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Vogel's Approximation Method (VAM)

START

SH For each row and column,

find the difference between
the two least cost cells that
have not been allocated
KE
Select the largest of the
differences of rows and
columns, and, in case of a tie,
choose the one corresponding
to which largest number of
units can be assigned or the
U

cost value is the lowest

M

Assign the largest quantity

permissible by the rim req-
uirements to the cell in that row/
column with the smallest cost

Eliminate the row/column

that has been satisfied

Are
No all rim
conditions
satisfied?

Yes

STOP
Modified Distribution Method (MODI)

SH
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U
M
 New Delhi – Mumbai Mumbai – New Delhi
Flight Number Departure Arrival Flight Number Departure Arrival
101 5 A.M. 7 A.M. 201 7 A.M. 9 A.M.
102 7 A.M. 9 A.M. 202 8 A.M. 10 A.M.
103 1 P.M. 3 P.M. 203 1 P.M. 3 P.M.
104 7 P.M. 9 P.M. 204 6 P.M. 8 P.M.

Transportation Problem
1. Consider the following transportation problem:

Market
Plant Supply
1 2 3 4
P1 10 5 7 8 150

P2 6 4 8 5 125

P3 9 12 10 7 225

Demand 110 80 190 120 500

(a) Obtain initial solution to this problem using North-West Corner Method.
(b) Obtain initial solution to this problem using Least Cost Method (LCM).
(c) Test whether the initial solution obtained by LCM is optimal.
(d) If not, improve the solution until optimal solution is reached. What is the total cost
involved?
(e) Obtain initial solution to this problem using Vogel’s Approximation Method (VAM) or
Penalty Method. And test whether the initial solution is optimal.
(f) If not, obtain the optimal solution. What is the total cost involved?
2. Test whether the following solution is optimal. If not, obtain the optimal solution.

Plant 1 – C: 700; Plant 2 – B: 700; Plant 3 – A: 600; Plant 3 – C: 100; Plant 3 – D: 300

A B C D Supply

Plant 1 18 7 13 12 700

Plant 2 18 19 26 16 800

Plant 3 14 20 22 16 1000

Demand 600 600 800 500 2500

3. Consider the optimal solution for the problem (1) above and answer the following questions
independently:
(a) It is decided to send 50 units from P3 to M2. What will be the revised solution and
what effect it will have on the total cost?
 (b) How will the solution change if 70 units are decided to be sent from P3 to M2?
(c) The transporter agrees to give a 50 percent discount on the route P1M1. How will it
affect the solution?
4. Solve the following transportation problem for optimal solution, given that the routes P1M1
and P3M3 are currently unavailable. Does the problem have multiple optimal solutions? If yes,
identify.
M1 M2 M3 Supply

P1 8 10 5 90

P2 12 9 4 50

P3 7 3 6 80

P4 9 5 7 60

Demand 120 10 110

5. You are given the following unit profit matrix. Solve the problem for maximum total profit.

M1 M2 M3 M4 Supply

P1 8 12 15 6 10

P2 7 11 10 10 15

P3 4 10 11 10 20

P4 9 4 6 8 15

Demand 8 12 18 22 60

6. Solve the following transportation problem, taking initial solution using VAM.

Market
Plant Supply
1 2 3 4 5
A 5 2 4 2 6 16
B 8 3 5 2 1 24
C 6 8 4 8 3 28
Demand 8 8 20 16 16 68
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