Module V

TRANSPORTATION PROBLEM

Transportation Problem
➢ The transportation problem is a special type of LPP where the objective is
to minimize the cost of distributing a product from a number of sources
or origins to a number of destinations.
➢ In Transportation Models, the sources and destinations are known, the
supply and demand at each source and destinations are also known.
➢ It is designed to find the best arrangement for transportation such that the
transportation cost is minimum.

Terminology used in Transportation Model

➢ Origin: The location from which goods are dispatched.
➢ Destination: The place or location to which the goods are transported.
➢ Unit transportation cost: The cost of transporting one unit from the
origin to a destination.
➢ Feasible solution: A feasible solution to transportation is a set of
non-negative allocations xij that satisfies the sum (row and column)
restrictions.
➢ Basic feasible solution: A feasible solution to a transportation problem is
said to be a basic feasible solution if it contains m + n - 1 non- negative
allocations, where m is the number of rows and n is the number of
columns of the transportation problem.
➢ Optimal solution: A feasible solution that minimizes the transportation
cost is called an optimal solution.
➢ Balanced transportation problem: Total supply from all the sources is
equal to the total demand in all the destinations.
𝑚 𝑛
∑ 𝑎𝑖 = ∑ 𝑏𝑗
𝑖=1 𝑗=1
➢ Unbalanced transportation problem: Total supply from all the sources
is not equal to the total demand in all the destinations.
𝑚 𝑛
∑ 𝑎𝑖 ≠ ∑ 𝑏𝑗
𝑖=1 𝑗=1
➢ Non-Degenerate Basic feasible solution: A basic feasible solution to a
(𝑚 × 𝑛) transportation problem is said to be a non degenerate if,
 ● The total number of non-negative allocations is exactly m+n-1 and
● These m+n-1 allocations are in independent positions.

Basic Assumptions in Transportation Technique

➢ Equality of demand and supply:
𝑚 𝑛
∑ 𝑎𝑖 = ∑ 𝑏𝑗
𝑖=1 𝑗=1
➢ Transportation between any sources of supply to any destination:
Products can conveniently be transported from any production centre to
any consumption centre.
➢ Certainty of cost per unit: The per unit transportation cost of items from
one production centre to one consumption centre is certain.
➢ Independent cost: It is assumed that the cost per unit is independent of
the quantity.
➢ Objective: The objective is to minimize transportation cost of the
organization as a whole.
Uses of Transportation Techniques
➢ It helps to minimize transportation cost
➢ It helps to determine the lowest cost location for a new factory
➢ It helps to determine the minimum cost production schedule.

Linear Programming Formulation Of Transport Problem

𝑋𝑖𝑗 : number of units transferred from ith origin to jth destination
𝐶𝑖𝑗 : cost of transferring one unit from ith origin to jth destination
𝑎𝑖 : number of units available in ith origin
𝑏𝑗 : number of units required at jth destination
𝑚 𝑛
𝑀𝑖𝑛𝑖𝑚𝑖𝑠𝑒 𝑍 = ∑ ∑ 𝐶𝑖𝑗𝑋𝑖𝑗
𝑖=1 𝑗=1
Subject to the constraints;
𝑛
∑ 𝑋𝑖𝑗 = 𝑎𝑖 : 𝑖 = 1, 2,..... 𝑛 (capacity constraint)
𝑗=1
𝑚
∑ 𝑋𝑖𝑗 = 𝑏𝑗 : 𝑗 = 1, 2,..... 𝑚 ( demand constraint)
𝑖=1
𝑋𝑖𝑗 ≥ 0 for all i and j
Methods of finding initial basic solution
1. North West Corner Method (NWCM)
2. Lowest Cost entry Method (LCM) [Matrix Minima Method]
3. Vogal’s Approximation Method (VAM)

North West Corner Method (NWCM)

The northwest-corner rule requires that we start in the upper left-hand cell (or
northwest corner) of the table and allocate the units.

Steps in NWCM are the following:

1. Construct an empty 𝑚 × 𝑛 matrix, completed with rows and columns.
2. Indicate the row totals and column totals.
3. Starting from the North West corner, (left hand side upper most cell) of
the matrix (cell 1, 1), allocate maximum possible quantity to that cell.
(The quantity cannot be more than what is available at the origin or more
than what is required at the destination).
4. Adjust supply and demand numbers in respective rows and columns.
5. If the supply for the first row is exhausted, move down to the second row,
first column and go to step 4.
 6. If demand for the first column is satisfied, then move to the next cell in
the second column, first row and go to step 4.
7. If for any cell supply equals demand, then the next allocation can be
made either in the next row or column.
8. Continue this process till the total available quantity is fully allocated to
cells, as required.

Q1: Obtain initial feasible solution using North West Corner Method.
D1 D2 D3 D4 Supply
O1 6 4 1 5 14
O2 8 9 2 7 16
O3 4 3 6 2 5
Required 6 10 15 4 35
Q2: Solve the following transportation problem by NWCM method.
W1 W2 W3 W4 ai
F1 30 25 40 20 100
F2 29 26 35 40 250
F3 31 33 37 30 150
bj 90 160 200 50 500
Q3: Determine initial feasible solution to the following transportation problem.
D1 D2 D3 D4 Supply
S1 19 30 50 10 7
S2 70 30 40 60 9
S3 40 8 70 20 18
Demand 5 8 7 14 34

Lowest Cost entry Method (LCM) or Matrix Minima Method

The method makes initial allocations based on lowest cost. It reduces the
computation as well as the amount of time necessary to arrive at the optimal
solution.
Steps in LCM are the following:
1. Select the cell with minimum transportation cost. If there are more than
one cells with lowest cost, select one among them arbitrarily.
2. Allot as many units as possible to that cell and eliminate that row in
which either capacity or requirement is exhausted.
3. Adjust capacity and requirements for next allocations.
4. Repeat steps 1 to 3 till entire capacities are exhausted to fulfill the
requirements.

Q4: Find initial feasible solution by LCM method.

W1 W2 W3 Supply
F1 2 7 4 5
F2 3 3 1 8
F3 5 4 7 7
F4 1 6 2 14
Demand 7 9 18 34
Q5: Find initial feasible solution by LCM method.
W1 W2 W3 Supply
P1 7 6 6 20
P2 5 7 3 28
P3 4 5 8 17
Demand 21 25 19 65
Q6: Obtain initial feasible solution by matrix minima method.
D1 D2 D3 D4 Supply
O1 1 2 3 4 6
O2 4 3 2 0 8
O3 0 2 2 1 10
Required 4 6 8 6 24

Vogal's Approximation Method (VAM)

➢ Of the three methods of finding initial basic feasible solutions, Vogal's
Approximation Method (VAM) is preferred as it gives either optimum or
near optimum solution to transportation problems. In Vogal's
Approximation method, the basis of allocation is unit cost penalty.
 ➢ The difference between the lowest and second lowest cost is called
penalty and that row or column with highest cost penalty is selected first
for allocation. Subsequent allocations are also made on the basis of the
highest unit cost penalty.

Steps in VAM are the following:

1. The difference between the lowest and second lowest cost of each column
and row will be written in a separate column or shown in brackets below
column totals and to the right of row totals. These are called penalties.
2. Select that row or column with the largest penalty. If there are more than
one row or column with highest penalty, select any column or cell among
them arbitrarily and allocate as many units as possible to that cell with
lowest cost in that row or column. Thus either the row total or column
total is exhausted. Delete that row or column or row and construct a
reduced matrix with remaining rows and columns.
3. For the reduced matrix, apply steps 1 to 2, thereby exhausting row totals
or column totals.

Q7: Solve the following problem using VAM.

W1 W2 W3 Supply
F1 2 7 4 5
F2 3 3 1 8
F3 5 4 7 7
F4 1 6 2 14
Demand 7 9 18 34

Q8: Solve the following transportation problem using VAM.

W1 W2 W3 W4 Supply
F1 3 3 4 1 100
F2 4 2 4 2 125
F3 1 5 3 2 75
Demand 120 80 75 25 300
Q9: Solve the following transportation problem using VAM to get initial
feasible solution.
A B C D Supply
P 5 4 2 6 20
Q 8 3 5 7 30
R 5 9 4 6 50
Demand 10 40 20 30 100

Q10: Obtain the initial feasible solution using NWCM, LCM and VAM.
W1 W2 W3 Supply
F1 2 7 4 5
F2 3 3 1 8
F3 5 4 7 7
F4 1 6 2 14
Demand 7 9 18 34