BBM 351

CHAPTER THREE.

TRANSPORTATION.

- Transportation models are special type of linear programming models.

- In transport models, demand and production are both related to the same item being produced
and distributed.
- The models are also characterized by the element of certainty of data and the measurements
related to the transportation problem itself.
- Certainty pertains to;
i) Quantities requested by the receiving points.
ii) Quantities produced by the supplying sources.
iii) All those costs pertaining to the transportation problem.
- In such cases, data and information relating to the transportation problem must be certain,
known and expressed in quantitative form. It is important to collect the relevant data and
information that will assist in making decision that is useful in selecting the best strategy for,
distributing the product which meets the receiving points requirements and yet remain within
the productive capacity of various supplying units.

OBJECTIVE.

- In transportation problem, the objective is either to maximize the profit/contribution/benefit or

to minimize total transportation costs of moving a certain commodity from a number of origins
to several receiving points.

- To facilitate the identification of starting solution and to eventually get the optimum solution,
use the data and information collected and then represent in a tabular form.

General tabular structure/or arrangement in the table.

a) The receiving points should be listed in the columns.
b) The supplying sources should be in the rows.
c) The quantities produced from each source should be listed in the column at the right hand
side of the table.
d) The requirements by the receiving points should be in the bottom row, across the body of
the table.
e) Cells in the table represent all possible combinations of supply points and demand points.

GENERAL REPRESENTATION PROBLEM.

Sources To j Destination – receiving points

From i

F1 W1 W2 --- Wjn Wj Capacity/

Supply
X11 X12 - X1n X1j PF1

1|Page
 BBM 351

F2 X21 X22 - X2n X2j PF2

- - - - - - -
Fi Xi1 Xi2 - Xin Xij PFi
Requirement RW1 RW2 - RWn RWj GW
/ GF
Demand

Where;

Wj = destinations= receiving points = warehouses.

Fi = sources = supplying points = factories.

PFi = total quantity produced by a given factory Fi in a given point in time.

RWj = total requirement of warehouse Wj.

GW = grand total requirement by all warehouses.

GF = grand total production by all factories.

Hence, GW = ∑Wj

GF = ∑Fi

Xij = quantity of items that each supplying point Fi transports.

NOTE.

a) It is not necessary that the grand totals of requirements and quantities supplied be equal. But
for a solution to exist, there must be consistency condition which assumes the totals are equal.

m m

∑ Fi = ∑ Wj
i=1 i=1

- Consequently for the model to possess a feasible solution and in order to analyze a standard
transportation model, assume that total supply equals total demand.
b) Some cells may receive zero units. Hence, remain empty and such empty cells are called
Waters.
c) Filled or used cells are called Stones.
d) The product supplied and product received must be homogeneous.
e) The cost of transporting a unit of the product from the ith source to the jth destination is Cij and
is known for all combinations (i,j).

FORMULATION OF TRANSPORTATION MODELS.

ILLUSTRATION 1.

2|Page
 BBM 351

A dairy firm has three plants located throughout a state. Daily milk production at each plant is as
follows;

Plant 1 is 6million litres.

Plant 2 is 1million litres.

Plant 3 is 10 million litres.

Each day the firm must fulfil the needs of its four distribution centres. Minimum requirement at each
centre is as follows;

Distribution Centre 1 is 7million litres.

Distribution Centre 2 is 5million litres.

Distribution Centre 3 is 3million litres.

Distribution Centre 4 is 2million litres.

Cost of shipping one million litres of milk from each plant to each distribution Centre is given in the
following table in hundreds of shillings;

Distribution Centre
1 2 3 4 Supply
1 2 3 11 7 6
Plants 2 1 0 6 1 1
3 5 8 15 9 10
Demand 7 5 3 2

The dairy firm wishes to decide as to how much should be the shipment from which plant to which
distribution Centre so that the cost of shipment may be minimum.

Solution.

Formulation of model.

- Main steps are;

a) The key decision to be made is to find the quantity of units to be transported from each origin to
each destination.
Let the variables be x11 x12 x13 x14
X 21 x22 x23 x24
X 31 x32 x33 x34
These variables represent the quantities of milk to be shipped from different plants to different
distributions Centre and can be represented in the form of a matrix.
Distribution Centre
1 2 3 4
Plant 1 x 11 x12 x13 x14
2 X 21 x22 x23 x24
3 X 31 x32 x33 x34

3|Page
 BBM 351

b) Objective is to minimize the cost of transportation i.e.

Minimize = 2x11 +3x12 +11x13 +7x14
+1X 21 +0x22 +6x23 +1x24
+5X 31 +8x32 +15x33 +9x34

c) Constraints are;
i) Because of supply or availability.
2x11 +3x12 +11x13 +7x14 = 6 ( for milk from plant 1)
1X21 +0x22 +6x23 +1x24 = 1 ( for milk from plant 2)
5X31 +8x32 +15x33 +9x34 = 10 ( for milk from plant 3)
ii) Because of requirement or demand
2x11 +1x21 +5x31 = 7 ( for distribution Centre 1)
3X12 +0x22 +8x32 = 5 ( for distribution Centre 2)
11X13 +6x23 +15x33 = 3 ( for distribution Centre 3)
7x14 + 1x24 + 9x34 = 2 (for distribution Centre 4)

- In general there will be m constraints if the number of origin is m and n constraints if the
number of destination is n. Hence, the situations involves (mxn) variables, i.e. (3x4=12) variables
and (m+n) constraints, i.e. (3+4=7) constraints.

SOLUTION OF TRANSPORTATION MODEL.

- Basic steps of the computational procedure for obtaining an optimum solution to a
transportation model are;
1) Set up the transportation table.
- It involves making a transportation model in the form of a matrix.
2) Develop an initial feasible solution.
- Involves finding a feasible solution.
3) Perform an optimality test/ degeneracy test.
- Test whether the solution is an optimum one and it may be improved on it till optimality is
attained. The degeneracy test is performed using the formualar;
m+n – 1 = number of the required filled cells, where m denote the rows and denote the columns
of the transportation table.

The methods/techniques of solving a transportation models are;

a) Northwest corner method.

b) Vogel approximation method.
c) Least cost method.

4|Page
 BBM 351

d) Stepping stone method

e) MODI Method (Modified Distribution) method.

NOTE;

- The stepping stone and MODI methods are improvement on Northwest corner method since it
gives an estimation of transportation cost which is far from the actual cost. Both methods use
the same concept in reducing the transportation cost.

NORTHWEST CORNER METHOD.

- It is used for determining the values of the filled cells in the table.
- It does not consider the costs or revenue or profit related to the objective function that must be
minimized unless some manipulation are undertaken.
Steps used in the Northwest corner method are;
1) Start from cell X11 and compare the supply of plant 1 (S 1) with the requirement of
distribution Centre 1(D1). These three situations will appear;
a) If D1 < S1, i.e. if the amount required at D1 is less than the number of units available at S 1,
then set X11 be equal to D1, and proceed horizontally, i.e. to cell(1,2).
b) If D1 = S1, set X11 equal to D1, and proceed diagonally, i.e. to cell (2,2)
c) If D1>S1, set X11 equal to S1, and proceed vertically downwards, i.e. to cell(2,1).
2) The next cell to be evaluated depends on which situation was satisfied when cell X 11 was
filled.
a) If D1 < S1, the remainder is entered in cell X12, (horizontally to cell X11).
b) If D1 = S1, then computation is made with D2 and S2.
- In these event, one of the three situations already examined, a, b or c may appear, in which
D2 < S2, D2 = S2 , or D2 > S2.
- The same pattern will be used for filling cell X 22 (diagonal to cell X11)
c) If D1 > S1, the remainder is entered in cell (2,1) downwards, i.e. vertically from X 11.
3) If the remainders in 2(a) and 2(c) do not exhaust the quantities under consideration, these
remainders must be used in computing the next value for the next cell.
- This computation follows the pattern of steps 2(a), 2(b) and 2(c) that is horizontally, diagonally
or vertically according to the results encountered in the computation.
4) Using this procedure the table is filled from the upper most left – hand side cell (starting
point) to the lower right – hand cell (ending point) using the supply points and demand
points fully.

VOGEL APPROXIMATION METHOD (VAM).

- This method produces a basic feasible solution which is very close, if not equal to the optimal
solution. In cases where accuracy is secondary, the starting solution so obtained by this method
can be taken as the approximate optimal solution.
It has the following steps;
1) From the unit costs matrix of the transportation model, calculate the difference between the
two lowest distribution costs for each row and each column.

5|Page
 BBM 351

- The difference are the penalties incurred for not assigning a positive value to the variable having
the smaller costs.
- Write these differences by the side of each row and column.
2) Find the row or column with the largest difference and circle (or mark) this value.
- If a tie exists, select that row or column that allows the largest movement of units.
3) Assign the largest possible allocation to the lowest costs cell for the row or column selected.
- However, while assigning these units, the allocation must be done within the restrictions of
column and row requirements.
4) Delete or cross – out any column or row satisfied by the assignment made.
5) Repeat the steps 1 to 4, until all allocations are made, of course ignoring the columns or rows
already deleted or crossed out.

LEAST COST METHOD.

- While using the Northwest corner method in finding the intial basic feasible solution, no
consideration is given to transportation costs.
- There is no reason to believe that the method will guarantee a good approximation of the
optimal solution.
- In fact, in most cases, the initial solution found by Northwest corner method, results into a
solution very far from the optimum value.
- To get to the optimum solution, will therefore require a number of computations.
- Since the objective is to find the minimum total transportation costs, it is most logical to use an
alternative approach by selecting the least cost cell in the transportation table and allocate the
maximum quantity to that route.
To get initial solution the following procedure should be used;
1) Scan the transportation table and select that cell with the least cost.
2) Allocate the maximum possible units into this cell, while taking into account the row- supply
availability and column – demand requirement.
- This exhausts the possibility of using some other cells in row or column satisfied by the
allocation.
3) Out of the remaining cells, seek the second lowest – cost cell and allocate maximum
possible quantity to that route, but be consistent with the corresponding row and column
totals.
4) Continue with this process until all of the supply is used and all of the demand filled,
ensuring that all the (m+n -1 ) basic variables are chosen.
- The result is that the table will have the lowest costs associated with the filled cells.

SOLUTION TO ILLUSTRATION 1.

6|Page
 BBM 351

a) Using the Northwest corner method.

Destinations
To 1 2 3 4 Supply
From
1 (2) (3) (11) (7) 6
Sources 6 x x x
2 (1) (0) (6) (1) 1
1 x x x
3 (5) (8) (15) (9) 10
X 5 3 2
Demand 7 5 3 2 17

- The transportation cost associated with this solution is;

Z = (6x2)+(1x1)+(5x8)+(3x15)+(2x9)= kshs. 11,600.
- Degeneracy test/ optimality test = m+n-1 = 4+3-1 = 6 ≠5, hence not equal to the filled cells.
Therefore, the solution is not feasible.

b) Using the Vogel Approximation Method.

Destinations Row
To 1 2 3 4 Supply penalty
From
1 6 1 1 5*
Sources (2) (3) (11) (7) --
1 5 x x
2 1 1 - ---
(1) (0) (6) (1)
X x x 1
3 10 3 444
(5) (8) (15) (9) 4
6 x 3 1
Demand 7 5 3 2 17
Column penalty 1 3 5 6*
3 5* 4 9*
3 - 4 -
5 - 15* -
5* - - -

The cost of transportation is;

=(2x1)+(3x5)+(1x1)+(5x6)+(15x3)+(9x1) = kshs. 10,200.

7|Page
 BBM 351

The degeneracy test/optimality test = m+n-1= number of filled cells. Hence, 3+4 – 1 = 6,
therefore, the solution is feasible.

c) Using the least cost method.

Destinations
To 1 2 3 4 Supply
From
1 (2) (3) (11) (7) 6
Sources 6 x x x
2 (1) (0) (6) (1) 1
x 1 x x
3 (5) (8) (15) (9) 10
1 4 3 2
Demand 7 5 3 2 17

- The transportation cost is;

(6x2)+(1x0)+(1x5)+(4x8)+(3x15)+(2x9) = kshs. 11,200
- The optimality test or degeneracy test is; m+n-1= 3+4-1= 6, hence the solution is feasible.

ILLUSTRATTION 2.(Unbalanced Transportation Model).

Kenya has three fresh water lakes thus lake Victoria, lake Turkana and Lake Naivasha where fish
supplies obtained are destined for different Kenya towns. These lakes supplies their fish to Kisumu,
Eldoret, Busia, Kapedo, Lokichogio, Naivasha and Gilgil.

The supplies from these lakes, the requirements for each market and the cost of transporting each
fish from each lake to each market are presented in the table below.

The management of the company wants to determine, the minimum costs transportation schedule
for fish from the lakes to the various markets.

Determine the transportation costs using;

a) Northwest corner method.

b) Vogel Approximation methods.
c) Least cost method.
a) Using the Northwest corner method.

8|Page
 BBM 351

Markets
kisumu Eldore Busi Kaped Lokich Naivasha Gilgil Dumm Lake
Lakes t a o ogio y Capacit
y
Lake (6) (7) (5) (4) (8) (6) (5) (0) 7000
Victoria 1000 2000 4000 x X x x X
Lake (10) (5) (4) (5) (4) (3) (2) (0) 4000
Turkana X X 500 3500 X x x X
Lake (9) (5) (3) (6) (5) (9) (4) (0) 10,000
Naivasha x x 500 2000 3500 3000 1000
Requirem 1,000 2,000 4,50 4,000 2,000 3,500 3,00 1000 21000
ents/ 0 0
Demand

- The transportation costs is;

(6x1000) + (7x2000)+
(5x4000)+(4x500)+(5x3500)+(6x500)+(5x2000)+(9x3500)+(4x3000)+(0x1000) = 122,000
The optimality test or degeneracy test is m+n – 1 = 8+3 – 1 = 10, hence the solution is feasible.

b) Using the VAM.

Markets
kisumu Eldore Busi Kaped Lokich Naivasha Gilgil Dumm Lake Row
Lakes t a o ogio y Capacit penalty
y
Lake (6) (7) (5) (4) (8) (6) (5) (0) 7000 5* 1
Victoria 1000 x X 4000 X X 1000 1000 11115
*-
Lake (10) (5) (4) (5) (4) (3) (2) (0) 4000 21
Turkana x x X X X 3500 500 x 12*----

Lake (9) (5) (3) (6) (5) x (9) (4) (0) 10,000 31
Naivasha x 2000 4500 x 2000 1500 x 11114
4*
Requirem 1,000 2,000 4,50 4,000 2,000 3,500 3,00 1000 21000
ents/ 0 0
Demand
Column 3 2 1 1 1 3 2 0

9|Page
 BBM 351

penalty 3* 2 1 1 1 3 2 -
- 2 1 1 1 3* 2 -
- 2* 1 1 1 - 2 -
- - 2 2 3* - 1 -
- - 2* 2* - - 1 -
- - - - 1 -

- The transportation cost is;

(1000x6)+ (4000x4)+ (1000x5)+(1000x0) + (3500x3)+
(500x2)+(2000x5)+(4500x3)+(2000x5)+(1500x4) = kshs.78,000
- The optimality test/ degeneracy test is m+n-1 = 8+3 – 1 = 10, hence the solution is feasible.

c) Using the least cost method.

Markets
kisumu Eldore Busi Kaped Lokich Naivasha Gilgil Dumm Lake
Lakes t a o ogio y Capacit
y
Lake (6) (7) (5) (4) (8) (6) (5) (0) 7000
Victoria x x X 4000 x 3000 x x
Lake (10) (5) (4) (5) (4) (3) (2) (0) 4000
Turkana x x X X 1000 x 3000 X
Lake (9) (5) (3) (6) (5) (9) (4) (0) 10,000
Naivasha 1000 2000 4500 x 1000 500 x 1000
Requirem 1,000 2,000 4,50 4,000 2,000 3,500 3,00 1000 21000
ents/ 0 0
Demand

The transportation cost is;

(400x4)+(3000x6)+(1000x4)+(3000x2)+(1000x9)+(2000x5)+(4500x3)+(1000x5)+(500x9)+(1000x0)=
kshs.71,600.

THE STEPPING STONE METHOD.

- The method is used for evaluating the initial solution to try to improve it by a reduction in the
total distribution costs. The unused cells are referred to as “waters”, while used cells as
“stones”.
- The analogy is that there is a frog in the pool of water and half – merging stones. The frog
intends to come out to dry land. To achieve that, it will first jump from the water and patch on
an appropriate half – submerging stone. Once on that stone it will make another jump that it
takes it to another stone.
- All its jumps will only be made if it can patch on a stone until it reaches the dry land (i.e. its
goal).

10 | P a g e
 BBM 351

- Applying the stepping stone method to evaluate the Northwest corner method initial solution,
each unoccupied cell must be evaluated one by one.
- Main steps involved are;
a) Pick an empty cell for evaluation.
b) To accomplish its evaluation, a closed path is to be developed by moving either clockwise or
anti-clockwise from the unoccupied cell being evaluated but using only occupied cells. Only
occupied cells or the stepping stones are used in the evaluation of unfilled cells. From that
unoccupied cell make a move to an appropriate filled cell.
Once a move is made to that occupied cell, make a right – angle turn to reach another
appropriate occupied cell. For each unoccupied cell, there is one and only one possible closed
path.
The path is developed by placing alternating plus and minus signs in the cells to indicate the
addition or removal of an allocation in the cell concerned. Start with a plus sign in the cell being
evaluated. By adding a unit to or subtracting a unit from a given cell, the row or column totals
are being kept in balance.
c) Once each cell has been evaluated, sum up the cost values of the cell to which a unit has been
added, and also sum up the cost values of the cells from which a unit has been subtracted.
Obtain the difference between the two sums to determine whether there is a possibility of cost
reduction. Any evaluated cell where the sum of minus signs is greater than the sum of plus signs
indicates an advantageous possibility of the total transport cost reduction, hence an
improvement.
d) Select the cell that shows the greatest improvement possibility. Move maximum amount of
units possible into that cell. The amount that can be moved into an improvement cell is limited
to the smallest amount in the minus cell of the evaluation path. Make the necessary
adjustments as indicated by the minus and plus signs in other cells in the evaluation path and
the result is a new objective function.
e) The same procedure is repeated for the initial solution.

- It’s possible for an unoccupied cell to show zero change, rather than either a positive or a
negative change. This indicates that that a move into the zero – change cell will not cause any
change in the objective function, hence we can be indifferent.

ILLUSTRATION.

- Refer to question one(1) in the exercise given below. Using the Northwest corner method, the
initial feasible solution may be given below.

Basic initial feasible solution.

To j RECEIVING DEPOTS
From i Homabay Kisumu Kakamega Bungoma Capacity
Sonny (25) (35) (36) (60) 15
10 5

11 | P a g e
 BBM 351

Chemelil (55) (30) (45) (38) 6

6
Mumias (40) (50) (26) (65) 14
1 13
Nzoia (60) (40) (66) (27) 11
2 9
Requirement 10 12 15 9 46

The transportation cost is;

(25x10)+ (35x5) + (30x6) + (50x1) + (26x13) + (66x2) + (27x9) = £1368.

Degeneracy test/ optimality test = m+n -1 = number of required filled cells.

4+4 – 1 = 7; hence the problem is feasible but it can be improved.

EVALUATION OF EMPTY CELLS USING STEPPING STONE METHOD.

- The empty cells that need to be evaluated are;

1) Sonny – kakamega.
2) Sonny – Bungoma
3) Chemelil – Homabay
4) Chemelil – Kakamega
5) Chemelil – Bungoma
6) Mumias – Homabay
7) Mumias – Bungoma
8) Nzoia – Homabay
9) Nzoia – Kisumu

The steps in empty cells evaluation by assigning plus and minus signs alternating each other are;

1) Sonny – Kakamega + -
Sonny – Kakamega 36
Sonny – Kisumu 35
Mumias – Kisumu 50

Mumias – Kakamega 26
+86 -61 (+25 No improvement)
2) Sonny – Bungoma + -
Sonny – Bungoma 60
Sonny – Kisumu 35
Mumias – Kisumu 50
Mumias – Kakamega 26
Nzoia – Kakamega 66
Nzoia – Bungoma 27

12 | P a g e
 BBM 351

+176 -88 (+88 No improvement)

3) Chemelil – Homabay + -
Chemelil – Homabay 55
Chemelil – Kisumu 30
Sonny – Kisumu 35
Sonny – Homabay 25
+90 -55 (+35, No improvement)
4) Chemelil – Kakamega + -
Chemelil – Kakamega 45
Chemelil – Kisumu 30
Mumias – Kisumu 50
Mumias – Kakamega 26
+95 --56 (+39, No improvement).
5) Chemelil – Bungoma + -
Chemelil – Bungoma 38
Chemelil – Kisumu 30
Mumias – Kisumu 50
Mumias – Kakamega 26
Nzoia – Kakamega 66
Nzoia – Bungoma 27
+154 -83 (+71, No improvement).
6) Mumias – Homabay + _
Mumias – Homabay 40
Mumias – Kisumu 50
Sonny – Kisumu 35
Sonny – Homabay 25
+75 -75 (0, Indifferent).
7) Mumias – Bungoma + _
Mumias – Bungoma 65
Mumias – Kakamega 26
Nzoia – Kakamega 66
Nzoia – Bungoma 27
+131 -53 (+78, No improvement).
8) Nzoia – Homabay + _
Nzoia – Homabay 60
Nzoia – kakamega 66
Mumias – kakamega 26
Mumias – Kisumu 50
Sonny – Kisumu 35
Sonny – Homabay 25
+121 -141 (-20, Yes, improvement)
9) Nzoia – Kisumu + _
Nzoia – Kisumu 40
Nzoia – kakamega 66
Mumias – kakamega 26
Mumias – Kisumu 50
+66 -116 (-50, yes, improvement)

13 | P a g e
 BBM 351

- Having evaluated all the nine empty cells routes, it’s found that if routes Nzoia – Homabay and
Nzoia – Kisumu were used, there would be some improvement on the current total
transportation costs.
- This is because either of these routes show some negative value.
- To decide which particular route to take first for improvement, we choose that one which shows
the greatest negative value, hence greatest reduction in transportation cost if that route were
used. Therefore, Nzoia – Kisumu showing -50 per units of item moved in, is taken.
- The maximum amount of units possible has to be moved in.
- But this maximum is limited to the smallest amount in the minus cell of the evaluation path.
Hence, the maximum would be one (1) unit as is limited by Mumias – Kisumu cell, i.e. add one
unit in Nzoia – Kisumu cell and make the necessary adjustments in all other cells, without
violating the requirement and its capacity
- The transportation table will therefore be as follows;
Initial solution using the stepping stone method.

To j RECEIVING DEPOTS
From i Homabay Kisumu Kakamega Bungoma Capacity
Sonny (25) (35) (36) (60) 15
10 5
Chemelil (55) (30) (45) (38) 6
6
Mumias (40) (50) (26) (65) 14
1-1=0* 13+1=14*
Nzoia (60) (40) (66) (27) 11
+1* 2-1=1* 9
Requirement 10 12 15 9 46

The transportation cost is;

(25x10)+ (35x5) + (30x6) + (26x14) + (40x1) + (66x1) + (27x9) = £1318.

Degeneracy test/ optimality test = m+n -1 = number of required filled cells.

4+4 – 1 = 7; hence the problem is feasible.

Exercises.

1) Kenya sukari company has four factories in Sonny, Chemelil, Mumias and Nzoia producing and
supplying sugar in western kenya.
The factories supply their sugar to four KNTC depots in Homabay, Kisumu, Kakamega and
Bungoma for eventual distribution to retailers. The management wants to determine, the
minimum cost transportation schedule for the monthly output of sugar.
Factory supply, depots demand and transportation costs per ton of sugar are shown below.
Determine the minimum transportation costs.

Factory Monthl KNTC Monthl From Homaba Kisum Kakameg Bungom

14 | P a g e
 BBM 351

y depots y i y u a a
supply Deman
(tons) d
(tons)
Sonny 15 Homaba 10 Sonny 25 35 36 60
y
Chemel 6 Kisumu 12 Chemel 55 30 45 38
il ii
Mumia 14 Kakameg 15 Mumia 40 50 26 65
s a s
Nzoia 11 Bungom 9 Nzoia 60 40 66 27
a

2) A company has three factories manufacturing the same product and 5 sales agencies in different
parts of the country. Production costs differ from factory to factory and the sales prices from
agency to agency. The shipping costs per unit product from each factory to each agency is
known. Given the following data, find the production and distribution schedules most profitable
to the company.

Factory i Production cost/unit Maximum capacity

($) No. of units.
1 18 140
2 20 190
3 16 115

1 2 2 6 10 5
Factory i 2 10 8 9 4 7
3 5 6 4 3 8
Agency j 1 2 3 4 5
Demand 74 94 69 39 119
Sales price ($) 35 37 36 39 34

3) A production control superintendent finds the following information on his desk. In departments
A, B and C, the number of surplus pallets is 18, 27 and 21 respectively. In departments G, H, I
and J, the number of pallets required is 14, 12, 23, and 17 respectively. The time in minutes to a
pallet from one department to another is given below;

To G H I J
From
A 13 25 12 21
B 18 23 14 9
C 23 15 12 16

Determine the optimal distribution plan to minimize the moving time.

15 | P a g e
 BBM 351

4) The following table gives the optimal costs of manufacturing and transporting from factories A,
B, C and D to destinations E, F, G, H and J as $6,530.

Destinations
To E F G H I Supply
From
A 8 10 12 17 15 100
Factories (100)
B 15 13 18 11 9 150
(70) (80)
C 14 20 6 10 13 160
(70) (50) (40)
D 13 19 7 6 12 280
(210) (70)
Demand 70 170 50 210 190

a) Supposing some new equipment were installed that reduce the variable operating cost by
$2 in factory B, will the optimal shipping schedule change?
b) Is there an alternate optimal solution to part (a)? if so find it.
c) Suppose freight charges from A to E are reduced by $2 a unit, will it change the shipping
schedule? If so, what is the new shipping schedule.
d) If the demand at G increases from 50 to 60 units, what will be the shipping schedule if there
is no increase in supply from any factory?
e) If demand at G increases to 60 units as well as the supply at factory D is increased by 10
units to meet this increased demand, find the optimal shipping schedule.

5) A manufacturing company has three factories F 1, F2, and F3 with monthly manufacturing
capacities of 7,000, 4,000 and 10,000 units of a product. The product is to be supplied to seven
stores. The manufacturing cost of these factories are slightly different but the important factor
is the shipping cost from each factory to a particular store. The factory capacities, store
requirements and unit cost in dollars of shipping from each factory to each store are given in the
table below;

Stores

16 | P a g e
 BBM 351

To S1 S2 S3 S4 S5 S6 S7 Capacity
From
F1 5 6 4 3 7 5 4 7000
Factories F2 9 4 3 4 3 2 1 4000
F3 8 4 2 5 4 8 3 10,000
Demand 1000 2000 4500 4000 2000 3500 3000

Work out a transportation plan so as to minimize the transportation cost.

17 | P a g e