 2 1 X

X X X 2 04 - 16
 1. North West Corner Method- Examples
 Finally, we will have the following initial bfs, which is:
x11=3, x12=2, x22=3, x23=2, x24=1, x34=2

3 2 X

3 2 1 X

2 X

X X X X

04 - 17
 1. North West Corner Method- Examples
Example 2. What is the initial feasible solution to the following TP by NWC
method? (the optimal solution will be seen later)

 In this table, the cost elements (Cij in dollars) are summarized in the
Northeast corner of any matrix cell. (For example, C12 = 0 and C34 = 18).
 Again, as can be seen from the table, total supply is equal to the total
demand (= 45). Thus, the TP is balanced and has a bfs.

18
 1. North West Corner Method- Examples
Solution: The starting solution for the TP is given in the following table.

 The total shipping cost for this solution is:

(5x10) + (10x0) + (5x7) + (15x9) + (5x20) + (5x18) = 410 dollars.
Note:
 As a rule, there should always be m + n – 1 full cells occupied by the variables
that are currently in the solution (no less and no more).
 Here m=3 and n=4. Therefore m+n-1 = 6. As we can see 6 cells are
occupied.
 Northwest corner rule always guarantee a feasible solution in which m+n-1
cells are occupied.
04 - 19
 1. North West Corner Method- Examples
 Example 3. Ethiopian Pharmuacticals produces drugs in packs at three
productions facilities – Addis Ababa, Gelan and Mojo. The company ships
the packs from the production facilities to four warehouses. The packs are
distributed directly to hospitals from the warehouses. The table on the next
slide shows the costs per pack to ship to the four warehouses.
To Ware House
From Plant Hawassa Sululta Burayu Akaki
Addis Ababa 19 7 3 21
Gelan 15 21 18 6
Mojo 11 14 15 22

Capacity Demand
Addis Ababa 100 Hawassa 150
Gelan 300 Sululta 100
Mojo 200 Burayu 200
Akaki 150
04 - 20
 1. North West Corner Method- Examples
Solution: The transportation problem is shown below.

To
H S B A
Capacity
From
19 7 3 21
AA 100

15 21 18 6
G 300

11 14 15 22
M 200

Demand 150 100 200 150 600

 Begin with a blank shipment schedule. Note the shipping costs in the
upper right hand corner of each cell.
04 - 21
 1. North West Corner Method- Examples

To
H S B A
Capacity
From
19 7 3 21
AA 100 x

15 21 18 6
G 300

11 14 15 22
M 200

Demand 50 100 200 150 600

 Start in the upper left-hand corner, “northwest corner” of the schedule and
place the largest amount of capacity and demand available in that cell.
Seattle demands 150 and Jaurez has a capacity of 100.
04 - 22
 1. North West Corner Method- Examples

To
H S B A
Capacity
From
19 7 3 21
AA 100 x

15 21 18 6
G 50 250

11 14 15 22
M 200

Demand x 100 200 150 600

 Since Addis Ababa capacity is depleted move down to repeat the process
for the Gelan to Hawassa cell. Gelan has sufficient capacity but Hawassa
can only take another 50 packs of demand.
04 - 23
 1. North West Corner Method- Examples

To
H S B A
Capacity
From
19 7 3 21
AA 100 x

15 21 18 6
G 50 100 150 x

11 14 15 22
M 50 150 x

Demand x x x x 600

04 - 24
 1. North West Corner Method- Examples

To
H S B A
Capacity
From 1900
19 7 3 21
750
AA 1900 100

15 21 18 6 2100
G 750 2100 2700 300
2700
11 14 15 22
750
M 750 3300 200
3300
Demand 150 100 200 150 600
C =11,500

 The previous slides show the process of satisfying all constraints and
allows us to begin with a starting feasible solution. Multiply the quantity in
each cell by the cost.
04 - 25
 2. Minimum Cost Method
 The Northwest Corner Method does not utilize shipping costs. It can yield
an initial basic feasible solution easily but the total shipping cost may be
very high.
 The minimum cost method uses shipping costs in order come up with a
basic feasible solution that has a lower cost.
 The steps to follow for the minimum cost method are:
1. Find the decision variable with the smallest shipping cost (Xij).
2. Then, assign Xij its largest possible value, which is the minimum of si
and dj.
3. After that, as in the Northwest Corner Method, cross out row i and
column j and reduce the supply or demand of the non-crossed-out row
or column by the value of Xij.
4. Choose again the cell with the minimum cost of shipping from the cells
that do not lie in a crossed-out row or column and repeat the
procedure until all are depleted.
04 - 26
 2. Minimum Cost Method -Examples
 Example 1. Find the initial feasible solution to the following TP using
Minimum Cost Method.
Step 1: Select the cell with minimum cost.

2 3 5 6
5

2 1 2 5
10

3 8 4 6
15

12 8 4 6

04 - 27
 2. Minimum Cost Method -Examples

Step 2: Cross-out column 2

2 3 5 6
5

2 1 3 5
2
8

3 8 4 6
15

12 X 4 6

04 - 28
 2. Minimum Cost Method -Examples

Step 3: Find the new cell with minimum shipping cost

2 3 5 6
5

2 1 3 5
2
8

3 8 4 6
15

12 X 4 6

04 - 29
 2. Minimum Cost Method -Examples

Step 4: Cross-out row 2

2 3 5 6
5

2 1 3 5
X
2 8

3 8 4 6
15

10 X 4 6

04 - 30
 2. Minimum Cost Method -Examples

Step 5: Find the new cell with minimum shipping cost and cross-out
row 1
2 3 5 6
X
5

2 1 3 5
X
2 8

3 8 4 6
15

5 X 4 6

04 - 31
 2. Minimum Cost Method -Examples

Step 6: Find the new cell with minimum shipping cost and cross-out
column 1
2 3 5 6
X
5

2 1 3 5
X
2 8

3 8 4 6
10
5

X X 4 6

04 - 32
 2. Minimum Cost Method -Examples

Step 7: Find the new cell with minimum shipping cost and cross-out
column 3
2 3 5 6
X
5

2 1 3 5
X
2 8

3 8 4 6
6
5 4

X X X 6

04 - 33
 2. Minimum Cost Method -Examples
Step 8: Finally assign 6 to last cell. The bfs is found as: X11=5,
X21=2, X22=8, X31=5, X33=4 and X34=6

2 3 5 6
X
5

2 1 3 5
X
2 8

3 8 4 6
X
5 4 6

X X X X

The cost in the initial solution, C =2*5+2*2+3*5+1*8+4*4+6*6 = 89

04 - 34
 2. Minimum Cost Method -Examples
Example 2. Based on the following transportation table, find the initial feasible
solution using LCM.

Warehouse
Factory A B C D Supply
1 4 7 7 1 100
2 12 3 8 8 200 Total
3 8 10 16 5 150 Supply
Demand 80 90 120 160 450
Total Demand 450

o4 - 35
 2. Minimum Cost Method -Examples

Identify the cell with the lowest cost

Warehouse
Factory A B C D Supply
1 4 7 7 1 100
2 12 3 8 8 200 Total
3 8 10 16 5 150 Supply
Demand 80 90 120 160 450
Total Demand 450
o4 - 36
 2. Minimum Cost Method -Examples

Allocate as many units as possible to that cell

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 3 8 8 200 Total
3 8 10 16 5 150 Supply
Demand 80 90 120 60 160 450
Total Demand 450
o4 - 37
 2. Minimum Cost Method -Examples

And cross out the row or column (or both) that is exhausted by this
assignment as possible to that cell

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 3 8 8 200 Total
3 8 10 16 5 150 Supply
Demand 80 90 120 60 160 450
Total Demand 450
o4 - 38
 2. Minimum Cost Method -Examples

Find the cell with the next lowest cost from among the feasible cells

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 3 8 8 200 Total
3 8 10 16 5 150 Supply
Demand 80 90 120 60 160 450
Total Demand 450
o4 - 39
 2. Minimum Cost Method -Examples

Allocate as many units as possible to that cell

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 90/3 8 8 110 200 Total
3 8 10 16 5 150 Supply
Demand 80 90 120 60 160 450
Total Demand 450
o4 - 40
 2. Minimum Cost Method -Examples

And cross out the row or column (or both) that is exhausted by this
assignment

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 90/3 8 8 110 200 Total
3 8 10 16 5 150 Supply
Demand 80 90 120 60 160 450
Total Demand 450
o4 - 41
 2. Minimum Cost Method -Examples

Find again the cell with the next lowest cost from among the feasible
cells

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 90/3 8 8 110 200 Total
3 8 10 16 5 150 Supply
Demand 80 90 120 60 160 450
Total Demand 450
o4 - 42
 2. Minimum Cost Method -Examples

Allocate as many units as possible to that cell

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 90/3 8 8 110 200 Total
3 8 10 16 60/5 90 150 Supply
Demand 80 90 120 60 160 450
Total Demand 450
o4 - 43
 2. Minimum Cost Method -Examples

And cross out the row or column (or both) that is exhausted by this
assignment

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 90/3 8 8 110 200 Total
3 8 10 16 60/5 90 150 Supply
Demand 80 90 120 60 160 450
Total Demand 450
o4 - 44
 2. Minimum Cost Method -Examples

Find again the cell with the next lowest cost from among the feasible
cells … In this case there is a tie … choose one arbitrarily, say cell 3,A

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 90/3 8 8110 200 Total
3 8 10 16 60/5 90 150 Supply
Demand 80 90 120 60 160 450
Total Demand 450
o4 - 45
 2. Minimum Cost Method -Examples

Allocate as many units as possible to that cell

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 90/3 8 8 110 200 Total
3 80/8 10 16 60/5 90 150 Supply
Demand 80 90 120 60 160 450
Total Demand 450
o4 - 46
 2. Minimum Cost Method -Examples

And cross out the row or column (or both) that is exhausted by this
assignment

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 90/3 8 8 110 200 Total
3 80/8 10 16 60/5 10 90 150 Supply
Demand 80 90 120 60 160 450
Total Demand 450
o4 - 47
 2. Minimum Cost Method -Examples

Find again the cell with the next lowest cost from among the feasible
cells

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 90/3 8 8 110 200 Total
3 80/8 10 16 60/5 10 90 150 Supply
Demand 80 90 120 60 160 450
Total Demand 450
o4 - 48
 2. Minimum Cost Method -Examples

Allocate as many units as possible to that cell

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 90/3 110/8 8 110 200 Total
3 80/8 10 16 60/5 10 90 150 Supply
Demand 80 90 10 120 60 160 450
Total Demand 450
o4 - 49
 2. Minimum Cost Method -Examples

And cross out the row or column (or both) that is exhausted by this
assignment

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 90/3 110/8 8 110 200 Total
3 80/8 10 16 60/5 10 90 150 Supply
Demand 80 90 10 120 60 160 450
Total Demand 450
o4 - 50
 2. Minimum Cost Method -Examples

Find again the cell with the next lowest cost from among the feasible
cells

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 90/3 110/8 8 110 200 Total
3 80/8 10 16 60/5 10 90 150 Supply
Demand 80 90 10 120 60 160 450
Total Demand 450
o4 - 51
 2. Minimum Cost Method -Examples

Allocate as many units as possible to that cell

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 90/3 110/8 8 110 200 Total
3 80/8 10 10/16
16 60/5 10 90 150 Supply
Demand 80 90 10 120 60 160 450
Total Demand 450
o4 - 52
 2. Minimum Cost Method -Examples

And cross out the row or column (or both) that is exhausted by this
assignment

Warehouse
Factory A B C D Supply
1 4 7 7 100/1 100
2 12 90/3 110/8 8 200 Total
3 80/8 10 10/16 60/5 150 Supply
Demand 80 90 120 160 450
Total Demand 450
The initial feasible solution:
80*8 + 90*3 + 110*8 + 10*16 +100*1 + 60*5 = 2,350 o4 - 53
 3. Vogel’s Method
 The steps to follow to find a bfs to TP by Vogel’s method are:
1. Begin with computing each row and column a penalty.
The penalty will be equal to the difference between the two smallest
shipping costs in the row or column.
2. Identify the row or column with the largest penalty.
3. Find the first basic variable which has the smallest shipping cost in
that row or column.
4. Then assign the highest possible value to that variable, and cross-out
the row or column as in the previous methods.
5. Compute new penalties and repeat the same procedure.

04 - 54
 3. Vogel’s Method
 An example for Vogel’s Method
Step 1: Compute the penalties.
Supply Row Penalty

6 7 8
10 7-6=1

15 80 78
15 78-15=63

Demand 15 5 5

Column Penalty 15-6=9 80-7=73 78-8=70

04 - 55
 3. Vogel’s Method
Step 2: Identify the largest penalty and assign the highest possible value to the
variable.

Supply Row Penalty

6 7 8
5 8-6=2
5

15 80 78
15 78-15=63

Demand 15 X 5

Column Penalty 15-6=9 _ 78-8=70

04 - 56
 3. Vogel’s Method

Step 3: Identify the largest penalty and assign the highest possible value to
the variable.

Supply Row Penalty

6 7 8
0 _
5 5

15 80 78
15 _

Demand 15 X X

Column Penalty 15-6=9 _ _

04 - 57
 3. Vogel’s Method

Step 4: Identify the largest penalty and assign the highest possible value to
the variable.
Supply Row Penalty

6 7 8
X _
0 5 5

15 80 78
15 _

Demand 15 X X

Column Penalty _ _ _

04 - 58
 3. Vogel’s Method

Step 5: Finally the bfs is found as X11=0, X12=5, X13=5, and X21=15

Supply Row Penalty

6 7 8
X _
0 5 5

15 80 78
X _
15

Demand X X X

Column Penalty _ _ _

Therefore, The cost in the initial solution,

C =0*6+7*5+8*5+15*15 = 302
04 - 59
 2. Minimum Cost Method -Examples
Example 3. Based on the following transportation table, find the initial feasible
Solution.
Warehouse
Factory A B C D Supply
1 4 7 7 1 100
2 12 3 8 8 200 Total
3 8 10 16 5 150 Supply
Demand 80 90 120 160 450
Total Demand 450
NWC solution = 2460
LCM solution = 2350
Vogal’s solution = 2340

It shows that Vogal’s solution gives the minimum cost. Do you think
that this is The optimal solution? Why?
o4 - 60
 Methods for Optimal Solution to TP

 There are two manual methods of finding an optimal

solution to a Transportation Problem.
1. Stepping-stone method (Assignment 2)
2. Modified distributed method (MODI)

04 - 61
 Modified Distributed Method (MODI)
 It is a modified version of stepping stone method.
 The steps to follow to test the optimal solution to TP by MODI are:

Stage A.
Step I. Find the initial basic feasible solution of the given TP by NWC,
LCM or VAM methods.
Step II. Check the number of occupied cells. If they are less than m+n-1,
there exists degeneracy and introduce a very small positive
assignment of e (approx. 0) in suitable independent positions, so
that the number of occupied cells (basic) is exactly equal to m+n-1.
Go to stage 2.

04 - 62
 Modified Distributed Method (MODI)
Stage B.
 Step 0: Let ui, vj , cij variables represent rows, columns, and cost in the
transportation table, respectively.
 Step I: For an initial basic feasible solution with (m+n-1) occupied (basic)
cells, calculate ui and vj values for rows and columns respectively
using the relationship Cij = ui + vj for all allocated cells only. To start
with assume any one of the ui or vj to be zero.
 Step II: For the unoccupied (non-basic) cells, calculate the cell evaluations
or the net evaluations as kij = Cij – (ui + vj).
 Step III:
a) If all kij > 0, the current solution is optimal and unique.
b) If any kij = 0, the current solution is optimal, but an alternate
solution exists.
c) If any kij < 0, then an improved solution can be obtained by
converting one of the basic cells to a non basic cells and one of the
non basic cells to a basic cell. Go to step IV.
o4 - 63
 Modified Distributed Method (MODI)

 Step IV: Select the cell corresponding to most negative cell evaluation. This
cell is called the entering cell. Identify a closed path or a loop which
starts and ends at the entering cell and connects some basic cells
at every corner.
 Step V: Put a + sign in the entering cell and mark the remaining corners of
the loop alternately with – and + signs.
 Step VI: From the cells marked with – sign, select the smallest quantity (say
θ). Add θ to each quantity of the cell marked with + sign and
subtract θ from each quantity of the cell marked with – sign. In case
of a tie, make zero allocation to any one of the cells. This will make
one non-basic cells as basic and vice-versa.
 Step VII: Return to step I.

o4 - 64
 Optimal Solution to TP – MODI Method
Example 1. You remember that the initial feasible solution for the following TP
was found by NWC. Test the optimal solution by MODI.

The initial feasible solution

 The total shipping cost for this solution was:

(5x10) + (10x0) + (5x7) + (15x9) + (5x20) + (5x18) = 410 dollars.
65
 Optimal Solution to TP – MODI Method
Stage A.
 As a rule, there should always be m + n – 1 full cells occupied by the
variables that are currently in the solution.
 Here m=3 and n=4. Therefore m+n-1 = 6. As we can see 6 cells are
occupied.
Stage B.
 Determination of Entering Variable:
 For each variable Xij that is in the current solution, the multipliers Ui
and Vj must satisfy the following equation:
Ui + Vj = Cij (Note: For all variables that are in the solution)
 These equations yield m+n-1 equations with m+n unknowns.
 The values of the multipliers can be determined by simply assuming an
arbitrary value for any one of the multipliers.
 In practice, we usually set U1 = 0. And then we solve all other values
(U2, V1, etc.).
04 - 66
 Optimal Solution to TP – MODI Method
 Applying to our example, we get the following:
For x11: U1 + V1 = C11 = 10
For x12: U1 + V2 = C12 = 0
For x22: U2 + V2 = C22 = 7
For x23: U2 + V3 = C23 = 9
For x24: U2 + V4 = C24 = 20
For x34: U3 + V4 = C34 = 18

04 - 67
 Optimal Solution to TP – MODI Method
 When we set U1 = 0, we can calculate all remaining values as follows:
V1 = 10, V2 = 0, U2 = 7, V3 = 2, V4 = 13, and U3 = 5.
 Next, the evaluation of each variable Xij that is not currently in the solution
(non-basic) is made by using the following equation:
kij = Cij – (ui + vj).(For all variables that are not in the solution)
 Examine kij. If at least one kij is negative, the entering variable is then
selected as the Xij variable with the most negative kij value.

04 - 68
 Optimal Solution to TP – MODI Method
 Now, applying this procedure to the current example:
The Ui and Vj values found before will be put in their places as follows:
For x13: k13 = C13 – (U1 + V3) = 20 – (0 + 2) = 18
For x14: k14 = C14 – (U1 + V4) = 11 – (0 + 13) = -2
For x21: k21 = C21 – (U2 + V1) = 12 – (7 + 10) = -5
For x31: k31 = C31 – (U3 + V1) = 0 – (5 + 10) = -15
For x32: k32 = C32 – (U3 + V2) = 14 – (5 + 0) = 9
For x33: k33 = C33 – (U3 + V3) = 16 – (5 + 2) = 9

 At this point we check for optimality. If all kij values are positive, then the
solution is optimum.
 Since there are negative values, the initial feasible solution is not optimal
 Since -15 is the most negative kij value, X31 is the entering variable.
 We continue now by selecting a leaving variable.
04 - 69
 Optimal Solution to TP – MODI Method
 Determination of Leaving Variable
 In order to determine a leaving variable, we construct a closed loop.
o The Loop starts and ends at the entering variable (x31 in this case)
o It visits only the Xij’s that are currently in the solution.
o It forms a rectangular shape.
o It must be drawn so as to reach the end point at the Shortest
possible path.
o Put a + sign in the entering cell and mark the remaining corners of
the loop alternately with – and + signs.

04 - 70
 Optimal Solution to TP – MODI Method

 In each row and column there should be equal number of + and – signs.
 The leaving variable is selected from among the variables that have (-ve)
signs. In this case x11, x22, or x34 can be selected.
 Usually the leaving variable is one of these (-) signed variables having the
smallest value. In this case all x11, x22, and x34 have the value of 5.
 Therefore, x34 is arbitrarily selected. You might select other ones, as well.
 Now, we will form the new solution by changing the places in the table as
follows:
 The cell value corresponding to the entering variable x31 is increased by
The value of the leaving variable x34, which is 5.

04 - 71
 Optimal Solution to TP – MODI Method

 Here, only the place of Leaving Variable (x34) is emptied.

 Note that, however, although the values of x11 and x22 become zero, we
should leave them in the current solution. (Because m + n – 1 cells (6
cells) must be occupied)
 According to this new solution, the total shipping cost becomes 335
dollars.
(0x10)+(15x0)+(5x0)+(0x7)+(15x9)+(20x10) = 335

04 - 72
 Optimal Solution to TP – MODI Method
 The variables that are currently in the solution are: x11, x12, x22, x23, x24,
and x31.
o For x11: U1 + V1 = C11 = 10
o For x12: U1 + V2 = C12 = 0
o For x22: U2 + V2 = C22 = 7
o For x23: U2 + V3 = C23 = 9
o For x24: U2 + V4 = C23 =20
o For x31: U3 + V1 = C31 = 0

 When we set U1 = 0, we can calculate all remaining values as follows:

V1 = 10, V2 = 0, U2 = 7, V3 = 2, V4 = 13, and U3 = -10.

04 - 73
 Optimal Solution to TP – MODI Method
 Next, for all remaining variables, Ui and Vj values will be put in their places
as follows:
For x13: k13 = C13 – (U1 + V3) = 20 – (0 + 2) = 18
For x14: k14 = C14 – (U1 + V4) = 11 – (0 + 13) = -2
For x21: k21 = C21 – (U2 + V1) = 12 – (7 + 10) = -5
For x32: k32 = C32 – (U3 + V2) = 14 – (-10 + 0) = 24
For x33: k33 = C33 – (U3 + V3) = 16 – (-10 + 2) = 24
For x34: k34 = C34 – (U3 + V4) = 18 – (-10 + 13) = 15
 Since -5 is the most negative kij value, x21 is the entering variable.
 Since there are negative values in the current solution, we continue by
selecting a leaving variable. To determine the leaving variable we again draw
a closed loop.

04 - 74
 Optimal Solution to TP – MODI Method

 Since both x11 and x22 (-ve signed cells) have a value of zero, we can
select either one.
 But, in this case, we select x11 as the leaving variable arbitrarily.
 The new solution becomes as follows (x21 enters and x11 leaves):

04 - 75
 Optimal Solution to TP – MODI Method
 Here, since the value of leaving variable is zero, this makes no difference
in the values of the table. Therefore, the total shipping cost is still 335
dollars.
 Now, again, we will check for the optimality of the new solution.

04 - 76
 Optimal Solution to TP – MODI Method
 The variables that are currently in the solution are: x21, x12, x22, x23, x24,
and x31.
o For x21: U2 + V1 = C21 = 12
o For x12: U1 + V2 = C12 = 0
o For x22: U2 + V2 = C22 = 7
o For x23: U2 + V3 = C23 = 9
o For x24: U2 + V4 = C24 = 20
o For x31: U3 + V1 = C31 = 0

 When we set U1 = 0, we can calculate all remaining values as follows:

V1 = 5, V2 = 0, U2 = 7, V3 = 2, V4 = 13, and U3 = -5.
04 - 77
 Optimal Solution to TP – MODI Method
 Next, for all remaining variables that are not in the current solution,
Ui and Vj values will be put in their places as follows:
For x13:k13 = C13 – (U1 + V3) = 20 – (0 + 2) = 18
For x14:k14 = C14 – (U1 + V4) = 11 – (0 + 13) = -2
For x11:k11 = C11 – (U1 + V1) = 10 – (0 + 5) = 5
For x32:k32 = C32 – (U3 + V2) = 14 – (-5 + 0) = 19
For x33:k33 = C33 – (U3 + V3) = 16 – (-5 + 2) = 24
For x34:k34 = C34 – (U3 + V4) = 18 – (-5 + 13) = 10

 Since -2 is the only negative kij value, x14 is the entering variable.

04 - 78
 Optimal Solution to TP – MODI Method

 At this stage, x24 enters the solution because it has minimum value (with -
sign).The new solution is

04 - 79
 Optimal Solution to TP – MODI Method
 The variables that are currently in the solution are: x12, x14, x21, x22,
X23, and x31.
o For x12: U1 + V2 = C12 = 0
o For x14: U1 + V4 = C14 = 11
o For x21: U2 + V1 = C21 = 12
o For x22: U2 + V2 = C22 = 7
o For x23: U2 + V3 = C23 = 9
o For x31: U3 + V1 = C31 = 0

 When we set U1 = 0, we can calculate all remaining values as follows:

V1 = 5, V2 = 0, U2 = 7, V3 = 2, V4 = 11, and U3 = -5.
04 - 80
 Optimal Solution to TP – MODI Method
 Next, for all remaining variables that are not in the current solution,
Ui and Vj values will be put in their places as follows:
For x11:k11 = C11 – (U1 + V1) = 10 – (0 + 5) = 5
For x13:k13 = C13 – (U1 + V3) = 20 – (0 + 2) = 18
For x24:k24 = C24 – (U2 + V4) = 20 – (7 + 11) = 2
For x32:k32 = C32 – (U3 + V2) = 14 – (-5 + 0) = 19
For x33:k33 = C33 – (U3 + V3) = 16 – (-5 + 2) = 19
For x34:k34 = C34 – (U3 + V4) = 18 – (-5 + 11) = 12
 Now, all kij values for this solution are positive
 From the variables currently in the solution:
=0*5+11*10+12*0+7*10+9*15+0*5
=315 dollars
04 - 81
Optimal Solution to TP
Linear Programming Approach

04 - 82
 Linear Programming Approach to TP
 Although, the manual solution to the transportation model is relatively
straightforward, it is time consuming.
 The transportation model can also be optimally solved by Linear
Programming.

Demand Location B Demand Location A Supply Location 3

Supply Location 2

Supply Location 1 Demand Location C

Demand Location D

04 - 83
 Linear Programming Approach to TP
Let,
 m is a set of supply points from which a good is shipped
 n is a set of demand points to which the good is shipped
 i represents a supply point
 j represents a demand point
 ai is the availability at the ith source
 bj is the requirement of the jth destination.
 Cij is the cost of transporting one unit of commodity from the ith
source to the jth destination
 xij is the quantity of the commodity transported from ith source to the
jth destination (i=1, 2, …… m; j=1,2, …..n)

 The objective of TP is to minimize the total shipping cost of supplying the

destinations with the required demand from the available supplies at the
sources..
04 - 84
 Linear Programming Approach to TP
Therefore, the mathematical representation of transportation model is:
im j n
Z  min   cijXij
i 1 j 1

s.t.
j n

X j 1
ij  ai (i  1,2,..., m)

i m

X i 1
ij  bj ( j  1,2,..., n)

and, Xij  0(i  1,2,..., m; j  1,2,..., n)

Where,
Xij = number of units shipped from supply point i to demand point j
ai = supply capacity of supply point i
bj= demand requirement of demand point j
Cij= the cost of transporting one unit of commodity from the ith
source to the jth destination
04 - 85
 Linear Programming Approach to TP
 Therefore, the problem is to determine the values of xij such that total cost of
transportation is minimized.
Important Notes:
1. The necessary and sufficient condition for a TP to have a feasible solution is
if the the total quantity available is the same as the total requirement. That is,
m m

a
i 1
i  b
i 1
i

And, the TP which satisfies this condition is called Balanced TP.

m m

2. If  ai   b , then the TP is said to be Unbalanced TP.

j
i 1 i 1

3. For any TP, the coefficients of all Xij in the constraints are unity.
4. Since both the objective function and the constraints are linear in the TP
model, TP is a special case of LPP.

04 - 86
 Balanced Transportation Problem

Source Destination Availability

D1 D2 D3 D4
C11 C12 C13 C14
S1 X11 X12 X13 X14 a1
C21 C22 C23 C24
S2 X21 X22 X23 X24 a2
C31 C32 C33 C34
S3 X31 X32 X33 X34 a3
Requirement B1 b2 b3 b4 Σai = Σbj

The necessary and sufficient condition for a TP

04 - 87
 The LP Formulation - Examples
Example 1. Consider the following transportation table and formulate a LPP.

Warehouse
Factory A B C D Supply
1 4 7 7 1 100
2 12 3 8 8 200 Total
3 8 10 16 5 150 Supply
Demand 80 90 120 160 450
Total Demand 450
let x be the quantity shipped from factory i to warehouse j
i, j
minimize 4x1,A  7 x1,B  7 x1,C  1x1,D 
12x2,A  3x2,B  8x2,C  8x2,D 
8x3,A  10x3,B  16x3,C  5x3,D
04 - 88
 The LP Formulation - Examples
Supply Constraints (rows)
Warehouse
Subject to Factory A B C D Supply
1 4 7 7 1 100
X1,A+ X1,B+ X1,C+ X1,D ≤ 100 2 12 3 8 8 200 Total
3 8 10 16 5 150 Supply
X2,A+ X2,B+ X2,C+ X2,D ≤ 200 Demand 80 90 120 160 450
X3,A+ X3,B+ X3,C+ X4,D ≤ 150 Total Demand 450

.
Demand Constraints (columns)

Subject to
X1,A+ X2,A+ X3,A ≥ 80
X1,B+ X2,B + X3,B ≥ 90
X1,C+ X2,C+ X3,C ≥ 120
X1,D+ X2,D+ X3,D ≥ 160

04 - 89
 The LP Formulation - Examples
The complete formulation of the TP is, therefore,
Min Z = 4X1,A+7X1,B+ 7X1,C+ X1,D +12X2,A+ 3X2,B+ 8X2,C+ 8X2,D
+ 8X3,A+ 10X3,B+ 16X3,C+5X3,D
Subject to
X1,A+ X1,B+ X1,C+ X1,D ≤ 100
X2,A+ X2,B+ X2,C+ X2,D ≤ 200
X3,A+ X3,B+ X3,C+ X3,D ≤ 150
X1,A+ X2,A+ X3,A ≥ 80
X1,B+ X2,B + X3,B ≥ 90
X1,C+ X2,C+ X3,C ≥ 120
X1,D+ X2,D+ X3,D ≥ 160
and Xij ≥ 0 (i=123; j=A, B, C, D) 04 - 90
 The LP Formulation - Examples

Example 2. Some Building Brick Company (BBC) has orders for 80 tons of
bricks at three locations in Yeka S/C, Kolfe-Keranio S/C and Nifas Silk Lafto
S/C. The requirements in their order are 25 tons, 45 tons, and 10 tons. BBC
has two plants. Plant 1 produces 50 and plant 2 produces 30 tons per week.
End of week shipments is to be made given the following delivery cost (in
x100birr) per ton:

Sub-city
Plant
Yeka K/K N/S
1 24 30 40
2 30 40 42

Formulate a LPP.

04 - 91
 The LP Formulation - Examples
• Solution:
– Let the decision Variables xij is the amount of brick shipped from plant i
to suburb j.
where,
i = supply point, i.e. 1 (Plant 1) and 2 (Plant 2)
j = demand point, i.e. 1 (Yeka), 2 (K/K), and 3 (N/F Lafto)
– Objective Function: Minimize total shipping cost per week:
Min. Z= 24x11+30x12+40x13+30x21+40x22+42x23
– Constraints:
x11 + x12 + x13 < 50 (Plant 1 capacity)
x21 + x22 + x23 < 30 (Plant 2 capacity)
x11 + x21 = 25 (Yeka S/C demand)
x12 + x22 = 45 (K/K S/C demand)
x13 + x23 = 10 (N/F Lafto S/C demand)
all xij > 0 (Non-negativity)
04 - 92
 The LP Formulation - Examples

LP Formulation:

Z = Min. 24x11+30x12+40x13+30x21+40x22+42x23
s.t.
x11 + x12 + x13 < 50
x21 + x22 + x23 < 30
x11 + x21 = 25
x12 + x22 = 45
x13 + x23 = 10
and, all xij > 0

04 - 93
 The LP Formulation - Examples
 Example 3: EEPCo has proposed three Micro hydropower plants that
supply the electric needs of four major towns of the country. The
associated supply of each plant and demand of each town is given in
table 1. The cost of sending 1MWH of electricity from a plant to a town
depends on the distance the electricity must travel. Formulate a LPP.

From To

Town 1 Town 2 Town 3 Town 4 Supply (MWH)

Plant 1 $8 $6 $10 $9 35

Plant 2 $9 $12 $13 $7 50

Plant 3 $14 $9 $16 $5 40

Demand 45 20 30 30
(MWH)

04 - 94
 The LP Formulation - Examples
Solution:
1. Decision Variable:
 Since we have to determine how much electricity is sent from each plant to
each city;
 Xij = Amount of electricity produced at plant i (i =1, 2, 3) and sent to
town j (j = 1, 2, 3, 4)

2. Objective Function:
 Since we want to minimize the total cost of shipping from plants to cities;
Minimize Z = 8*X11+ 6*X12 +10*X13 + 9*X14 + 9*X21 + 12*X22 +13*X23
+ 7*X24 +14*X31 + 9*X32 + 16*X33 + 5*X34

04 - 95
 The LP Formulation - Examples

3. Supply Constraints:
 Since each supply point has a limited production capacity;
X11+X12+X13+X14 <= 35
X21+X22+X23+X24 <= 50
X31+X32+X33+X34 <= 40
 Further, since a negative amount of electricity can not be shipped all Xij’s
must be non negative;
Xij >= 0 (i= 1,2,3; j= 1,2,3,4)

04 - 96
 The LP Formulation - Examples

4. What will be the demand Constraints?

04 - 97
 The LP Formulation - Examples

The LP Formulation:
Min Z = 8*X11+6*X12+10*X13+9*X14+9*X21+12*X22+13*X23+7*X24+
14*X31+9*X32+16*X33+5*X34
Subject to:
X11+X12+X13+X14 ≤35
X21+X22+X23+X24 ≤ 50
X31+X32+X33+X34 ≤40
X11+X21+X31 ≥ 45
X12+X22+X32 ≥ 20
X13+X23+X33 ≥ 30
X14+X24+X34 ≥ 30
and, Xij ≥ 0 (i= 1,2,3; j= 1,2,3,4)

04 - 98
 The Transportation LP Solution

 Since transportation problem is a special class of linear programming

problem, it can be solved by simplex method.

 However, the number of variables being large, there will be too many
calculations and is tedious to do it manually.

 The method usually used to find optimal solution to transportation LP

problem is computer solution. The simplest of this is use of the EXCEL
SOLVER.

04 - 99
Excel Layout for The Model

04 - 100
Solver Entries for the layout

04 - 101
 The LP Formulation - Examples
Example 1. Consider the following transportation table.
a) Formulate a LPP.
b) Find the optimal solution using Excel Solver

Warehouse
Factory A B C D Supply
1 4 7 7 1 100
2 12 3 8 8 200 Total
3 8 10 16 5 150 Supply
Demand 80 90 120 160 450
Total Demand 450

04 - 102
 The LP Formulation - Examples
The complete formulation of the TP is, therefore,

Min Z = 4X1,A+7X1,B+ 7X1,C+ X1,D +12X2,A+ 3X2,B+ 8X2,C+ 8X2,D

+ 8X3,A+ 10X3,B+ 16X3,C+5X3,D
Subject to
X1,A+ X1,B+ X1,C+ X1,D ≤ 100
X2,A+ X2,B+ X2,C+ X2,D ≤ 200
X3,A+ X3,B+ X3,C+ X3,D ≤ 150
X1,A+ X2,A+ X3,A ≥ 80
X1,B+ X2,B + X3,B ≥ 90
X1,C+ X2,C+ X3,C ≥ 120
X1,D+ X2,D+ X3,D ≥ 160
and Xij ≥ 0 (i=123; j=A, B, C, D) 04 - 103
 Variation of A Transportation Problem

1. Unbalanced Transportation Problem - if total supply is not equal to

total demand.
2. Degeneracy: The condition of too few completed cells to allow all
necessary paths to be constructed
3. Evaluating Alternatives – To choose best locations if more
supply/demand locations are proposed.
4. Maximization in Transportation Problem – when the objective is to
maximize the profit.

04 - 104
 1. Unbalanced Transportation Problem
 When supply and demand are not equal, then the problem is unbalanced.
There are two situations:
 When supply is greater than demand:
In this case, when all demand is satisfied, the remaining supply that
was not allocated at each origin would appear as slack in the supply
constraint for that origin.
To find a solution to the problem, it has to be balanced by adding
dummy demand point. Since shipments to the dummy demand point
are not real, they are assigned a cost of zero.
 Dummy: Imaginary number added which is equal to the difference
between supply and demand when these are unequal
 When supply is less than demand:
In this case, the problem has no feasible solution as one or more of the
demand will be left unmet.
The problem may be solved by assuming a dummy supply with a unit
cost of shipping equal to zero.
04 - 105
 1. Unbalanced Transportation Problem - Example
Example: Consider the following situation showing cost per unit between
supply and demand (receiving) location where the supply and the demand
are unequal.

Demand
Supply A B Supply
1 9 6 75
2 5 3 75
80 90 Total
Total Demand 170 Supply
150

In this case the ability of the demand (receiving) locations is 20 more than the
supply locations.

04 - 106
 1. Unbalanced Transportation Problem - Example
In this case we must balance the supply and demand by introducing a Dummy
Supply Location for 20 units.

Demand
Supply A B Supply
1 9 6 75
2 5 3 75
Dummy 20
80 90 Total
Total Demand 170 Supply
170

Note: No cost is entered for the Dummy location. Now, the problem can be
solved using the Linear Programming solution for the Transportation Problem
as shown on the next slide.

04 - 107
1. Unbalanced TP – Excel Solution

04 - 108
 2. Degeneracy in Transportation Problem
 To find a solution to a transportation problem using MODI, the number of
occupied cells in any solution must be equal to the number of rows in the
table plus the number of columns minus 1. i.e. m+n-1
 If a solution does not satisfy this rule it is called degenerate. For example,
To Customer Customer Customer Warehouse
From 1 2 3 supply
$8 $2 $6
Warehouse 1 100 100

$10 $9 $9
Warehouse 2 0 100 20 120

$7 $10 $7
Warehouse 3 80 80

Customer demand 100 100 100 300

 Initial solution is degenerate.

 Place a zero quantity in an unused cell and proceed to find the bfs.
04 - 109
 3. Evaluating Alternatives
Example: A Metal and Metal Products company that specializes in iron casting
currently has 3 Warehouses (receiving locations) and two casting foundry
factories (supply locations). The shipping cost, factory capacity and warehouse
capacity (both in x100)are summarized in the following table.

Warehouse

Foundry A B C Supply
1 17 10 6 30
2 7 12 14 20
Demand 25 10 40 Total
Total Demand 75 Supply
50

04 - 110
 3. Evaluating Alternatives
Business conditions have been good and the company will build a new foundry
to meet future business requirements. They are considering 2 locations: Akaki
and Kotebe. The new foundry will be designed to produce 2,500 casts per
month. The new foundry will be shipping their product to the current
warehouses. The production department has determined the shipping costs
from Akaki and Kotebe to the existing warehouses and summarized them in the
table below:

Warehouse
New Which location should they
Foundry A B C choose? Akaki or Koetebe?
Akaki 10 8 15
Kotebe 12 13 5

04 - 111
 3. Evaluating Alternatives
To answer this question, we must consider the Transportation Problem Solution
for both Akaki and Kotebe then evaluate the results: Warehouse
New
Foundry A B C
Akaki – Transportation Problem Akaki 10 8 15
Kotebe 12 13 5

Warehouse Supply
Factory
Demand A B C Supply
1 17 10 6 30
2 7 12 14 20
Akaki 10 8 15 25
Demand 25 10 40 Total
Total Demand 75 Supply
75
04 - 112
 3. Evaluating Alternatives

Akaki – Solution

Warehouse Supply
Factory
Demand A B C Supply
1 0 0 30 30
2 20 0 0 20
Akaki 5 10 10 25
Demand 25 10 40 Total
Total Demand 75 Supply
75
Total Cost 600
04 - 113
 3. Evaluating Alternatives
Warehouse
New
Foundry A B C
Kotebe – Transportation Problem Akaki 10 8 15
Kotebe 12 13 5

Warehouse Supply
Factory
Demand A B C Supply
1 17 10 6 30
2 7 12 14 20
Kotebe 12 13 5 25
Demand 25 10 40 Total
Total Demand 75 Supply
75
04 - 114
 3. Evaluating Alternatives

Best
Kotebe – Solution

Warehouse Supply
Factory
Demand A B C Supply
1 17 10 6 30
2 7 12 14 20
Kotebe 12 13 5 25
Demand 25 10 40 Total
Total Demand 75 Supply
75
Total Cost 520
04 - 115
 4. Maximization in Transportation Problem
 To minimize the shipment cost in TP, clear algorithm is designed (as we
have seen earlier).
 If the TP is with objective to maximize the total profit, What to do?

Options:
1. To find a manual solution to it, the maximization problem has to be
converted to a minimization problem by multiplying all unit cost entries
by -1, or
2. By subtracting all the unit cost entries from the highest entry in the
given transportation table. The modified minimization problem can then
be solved in the usual manner, or
3. Directly solve it by Excel Solver but Max. option shall be selected in the
Solver dialog box.

04 - 116
 4. Maximization in Transportation Problem
 Example: Solve the following TP to maximize profit. The unit profits are
given in the cells.

Warehouse
Factory A B C D Supply
1 15 51 42 33 23
2 80 42 26 81 44 Total
3 90 40 66 60 33 Supply
Demand 23 31 16 30 100
Total Demand 100

04 - 117
 4. Maximization in Transportation Problem
 Solution: Convert the problem to minimization type.
Option 1. Multiply the profit costs by -1.
Warehouse
Factory A B C D Supply
1 -15 51 -42 -33 23
2 -80 -42 -26 -81 44 Total
3 -90 -40 -66 -60 33 Supply
Demand 23 31 16 30 100
Total Demand 100

Option 2. Subtracting each cost element from highest cost element (90).
Warehouse
Factory A B C D Supply
1 75 39 48 57 23
2 10 48 64 9 44 Total
3 0 50 24 30 33 Supply
Demand 23 31 16 30 100
Total Demand 100
04 - 118
 4. Maximization in Transportation Problem
 The optimum allocations are as given below.
Factory A B C D Supply
1 23 23
2 6 8 30 44 Total
3 17 16 33 Supply
Demand 23 31 16 30 100
Total Demand 100

Warehouse
Factory A B C D Supply
1 15 51 42 33 23
2 80 42 26 81 44 Total
3 90 40 66 60 33 Supply
Demand 23 31 16 30 100
Total Demand 100

 Therefore, the optimum profit is:

= 23*51+6*80+8*42+30*81+17*90+16*66 = 7005.

 Please also solve this problem by Excel Solver and compare the result.
04 - 119
THANK YOU

04 - 120
 Home Take Assignment 4
1. Based on the following transportation table, find the optimal solution
a) using MODI
b) using LP
And, compare the solutions from the two methods.

Warehouse
Factory A B C D Supply
1 4 7 7 1 100
2 12 3 8 8 200 Total
3 8 10 16 5 150 Supply
Demand 80 90 120 160 450
Total Demand 450

04 - 121
 Home Take Assignment 4
2. Ethiopian Pharmuacticals produces drugs in packs at three productions
facilities – Addis Ababa, Gelan and Mojo. The company ships the packs
from the production facilities to four warehouses. The packs are distributed
directly to hospitals from the warehouses. The table on the next slide
shows the costs per pack to ship to the four warehouses. Find the
minimum cost of transport using MODI approach.
To Ware House
From Plant Hawassa Sululta Burayu Akaki
Addis Ababa 19 7 3 21
Gelan 15 21 18 6
Mojo 11 14 15 22

Demand
Capacity
Hawassa 150
Addis Ababa 100
Sululta 100 Ans: C = $6250
Gelan 300
Burayu 200
Mojo 200
Akaki 150 04 - 122
 Home Take Assignment 4
3. A Contractor is organizing the supply of ready-mix concrete to four sites. He
estimates that the total daily requirements of the four sites amount to 24
lorry loads and he finds three suppliers who are able to meet this demand
between them. The separate amounts available from the suppliers are (in
lorry loads) are S1: 4; S2: 8; S3:12 and the quantities needed for the four
sites are A: 5 , B: 2, C:10, D:7
In the price negotiation it was agreed that transport costs will be charged to
the contractor in proportion to mileage incurred. The distances involved are:
Demand
Supply A B C D Supply
S1 6 12 2 5 4
S2 8 21 13 12 8 Total
S3 11 16 5 16 12 Supply
Demand 5 2 10 7 24
Total Demand 24

It is required for the contractor to determine the minimum total distance to

be traveled and corresponding supply arrangement from each supplier to
each site. Solve it by LPP.
04 - 123
 Home Take Assignment 4
4. Some Building Brick Company (BBC) has orders for 80 tons of bricks at
three locations in Yeka S/C, Kolfe-Keranio S/C and Nifas Silk Lafto S/C.
The requirements in their order are 25 tons, 45 tons, and 10 tons. BBC
has two plants. Plant 1 produces 50 and plant 2 produces 30 tons per
week. End of week shipments is to be made given the following delivery
cost (in x100birr) per ton:

Sub-city
Plant
Yeka K/K N/S
1 24 30 40
2 30 40 42

What is the optimal solution to this TP using LPP?

04 - 124
 Home Take Assignment 4
5. EEPCo has proposed three Micro hydropower plants that supply the
electric needs of four major towns of the country. The associated supply
of each plant and demand of each town is given in table 1. The cost of
sending 1MWH of electricity from a plant to a town depends on the
distance the electricity must travel. Find an optimal solution using LPP.

From To

Town 1 Town 2 Town 3 Town 4 Supply (MWH)

Plant 1 $8 $6 $10 $9 35

Plant 2 $9 $12 $13 $7 50

Plant 3 $14 $9 $16 $5 40

Demand 45 20 30 30
(MWH)

04 - 125
 Home Take Assignment 4
6. A plastics manufacturer has 1200 boxes of transparent wrap in stock at
one factory and another 1000 boxes at its second factory. The
manufacturer has orders for this product from three different retailers, in
quantities of 1000, 700, and 500 boxes, respectively. The unit shipping
costs (in birr per box) from the factories to the retailers are as follows.

From To

Retailer 1 Retailer 2 Retailer 3

Factory 1 14 13 11

Factory 2 13 13 12

04 - 126
 Home Take Assignment 4
7. Solve the cargo problem whose LPP formulation done in chapter 2.

04 - 127