NUMERICAL METHODS FOR SOLVING

THE TRANSPORTATION PROBLEM IN

LOGISTICS

ARCHIBONG, EZEKIEL JOHN

210551009

IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE

AWARD OF
BACHELOR OF SCIENCE DEGREE (B.Sc (HONS.)) IN
MATHEMATICS,
AT LAGOS STATE UNIVERSITY, OJO, LAGOS, NIGERIA.

MARCH, 2025
 Certification

I certify that this seminar with the title ”NUMERICAL METHODS FOR SOLVING THE
TRANSPORTATION PROBLEM IN LOGISTICS”, submitted by ARCHIBONG, EZEKIEL
JOHN with Matriculation Number 210551009, was carried out under my supervision in
the Department of Mathematics, Faculty of Science, Lagos State University, Ojo, Lagos.

Dr. Ige A.O. (Ph.D.) DATE

(Supervisor)
Department of Mathematics,
Lagos State University,
Ojo, Lagos.

Prof. Olutimo A.L. (Ph.D.) DATE

(Head, Mathematics Department)
Lagos State University.

EXTERNAL EXAMINER DATE

1
 ABSTRACT

Transportation plays a critical role in logistics, influencing cost efficiency, service deliv-
ery, and overall supply chain performance. Efficiently solving transportation problems is
essential for minimizing costs while meeting demand and supply constraints. This study
explores various numerical methods used to optimize transportation problems, focusing
on classical approaches such as the Northwest Corner Method, Least Cost Method, Vo-
gel’s Approximation Method, and the Modified Distribution (MODI) Method. These
methods provide structured ways to determine the optimal allocation of resources in
logistics networks. Furthermore, the study examines real-world applications of these
numerical techniques in supply chain management, freight distribution, and production
planning. Challenges such as demand fluctuations, transportation disruptions, and cost
variability are also discussed. By evaluating the effectiveness of these numerical meth-
ods, this research aims to provide insights into selecting the most efficient approach for
solving transportation problems in different logistics scenarios. The findings of this study
contribute to the field of operations research and logistics management, offering valuable
decision-making tools for optimizing transportation planning.

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Table of Contents
Certification 1

Abstract 2

INTRODUCTION 4
1.1 Background of study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.2 Statement of the Problem . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3 Aim and Objectives of the Study . . . . . . . . . . . . . . . . . . . . . . 5
1.3.1 Aim of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3.2 Objectives of the Study . . . . . . . . . . . . . . . . . . . . . . . 5
1.4 Scope of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.5 Significance of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.6 Definition of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

LITERATURE REVIEW 9
2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2 Theoretical Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2.1 The Transportation Problem . . . . . . . . . . . . . . . . . . . . . 10
2.2.2 Feasibility Condition . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2.3 Theorem: Existence of Basic Feasible Solutions . . . . . . . . . . 12
2.2.4 Theorem: Optimality criterion for the MODI method . . . . . . . 12
2.2.5 Methods for Solving the Transportation Problem . . . . . . . . . 12
2.2.6 Optimality Condition . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2.7 Degeneracy in the Transportation Problem . . . . . . . . . . . . . 13

METHODOLOGY 14
3.1 Research Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2 Method of Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.3 Method of Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.4 Procedure for Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.5 Software Utilized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

References 16

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CHAPTER 1
INTRODUCTION
Transportation is a key aspect of logistics, affecting supply chain performance, cost
efficiency, and service delivery. The transportation problem, a classic optimization chal-
lenge in operations research, aims to find the most economical way to distribute products
from various supply sources to multiple demand destinations while adhering to speci-
fied constraints [1]. Effective solutions to transportation issues are vital for businesses
and industries striving to enhance their supply chain networks and reduce logistics ex-
penses [13].
Multiple numerical methods have been created to solve transportation problems, such
as the Northwest Corner Method, Least Cost Method, Vogel’s Approximation Method,
and the Modified Distribution (MODI) Method [8]. These methods offer structured
strategies for generating initial viable solutions and refining them to develop optimal
transportation plans. For example, the MODI Method is commonly utilized to improve
initial allocations and identify the most cost-effective distribution approach.
Although these traditional methods continue to be effective, contemporary supply
chains encounter difficulties such as fluctuating demand, unpredictable lead times, and
supply interruptions, creating a demand for more resilient optimization techniques [3].
The growing complexity of logistics and global supply chains has spurred significant
research aimed at enhancing numerical methods for transportation problems. Innovative
strategies, including heuristic and metaheuristic algorithms, have been suggested to tackle
large-scale transportation challenges with improved computational efficiency [15].
Moreover, variables such as fuel prices, environmental issues, and real-time demand
fluctuations add further complexity to transportation optimization, underscoring the ne-
cessity for flexible numerical strategies. This study examines numerical methods for
solving transportation problems in logistics, assessing their effectiveness in optimizing
supply chain distribution. By comparing different classical and contemporary numerical
techniques, the research seeks to determine the most efficient methods for addressing
transportation challenges within logistics. The results will benefit operations research
and logistics management by supplying practical tools for transportation planning and
optimization.

1.1 Background of study

Transportation is essential for the effective operation of supply chains, as it facilitates
the movement of products from suppliers to consumers efficiently and affordably. The
transportation issue, initially presented in operations research by F.L. Hitchcock (1941),
serves as a key optimization model aimed at identifying the most cost-effective means
of transferring goods [1]. Over time, various numerical techniques have been established
to resolve transportation challenges, enhancing efficiency in logistics and supply chain
management [13].
Traditional numerical techniques, such as the Northwest Corner Method, Least Cost
Method, Vogel’s Approximation Method, and the Modified Distribution (MODI) Method,
are commonly applied to derive optimal transportation strategies [8]. These techniques
work particularly well for organized logistics challenges where supply levels, demand, and

4
transportation expenses are clearly defined. Nevertheless, contemporary supply chains
present complications, including variations in demand, interruptions in the supply chain,
and dynamic pricing, which may pose difficulties for conventional numerical techniques
[3].
As supply chains grow more intricate and global in nature, the need for efficient
and scalable numerical techniques has intensified. Large-scale logistics systems often
involve uncertainties, necessitating robust optimization methods capable of dynamically
handling constraints and adapting to fluctuating transportation situations [15]. As a
result, examining numerical methods for addressing transportation challenges continues
to be highly significant, as companies strive for solutions that are cost-effective, adaptable,
and computationally efficient for managing logistics operations.
This study aims to investigate different numerical methods utilized in addressing
transportation issues within logistics, evaluating their efficiency, applicability, and lim-
itations. By gaining insights into these methods, supply chain management decision-
makers can optimize resource distribution, reduce expenses, and improve overall logistics
performance.

1.2 Statement of the Problem

Despite the availability of traditional numerical methods, real-world transportation
problems often present challenges such as unbalanced supply and demand, restricted
routes, fluctuating transportation costs, and the need for optimality beyond initial feasible
solutions [8]. These challenges necessitate a comparative analysis of numerical methods
to determine which provides the most efficient and cost-effective solution in practical
logistics scenarios.
Furthermore, decision-makers in logistics require computationally efficient and easily
implementable methods that can handle large-scale transportation problems without ex-
tensive computational resources [1]. Thus, there is a need to examine how well different
numerical approaches perform in real-world applications and whether improvements can
be made to existing methodologies.

1.3 Aim and Objectives of the Study

1.3.1 Aim of the Study
The aim of this study is to analyze and evaluate numerical methods for solving trans-
portation problems in logistics, focusing on their efficiency, accuracy, and applicability in
optimizing transportation costs and resource allocation.

1.3.2 Objectives of the Study

To achieve this aim, the study is set to:

1. Provide a comprehensive overview of the transportation problem, including its for-

mulation and practical applications in logistics.

2. Examine commonly used numerical methods such as the North-West Corner Method
(NWC), Least Cost Method (LCM), Vogel’s Approximation Method (VAM), and
the Modified Distribution (MODI) Method for solving transportation problems.

5
 3. Compare and contrast these numerical methods in terms of their computational
efficiency, feasibility, and optimality in solving transportation problems.

4. Analyze the strengths and limitations of each method to determine their suitability
for real-world logistics and supply chain scenarios.

5. Provide insights into the best approach for solving transportation problems, based
on accuracy, cost-effectiveness, and ease of implementation in decision-making.

1.4 Scope of the Study

This study focuses on the use of classical numerical methods to solve transportation
problems in logistics. It specifically examines how goods can be efficiently distributed
from multiple supply points to various demand points, with the objective of minimizing
transportation costs.
The scope of the study is outlined as follows:

1. Domain Studied: The research is limited to logistics and supply chain trans-
portation planning, particularly the distribution of goods between a set of supply
locations and demand destinations.

2. Mode of Transportation: The study is restricted to road transportation systems,

which represent a significant share of logistics operations. Other modes of transport
are not considered in this research.

3. Time Horizon: The study adopts a static, single-period planning approach. It

assumes that supply, demand, and transportation costs are known and fixed within
the period considered. Time-dependent or dynamic factors are not included.

4. Exclusions and Limitations: For clarity and focus, the study does not cover the
following:

(a) Rail, air, sea, or multi-modal transportation systems.

(b) Advanced optimization techniques, such as metaheuristic methods or machine
learning-based approaches.
(c) Transportation problems where supply, demand, or costs change over time.
(d) Real-time transportation scheduling that requires continuous data updates.
(e) Stochastic models involving uncertainties, such as demand fluctuations or un-
expected delays.

1.5 Significance of the Study

This study is significant for the following reasons:

1. It serves as a reference material for students, researchers, and anyone interested in

numerical methods for solving transportation problems.

2. It provides a simplified and structured analysis of classical numerical methods,

which can be useful for academic purposes.

6
 3. It can be used as a knowledge resource by professionals in the logistics and sup-
ply chain industry who seek to understand the mathematical approaches behind
transportation planning.

4. It adds to the existing academic work on the subject, helping future researchers
find relevant information for further studies.

1.6 Definition of Terms

In order to provide clarity and precision in this study, key terms related to trans-
portation problems and numerical methods are defined below:

1. Balanced Transportation Problem: A transportation problem where the total

supply equals the total demand, meaning no adjustments are needed before solving.

2. Basic Feasible Solution (BFS): An initial solution to the transportation problem

that satisfies all constraints but may not be optimal.

3. Degeneracy in the Transportation Problem: A situation where the number

of occupied cells in a BFS is less than m + n − 1, which can lead to computational
difficulties and requires special handling.

4. Feasibility Condition: The requirement that ensures a transportation problem

has a valid solution, typically when total supply matches total demand.

5. Initial Basic Feasible Solution (IBFS): A preliminary transportation plan ob-

tained through heuristic methods like the North-West Corner Rule, Least Cost
Method, or Vogel’s Approximation Method.

6. Least Cost Method: A technique for finding an IBFS by prioritizing allocations

at the lowest transportation cost locations first.

7. MODI Method (Modified Distribution Method): An optimization technique

used to find the most cost-effective transportation plan by improving an initial
feasible solution.

8. North-West Corner Rule: A method for quickly finding an IBFS by allocating

supply to demand starting from the top-left (north-west) corner of the cost matrix.

9. Numerical Method: A computational approach used to find approximate solu-

tions to mathematical problems, often applied in solving transportation problems.

10. Optimal Solution: A feasible solution that results in the minimum possible trans-
portation cost.

11. Optimality Condition: A criterion that determines whether a feasible solution

is optimal, ensuring that no further cost reductions are possible.

12. Supply and Demand Constraints: Conditions ensuring that the total supply
from all sources equals the total demand at all destinations.

13. Transportation Problem: A type of optimization problem that focuses on min-

imizing transportation costs while satisfying supply and demand constraints.

7
14. Unbalanced Transportation Problem: A case where total supply does not
equal total demand, requiring adjustments before solving.

15. Vogel’s Approximation Method (VAM): A heuristic approach that considers

cost penalties to generate a better initial solution compared to other IBFS methods.

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CHAPTER 2
LITERATURE REVIEW
2.1 Introduction
The transportation problem is a classical optimization problem in operations research
and logistics, aimed at determining the most cost-effective way to distribute goods from
multiple supply points to various demand destinations while satisfying supply and demand
constraints. The problem was first introduced by Hitchcock (1941), who formulated it as
a cost-minimization problem. Koopmans (1949) extended the model by analyzing its eco-
nomic applications, while Dantzig (1951) introduced the transportation simplex method,
which became a foundational tool for solving large-scale transportation problems. Early
studies on the transportation problem primarily focused on formulating mathematical
models and algorithms that could systematically generate optimal transportation plans.
Classical numerical approaches were developed to simplify the process of finding ini-
tial and optimal solutions to transportation problems. Methods such as the North-West
Corner Rule, Least Cost Method, and Vogel’s Approximation Method (VAM) were in-
troduced to compute an Initial Basic Feasible Solution (IBFS). These methods were
typically followed by optimization techniques like the Stepping Stone Method and the
Modified Distribution (MODI) Method [2]. These classical methods are appreciated for
their simplicity, transparency, and computational efficiency, especially in cases where the
transportation problem is static and well-structured. However, they often face limitations
when applied to complex, large-scale, or dynamic transportation networks.
With advancements in computational power and optimization theory, researchers be-
gan exploring modern computational approaches to overcome the limitations of classical
methods. Techniques such as Genetic Algorithms [10], Ant Colony Optimization [6],
and Neural Networks [14] have been applied to transportation problems. These methods
introduced flexibility in handling non-linear, dynamic, and large-scale transportation net-
works. Additionally, the integration of machine learning techniques into transportation
models has enhanced decision-making under uncertainty, enabling real-time adaptability
and improved computational performance.
Several recent studies have explored the application of transportation optimization
in real-world logistics. For instance, Stevenson (2020) examined cost-efficient distribu-
tion models in manufacturing logistics, while Chopra and Meindl (2019) investigated
warehouse-to-retail transportation strategies aimed at minimizing overall supply chain
costs. Crainic and Kim (2007) introduced multi-modal transportation models that in-
tegrate road, rail, air, and maritime transport systems to improve efficiency and reduce
congestion in logistics operations. Furthermore, organizations such as the World Health
Organization [16] and the Federal Emergency Management Agency [7] have applied trans-
portation optimization techniques in healthcare and disaster response logistics, highlight-
ing the role of effective transportation planning in enhancing emergency response and
resource allocation.
The literature reviewed demonstrates that significant progress has been made in the
formulation and solution of transportation problems. Early studies laid the mathematical
foundations of the problem, while modern research has expanded its scope through ad-
vanced computational techniques and real-world applications. Despite the developments

9
in transportation optimization, classical numerical methods remain relevant due to their
simplicity, transparency, and educational value. This study contributes to this body of
knowledge by analyzing and evaluating classical numerical methods, providing insight into
their efficiency, accuracy, and practical applicability in transportation problem-solving.

2.2 Theoretical Framework

2.2.1 The Transportation Problem
The transportation problem is a linear programming problem that focuses on mini-
mizing transportation costs while satisfying supply and demand constraints. It involves
determining the most cost-effective way to transport goods from multiple sources to mul-
tiple destinations.
Mathematically, it is formulated as:
m X
X n
min Z = cij xij
i=1 j=1

subject to:
1. Supply Constraints:
n
X
xij = si , ∀i = 1, 2, . . . , m
j=1

2. Demand Constraints:
m
X
xij = dj , ∀j = 1, 2, . . . , n
i=1

3. Non-Negativity Constraints:
xij ≥ 0, ∀i, j

where:
1. xij is the quantity transported from the source i to the destination j.
2. cij is the transportation cost per unit from source i to destination j.
3. si is the supply available at the source i.
4. dj is the demand required at destination j.
5. m is the number of supply points (sources).
6. n is the number of demand points (destinations).
Depending on the relationship between total supply and total demand, transportation
problems are classified as:
1. Balanced Problem: m
P Pn
i=1 si = j=1 dj (Total supply equals total demand)

2. Unbalanced Problem: m
P Pn
i=1 si ̸= j=1 dj (Requires the addition of a dummy source/destination
to balance the system)

10
 Figure 1: illustration of the graph of a transportation problem

Figure 2: Illustration of the transportation problem

2.2.2 Feasibility Condition

A transportation problem is feasible if the total supply equals the total demand.
m
X n
X
si = dj
i=1 j=1

If this condition does not hold, the problem becomes an unbalanced transportation
problem, which requires modifications such as the introduction of dummy supply or de-
mand nodes.
Another essential condition for feasibility is the non-negativity constraint, which re-
quires that all transportation allocations be zero or positive. That is:

xij ≥ 0, ∀i, j

This reflects the practical reality that negative quantities of goods cannot be transported.
Furthermore, for a transportation problem to be feasible, every supply point should
have at least one valid transportation route to a demand point. If certain routes are
restricted or unavailable, they are typically modeled by assigning a very large or infinite
transportation cost, effectively preventing allocation along those routes.

11
2.2.3 Theorem: Existence of Basic Feasible Solutions
The transportation problem always has a basic feasible solution if the feasibility con-
dition holds. This guarantees that an initial solution can be obtained for optimization
using classical or modern numerical techniques.

2.2.4 Theorem: Optimality criterion for the MODI method

A feasible solution to a transportation problem is optimal if and only if the reduced
cost (opportunity cost) for all non-basic (empty) cells is non-negative. That is, for every
unallocated cell (i, j), the following condition is satisfied:

∆ij = cij − (ui + vj ) ≥ 0, ∀(i, j) ∈

/B
where:

1. cij is the transportation cost from source i to destination j.

2. ui and vj are the dual variables (also called row and column potentials).

3. B is the set of basic variables in the current solution.

4. ∆ij is the opportunity cost (or reduced cost).

The MODI (Modified Distribution) Method enhances efficiency by reducing the

number of computations needed for optimality testing.

2.2.5 Methods for Solving the Transportation Problem

There are several numerical methods used to solve the transportation problem, which
can be classified into:

1. Initial Basic Feasible Solution (IBFS) Methods: These methods provide an

initial feasible solution but may not be optimal.

(a) North-West Corner Method (NWC)

(b) Least Cost Method (LCM)
(c) Vogel’s Approximation Method (VAM)

2. Optimization Method: Used to improve the IBFS and find the optimal solution.

(a) Modified Distribution Method (MODI)

2.2.6 Optimality Condition

A transportation solution is optimal if no other feasible allocation can further reduce
the total transportation cost.
The MODI Method checks optimality by computing shadow costs and evaluating
whether cost improvements are possible. If all evaluations yield non-negative values, the
current solution is optimal.

12
Example: If the Initial Basic Feasible Solution (IBFS) has allocations at specific cells
of a cost matrix, the Modified Distribution (MODI) method will compute:

Ui + Vj = Cij
where:

1. Ui and Vj are potential values assigned to supply and demand nodes.

2. Cij is the transportation cost at that position.

By solving a set of equations based on allocations, the optimality condition is verified.

2.2.7 Degeneracy in the Transportation Problem

A transportation problem is degenerate if the number of allocated cells is less than
m + n − 1, where m is the number of sources and n is the number of destinations.

Example: If we have 3 suppliers and 4 customers, then the number of occupied cells
must be:
m+n−1=3+4−1=6
If fewer than 6 cells have allocations, degeneracy occurs, and an artificial allocation
(zero-value allocation) is introduced to maintain solvability.

13
CHAPTER 3
METHODOLOGY
3.1 Research Design
This study adopts a numerical and analytical approach. It focuses on applying selected
numerical methods to solve the transportation problem and evaluate how effective each
method is in minimizing transportation costs.

3.2 Method of Data Collection

The data used in this research were obtained from secondary sources, including aca-
demic textbooks and relevant literature. For the purpose of analysis, a hypothetical
transportation table was created, containing values for supply, demand, and transporta-
tion costs.

3.3 Method of Data Analysis

Three numerical methods were used to obtain initial feasible solutions to the trans-
portation problem. These methods are:

1. North-West Corner Rule.

2. Least Cost Method.

3. Vogel’s Approximation Method.

Each method was applied to the same transportation table. After obtaining the initial
solutions, the Modified Distribution Method (MODI) was used to test for optimality and
make adjustments where necessary.

3.4 Procedure for Data Analysis

The steps followed in analyzing the transportation problem are outlined below:

1. Presentation of the transportation table showing supply, demand, and cost infor-
mation.

2. Application of the North-West Corner Rule to obtain an initial feasible solution.

3. Application of the Least Cost Method to derive another initial solution.

4. Application of Vogel’s Approximation Method to generate an alternative solution.

5. Testing each solution for optimality using the MODI method.

6. Comparing the results to identify the most efficient method in terms of cost mini-
mization.

14
3.5 Software Utilized
All calculations in this study were done manually on paper. No specialized software
or programming tools were used.

15
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