Unit 2

SUBJECT: QUANTITATIVE TECHNIQUES

BBA V SEM
TRANSPORTATION & ASSIGNMENT TECHNIQUES

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

Basic Definition:

Feasible Solution:
A solution that satisfies the row and column sum restrictions and also the non-negativity restrictions is a feasible solution.

Basic Feasible Solution:

A feasible solution of (m X n) transportation problem is said to be basic feasible solution, when the total number of allocations is equal to
(m + n - 1).
Optimal Solution:
A feasible solution is said to be optimal solution when the total transportation cost will be the minimum cost.

Balanced Transportation Problem :

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

There will be (m + n - 1) basic independent variables out of (m x n) variables.
METHODS FOR FINDING AN INITIAL BASIC FEASIBLE SOLUTION:

North West Corner Rule(NWCR)

Least Cost Method (or)Matrix Minimum Method(LCM)

Vogel’s Approximation Method(VAM)

NORTH WEST CORNER RULE(NWCR)

Formulate the given problem as LPP and set up the problem in the tabular form known as transportation table.
Select the North-west (i.e., upper left) corner cell of the table and allocate the maximum possible units between the supply and demand
requirements. During allocation, the transportation cost is completely discarded (not taken into consideration).
Delete that row or column which has no values (fully exhausted) for supply or demand.
(iv) Now, with the new reduced table, again select the North-west corner cell and allocate the available values.
Repeat steps (ii) and (iii) until all the supply and demand values are zero.
Obtain the initial basic feasible solution.
LEAST COST METHOD/
MATRIX MINIMA METHOD(LCM)
Steps
Select the smallest transportation cost cell available in the entire table and allocate the supply and demand.
Delete that row/column which has exhausted. The deleted row/column must not be considered for further allocation.
Again select the smallest cost cell in the existing table and allocate. (Note: In case, if there are more than one smallest cost, select the cells
where maximum allocation can be made)
Obtain the initial basic feasible solution.
Solution: Since ∑ai = ∑bj = 950 the given problem is a balanced one. There exists a feasible solution to the transportation problem which
can be solved by Least- Cost method.
The transportation table of the given problem contains 12 cells. Select the minimum cost cell from the table (2, 4) and (3, 4) cell which is a
tie. If there is a tie, it is preferable to select a cell to which maximum allocation can be made. In this case the maximum allocation is 400
which is made in the cell (3, 4). The corresponding supply and demand values are 250 and 400 respectively.
Allocate the maximum possible value to satisfy the demand from the supply, so allocate 250 to the cell (3, 4) as shown below,
Now delete the column 4 which is exhausted and give a new reduced table. Take again the next minimum cost value available in the table
(1, 2) cell and allocate the value of 200 as shown below,

In the reduced table the minimum cost is 13 which occurs in two cells namely (1, 2) and (3, 3) the maximum allocation may be done in (1,
2).
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after deleting row 1 from the above table, the reduced matrix is given by,

Finally, column 2,source 3is left.Allocate to destination 2 and 3 satisfies the supply of 300. 16
The Initial Basic Feasible Solution using the Least- Cost method is thus shown below,
The transportation cost = (200*11)+(50*13)+(175*18)+(125*14)+(125*13)+ (250*10)
= Rs.12,200 /- 17
Calculate penalties for the each row and column by taking the difference between the smallest cost and next highest cost available in
that row/column. If there are two smallest costs, then the penalty is zero.
Select the row/column, which has the largest penalty and make allocation in the cell having the least cost in the selected row/column.
If two or more equal penalties exist, select one where a row/column contains minimum unit cost. If there is again a tie, select one
where maximum allocation can be made.
Delete the row/column, which has satisfied the supply and demand.
Repeat steps (i) and (ii) until the entire supply and
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demands are satisfied.
Obtain the initial basic feasible solution.
Example; Obtain an Initial Basic Feasible Solution to the following transportation problem using the Vogel’s Approximation method.

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Solution:
Since ∑ai = ∑bj = 950 the given problem is a balanced one. There exists a feasible solution to the transportation problem which can be
solved by Vogel’s Approximation method.
The transportation table of the given problem contains 12 cells.
Find the penalties for each row and column. Choose the row/column, which has the maximum value for allocation.

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In the above case we have two penalties, select the least cost which is in row 1 and hence select the (1, 1) for allocation. The supply and demand
are 200 and 250 respectively and hence allocate 200 in the cell as shown above.
Now delete the column one which is exhausted and again calculate the penalties for the remaining row and column.
The new reduced table is given below:

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Since the supply is only 50 then delete row 1 and the new reduced matrix is
In this table, the maximum penalty is 6 and demand is 175 allocate in the (2, 2) the reduced matrix is given below,

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Finally, after deleting row 2 source 3 is left allocate to destination 3 and 4 it satisfies the supply of 400.

The Initial Basic Feasible Solution using the Vogel’s Approximation method is shown below,

The transportation cost =

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(200*11)+(50*13)+(175*18)+(125*10)+(275*13)+ (125*10)
= Rs.12, 075/-
MODI METHOD

Modified Distribution Method (MODI) is an iterative optimization technique used to determine the most
optimal solution to transportation problems.
Modified Distribution Method is a powerful technique for solving transportation problems, and it can
help businesses optimize their transportation networks quickly and efficiently. By using an iterative
approach to identify and resolve closed loops in a transportation table, businesses can improve the
efficiency of their transportation network and save time and money in the process.

Steps:
To solve the transportation problem using the Modified Distribution Method, follow these steps:
Create the initial feasible solution using the Northwest Corner Method.
Find the least cost cell (i, j) in the table, and allocate as much as possible to the cell.
Cross out the row or column which is completely allocated.
Repeat steps 2 and 3 until all the cells are allocated.
Compute the total cost of the transportation, which is the sum of the product of the allocation and the
cost of transportation in each cell.
Applications
The Modified Distribution Method has several real-world applications, including:
Manufacturing: The Modified Distribution Method can be used to allocate raw materials to different
factories or production lines.
Transportation: This method can help optimize the transportation of goods from warehouses to retail
stores.
Agriculture: Farmers can use the Modified Distribution Method to allocate their produce to different
markets.
Advantages of Modified Distribution Method
The Modified Distribution Method offers several advantages for businesses looking to optimize their
transportation networks. Some of the benefits of using this method include:
The ability to find the optimal solution quickly and efficiently
The ability to calculate the opportunity cost of each cell in the transportation table, which helps to
improve the efficiency of the transportation network
The ability to handle complex transportation problems with multiple sources and destinations
The ability to save time and money by optimizing the transportation network
Limitations of Modified Distribution Method
While the Modified Distribution Method is a powerful optimization technique, it does have some
limitations. These include:
The method is only effective when dealing with transportation problems with a single commodity
The method assumes that transportation costs are linear and do not change based on the quantity of
goods being transported
The method can be time-consuming and complex, particularly when dealing with large transportation
problems