Goa Institute of Management

PGDM-FT 2024-2025

Quantitative Analysis for

Management
Dr. Deepti Mohan
QAM - Syllabus
• Queuing Models
• Linear Programming Problem (LPP) :
• Transportation Problem (TP)
• Introduction to TP. Concept of a balanced and unbalanced TP. TP Solution. Initial basic feasible solution (IBFS)
- North West Corner Rule Method, Matrix Minima Method, and Vogel’s Approximation Method, Degenerate
and Non-Degenerate TP. Test for optimality of a basic feasible solution using Modified Distribution Method
(MODI).

• Assignment Problem (AP)

• Project Management

14/11/2024 Dr. Deepti Mohan | Goa Institute of Management 2

Transportation Problem - Algorithm
• First, the Transportation problem has to be balanced i.e., total supply = total
demand. If the TP is unbalanced, it is converted to a balanced TP by use of
dummy row/column.
• Once you have a balanced TP, an initial BFS to the TP is found using any of the
three methods we discussed:
1) North West Corner Cell/Rule Method
2) Least Cost Method or Matrix Minima Method
3) Penalty Cost Method or Vogel’s Approximation Method
• Next, optimality is checked for the initial solution. If it is not optimal, a better
solution is created from the existing solution and its optimality is checked. The
process is repeated until the solution is optimal.
• From the initial basic feasible solution, optimal solution can be arrived at using
modified distribution (MODI) method aka UV method or Method of Multipliers.
14-11-2024 Deepti Mohan | Goa Institute of Management
• In a transportation problem with m supply (origin) nodes and n
demand nodes,
• Number of decision variables=mn
• Number of basic variables=m+n-1
• Number of non-basic variables = mn – (m+n-1)

14-11-2024 Deepti Mohan | Goa Institute of Management

Degeneracy in BFS of a Transportation
Problem
• If the number of variables with positive allocation = m+n-1, the BFS is
not degenerate (non-degenerate).
• If the number of variables with positive allocation < m+n-1, the BFS is
degenerate.

14-11-2024 Deepti Mohan | Goa Institute of Management

Method of Multipliers/ MODI Method/ UV
Method
• Identify basic and non-basic variables
• All variables with non-zero (positive) allocation are basic variables
• If there is no degeneracy (i.e. the BFS is non-degenerate), we have obtained all
the m+n-1 basic variables in the above step.
Optimality test:
• For basic variables, find 𝑢𝑖 and 𝑣𝑗 values such that 𝑐𝑖𝑗 = 𝑢𝑖 + 𝑣𝑗
• A BF solution is optimal if and only if 𝑐𝑖𝑗 − 𝑢𝑖 − 𝑣𝑗 ≥ 0 for
every (i, j) such that 𝑥𝑖𝑗 is nonbasic.

14-11-2024 Deepti Mohan | Goa Institute of Management

Iteration1-(initial BFS using MMM)
Bangalore Hyderabad Chennai Supply

Mumbai
𝑐11 =8 𝑐12 =6 𝑐13 =10 20
𝑥11 = 15 𝑥12 = 0 𝑥13 = 5

Delhi
𝑐21 =9 𝑐22 =5 𝑐23 =7 30
𝑥21 = 0 𝑥22 = 25 𝑥23 = 5

Demand
15 25 10 50\50

14-11-2024 Deepti Mohan | Goa Institute of Management

Optimality test (initial BFS using MMM)
Bangalore Hyderabad Chennai Supply

Mumbai
𝑐11 =8 𝑐12 =6 𝑐13 =10 20
𝑢1 = 0
𝑥11 = 15 𝑥12 = 0 𝑥13 = 5
B N B

Delhi
𝑐21 =9 𝑐22 =5 𝑐23 =7 30
𝑢2 =
𝑥21 = 0 𝑥22 = 25 𝑥23 = 5
N B B

Demand
15 25 10 50\50

𝑣1 = 𝑣2 = 𝑣3 =
14-11-2024 Deepti Mohan | Goa Institute of Management
Optimality test (initial BFS using MMM)
Bangalore Hyderabad Chennai Supply

Mumbai
𝑐11 =8 𝑐12 =6 𝑐13 =10 20
𝑥11 = 15 𝑥12 = 0 𝑥13 = 5 𝑢1 = 0
B N B
[c-u-v=0] [c-u-v=-2] [c-u-v=0]
Delhi
𝑐21 =9 𝑐22 =5 𝑐23 =7 30
𝑥21 = 0 𝑥22 = 25 𝑥23 = 5 𝑢2 = −3
N B B
[c-u-v=4] [c-u-v=0] [c-u-v=0]
Demand
15 25 10 50\50

𝑣1 = 8 𝑣2 = 8 𝑣3 = 10

14-11-2024 Deepti Mohan | Goa Institute of Management

• 𝑐12 − 𝑢1 − 𝑣2 < 0 for 𝑥12 (nonbasic variable). Hence this solution
is not optimal.
• Entering variable?
• The nonbasic variable with the most negative 𝑐12 − 𝑢1 − 𝑣2 will be
the entering variable
• In this BFS, 𝑥12 is the entering variable

14-11-2024 Deepti Mohan | Goa Institute of Management

To find new basic feasible solution
• Identify the variable corresponding to the nonbasic variable with the most
negative 𝑐𝑖𝑗 − 𝑢𝑖 − 𝑣𝑗 value (this is the entering variable).
• Form a closed loop starting and ending at this cell such that the following
conditions are satisfied:
• The loop should be made of horizontal and vertical lines only.
• All the other corners (turning points) of the loop lie in allocated (basic variable) cells.
• Make an allocation of +x to the chosen nonbasic variable. Add or subtract x
to/from corner cells as the case may be to ensure that supply and demand
constraints are not violated.
• From the donor cells (cells with –x), select the basic variable having the
smallest value as the leaving variable. Add the value of the leaving variable
to the allocation for each recipient cell (cell with +x). Subtract this value
from the allocation for each donor cell.

14-11-2024 Deepti Mohan | Goa Institute of Management

Completing the closed loop
Bangalore Hyderabad Chennai Supply

Mumbai
𝑐11 =8 𝑐12 =6 𝑐13 =10 20 Add +𝒙 to the entering
𝑥11 = 15 𝑥12 = 0 + 𝑥 𝑥13 = 5 − 𝑥 variable. Add/subtract 𝒙
at appropriate basic
B B B variable cells to ensure
supply and demand
Delhi constraints are not
𝑐21 =9 𝑐22 =5 𝑐23 =7 30 violated.
𝑥21 = 0 𝑥22 = 25 − 𝑥 𝑥23 = 5 + 𝑥
The maximum value x
N B B can take is 5 since 𝒙𝟏𝟑
𝐰𝐢𝐥𝐥 𝐭𝐮𝐫𝐧 𝐧𝐞𝐠𝐚𝐭𝐢𝐯𝐞 𝐢𝐟 𝐱
Demand
𝐢𝐬 𝐠𝐫𝐞𝐚𝐭𝐞𝐫 𝐭𝐡𝐚𝐧 𝟓
15 25 10 50\50
𝒙=𝟓

14-11-2024 Deepti Mohan | Goa Institute of Management

Finding leaving variable
Bangalore Hyderabad Chennai Supply

Mumbai
𝑐11 =8 𝑐12 =6 𝑐13 =10 20
𝑥11 = 15 𝑥12 = 0 + 5 𝑥13 = 5 − 5
B B B

Delhi
𝑐21 =9 𝑐22 =5 𝑐23 =7 30
𝑥21 = 0 𝑥22 = 25 − 5 𝑥23 = 5 + 5
N B B

Demand
15 25 10 50\50

14-11-2024 Deepti Mohan | Goa Institute of Management

New BFS
Bangalore Hyderabad Chennai Supply

Mumbai
𝑐11 =8 𝑐12 =6 𝑐13 =10 20
𝑢1 = 0
𝑥11 = 15 𝑥12 = 5 𝑥13 = 0
B B N

Delhi
𝑐21 =9 𝑐22 =5 𝑐23 =7 30
𝑢2 =
𝑥21 = 0 𝑥22 = 20 𝑥23 = 10
N B B

Demand
15 25 10 50\50

𝑣1 = 𝑣2 = 𝑣3 =
14-11-2024 Deepti Mohan | Goa Institute of Management
• 𝑥12 is the entering variable (becomes basic)
• 𝑥13 is the leaving variable (becomes nonbasic)

• No degeneracy in new BFS

14-11-2024 Deepti Mohan | Goa Institute of Management

New BFS – is this optimal?
Bangalore Hyderabad Chennai Supply

Mumbai
𝑐11 =8 𝑐12 =6 𝑐13 =10 20
𝑥11 = 15 𝑥12 = 5 𝑥13 = 0
B B N

Delhi
𝑐21 =9 𝑐22 =5 𝑐23 =7 30
𝑥21 = 0 𝑥22 = 20 𝑥23 = 10
N B B

Demand
15 25 10 50\50

14-11-2024 Deepti Mohan | Goa Institute of Management

Iteration-2: Check if the BFS is degenerate
1) Check whether the BFS is degenerate.
The number of supply nodes, m=2 and the number of demand nodes, n=3
Number of basic variables = m+n-1 = 4
There is no degeneracy as the number of positive variables = 4 =m+n-1
Bangalore Hyderabad Chennai Supply

Mumbai 𝑐11 =8 𝑐12 =6 𝑐13 =10

20
𝑥11 = 15 𝑥12 = 5 𝑥13 = 0

Delhi 𝑐21 =9 𝑐22 =5 𝑐23 =7

30
𝑥21 = 0 𝑥22 = 20 𝑥23 = 10

Demand
15 25 10 50\50

14-11-2024 Deepti Mohan | Goa Institute of Management

Iteration-2: Identify basic and nonbasic
variables
2) Identify basic and nonbasic variables
Bangalore Hyderabad Chennai Supply

Mumbai
𝑐11 =8 𝑐12 =6 𝑐13 =10 20 𝑢1 = 0
𝑥11 = 15 𝑥12 = 5 𝑥13 = 0
B B N
Delhi
𝑐21 =9 𝑐22 =5 𝑐23 =7 30 𝑢2 =
𝑥21 = 0 𝑥22 = 20 𝑥23 = 10
N B B
Demand
15 25 10 50\50

𝑣1 = 𝑣2 = 𝑣3 =

14-11-2024 Deepti Mohan | Goa Institute of Management

Iteration-2: Find u and v values
Set u1 = 0. Find 𝑟𝑒𝑚𝑎𝑖𝑛𝑖𝑛𝑔 𝑢𝑖 and 𝑣𝑗 values such that 𝑐𝑖𝑗 = 𝑢𝑖 + 𝑣𝑗 for basic variables,
Bangalore Hyderabad Chennai Supply

Mumbai
𝑐11 =8 𝑐12 =6 𝑐13 =10 20
𝑢1 = 0
𝑥11 = 15 𝑥12 = 5 𝑥13 = 0
B B
Delhi
𝑐21 =9 𝑐22 =5 𝑐23 =7 30
𝑢2 = −1
𝑥21 = 0 𝑥22 = 20 𝑥23 = 10
B B
Demand
15 25 10 50\50

𝑣1 = 8 𝑣2 = 6 𝑣3 = 8

14-11-2024 Deepti Mohan | Goa Institute of Management

Iteration-2: Check for optimality
Compute 𝑐𝑖𝑗 − 𝑢𝑖 − 𝑣𝑗 for nonbasic variables
Bangalore Hyderabad Chennai Supply

Mumbai 𝑐11 =8 𝑐12 =6 𝑐13 =10 20 𝑢1 = 0

𝑥11 = 15 𝑥12 = 5 𝑥13 = 0
B B N
[0] [0] [10-0-8=2] 𝑢2 = −1
Delhi 𝑐21 =9 𝑐22 =5 𝑐23 =7 30
𝑥21 = 0 𝑥22 = 20 𝑥23 = 10
N B B
[9-(-1)-8=2] [0] [0]
Demand 15 25 10 50\50
𝑣1 = 8 𝑣2 = 6 𝑣3 = 8

𝒄𝒊𝒋 − 𝒖𝒊 − 𝒗𝒋 ≥ 𝟎 for every nonbasic variable. Hence this solution is optimal and is unique. Optimal
transportation cost = 320
14-11-2024 Deepti Mohan | Goa Institute of Management
Example-1 Initial BF solution using MMM
D1 D2 D3 D4 Supply

O1 11 13 17 14
200 50 0 0 250

O2 16 18 14 10
0 50 0 250 300

O3 21 24 13 10
0 125 275 0 400

Demand
200 225 275 250

Cost = (200x11) + (50x13) + (50x18) + (125x24) + (275x13) +

(250x10) = 2200 + 650 + 900 + 3000 + 3575 + 2500 = 12825
14-11-2024 Deepti Mohan | Goa Institute of Management
Iteration 1- checking if the BFS is degenerate
1) Check whether the BFS is degenerate.
• The number of supply nodes, m=3 and the number of demand nodes, n=4
• Number of basic variables = m+n-1 = 6
• There is no degeneracy as the number of positive variables = 6 =m+n-1
D1 D2 D3 D4 Supply

𝑢𝑖 𝑠
O1 11 13 17 14
200 50 0 0 250
𝑢1 =
O2 16 18 14 10
0 50 0 250 300 𝑢2 =

O3 21 24 13 10
0 125 275 0 400 𝑢3 =

Demand
200 225 275 250

𝑣1 = 𝑣2 = 𝑣3 = 𝑣4 =

14-11-2024 Deepti Mohan | Goa Institute of Management

Iteration 1- finding u and v values
𝑢𝑖 𝑠
D1 D2 D3 D4 Supply

O1 11
200 13
50 17
0 14
0 250 𝑢1 =0
(B) (B)
O2 16
0 18
50 14
0 10
250 300 𝑢2 =5
(B)
O3 21 24 13 10
0 125 275 0 400 𝑢3 = 11
(B) (B)
Demand
200 225 275 250
𝑣1 =11 𝑣2 =13 𝑣3 = 2 𝑣4 = 5

14-11-2024 Deepti Mohan | Goa Institute of Management

Iteration 1- Checking for optimality
Compute 𝑐𝑖𝑗 − 𝑢𝑖 − 𝑣𝑗 for all non-basic variables (cells with zero allocation)

D1 D2 D3 D4 Supply
𝑢𝑖 𝑠

O1 11
200 13
50 17
0 14
0 250 𝑢1 = 0
(B) (B)
O2 16 18 14 10 𝑢2 = 5
0 50 0 250 300
(B) 𝑢3 = 11
O3 21 24 13 10
0 125 275 0 400
(B) (B)
Demand For 𝑥13 : 17-0-2=15
200 225 275 250
For 𝑥14 : 14-0-5=11
For 𝑥21 : 16-5-11=0
𝑣1 = 11 𝑣2 = 13 𝑣3 = 2 𝑣4 = 5 For 𝑥23 : 14-5-2=7
For 𝑥31 : 21-11-11=-1
For 𝑥34 : 10-11-5=-6
14-11-2024 Deepti Mohan | Goa Institute of Management
Optimality test: A BF solution is optimal if and only if 𝑐𝑖𝑗 − 𝑢𝑖 − 𝑣𝑗 ≥ 0 for
every (i, j) such that 𝑥𝑖𝑗 is nonbasic.

Here 𝑥31 and 𝑥34 have negative 𝑐𝑖𝑗 − 𝑢𝑖 − 𝑣𝑗 values. Hence the given solution is not optimal.

Identify the variable corresponding to the nonbasic variable with the most negative 𝑐𝑖𝑗 − 𝑢𝑖 − 𝑣𝑗 value (this
is the entering variable).

Here 𝑥34 is the entering variable.

14-11-2024 Deepti Mohan | Goa Institute of Management

Iteration 2- Finding improved solution
D1 D2 D3 D4 Supply
𝑢𝑖 𝑠

O1 11
200 13
50 17
0 14
0 250 𝑢1 =

O2 16 18 14 10 𝑢2 =
0 50+x 0 250-x 300

O3 21 24 13 10 𝑢3 =
0 125-x 275 0+x 400

Demand
200 225 275 250

𝑣1 = 𝑣2 = 𝑣3 = 𝑣4 = x=min(125,250)=125

14-11-2024 Deepti Mohan | Goa Institute of Management

Iteration 2- Finding improved solution – new
BFS
D1 D2 D3 D4 Supply

O1 11 13 17 14
200 50 0 0 250

O2 16 18 14 10
0 50+125 0 250- 300
=175 125=125
O3 21 24 13 10
0 125- 275 0+125=125 400
125=0
Demand
200 225 275 250

14-11-2024 Deepti Mohan | Goa Institute of Management

Iteration 2- new BFS
D1 D2 D3 D4 Supply
𝑢𝑖 𝑠

O1 11
200 13
50 17
0 14
0 250 𝑢1 =

O2 16 18 14 10 𝑢2 =
0 175 0 125 300

O3 21 24 13 10 𝑢3 =
0 0 275 125 400

Demand
200 225 275 250

𝑣1 = 𝑣2 = 𝑣3 = 𝑣4 = Cost =12075

14-11-2024 Deepti Mohan | Goa Institute of Management

Iteration 2- Find u and v values
The BFS is not degenerate . Compute u and v such that 𝑐𝑖𝑗 = 𝑢𝑖 + 𝑣𝑗 for all basic
variables
D1 D2 D3 D4 Supply
𝑢𝑖 𝑠

O1 11
200 13
50 17
0 14
0 250 𝑢1 = 0

O2 16 18 14 10 𝑢2 = 5
0 175 0 125 300

O3 21 24 13 10 𝑢3 = 5
0 0 275 125 400

Demand
200 225 275 250

𝑣1 = 11 𝑣2 = 13 𝑣3 = 8 𝑣4 = 5

14-11-2024 Deepti Mohan | Goa Institute of Management

 Checking for optimality
• Compute 𝑐𝑖𝑗 − 𝑢𝑖 − 𝑣𝑗 for all non-basic variables (cells with zero
allocation)
• D1 D2 D3 D4 Supply

O1 11
200 13
50 17
0 14
0 250 𝑢1 For 𝑥13 : 17-0-11=6
=0 For 𝑥14 : 14-0-8=6
O2 16
0 18
175 14
0 10
125 300 𝑢2 For 𝑥21 : 16-5-11=0
=5 For 𝑥23 : 14-5-8=1
O3 21 24 13 10 For 𝑥31 : 21-5-11=5
0 0 275 125 400 𝑢3 For 𝑥32 : 24-5-13=6
=5
Demand
200 225 275 250 A BF solution is optimal if and only if 𝑐𝑖𝑗 −
𝑢𝑖 − 𝑣𝑗 ≥ 0 for nonbasic variable.
𝑣1 = 11 𝑣2 = 13 𝑣3 = 8 𝑣4 = 5 Here all values are non-negative. Hence the
given solution is optimal. Multiple optimal
solutions are present for this problem.
Optimal transportation cost=12075
14-11-2024 Deepti Mohan | Goa Institute of Management
 Example 4
•Obtain the optimum solution for the following T.P using Modi Method (here data is in terms of cost in Rs)- (Solve for initial feasible solution using VAM)

D1 D2 D3 D4 Supply

O1 1 2 4 4
6
Balanced? Yes
O2 4 3 2 0
8
O3 0 2 2 1
10
Demand
4 6 8 6 24\ 24

14-11-2024 Deepti Mohan | Goa Institute of Management

 Example 4
•Obtain the optimum solution for the following T.P using Modi Method (here data is in terms of cost in Rs)- (Solve for initial feasible solution using VAM)

D1 D2 D3 D4 Supply

O1 1 2 4 4
6
0 6 0 0
O2 4 3 2 0
8
0 0 2 6
O3 0 2 2 1
10
4 0 6 0
Demand
4 6 8 6 24\ 24

Cost = 28

14-11-2024 Deepti Mohan | Goa Institute of Management

 Checking for degeneracy
The number of supply nodes, m=3 and the number of demand nodes, n=4
• Number of variables=mn = 12
• Number of basic variables=m+n-1 = 6
• Number of non-basic variables = mn – (m+n-1) = 6
• The number of variables with positive allocation = 5, Hence this BFS is
degenerate.
• There is 6-5=1 basic variable among the zero allocation cells

14-11-2024 Deepti Mohan | Goa Institute of Management

Finding the remaining basic variable(s)
• To find the remaining basic variables, find a zero allocation cell such that
no closed loop can be formed. Try the least cost cell among the zero
allocation cells first.
• To find missing basic variable from the unallocated cells:
• Start from the unallocated cell with the least cost. Check the loop formation one by
one.
• If you find a cell such that no closed-loop can be formed, select that cell as the
missing basic variable.
• There could be more than one missing basic variable as well (if positive
allocated cells is less than m+n-1 by more than one). The number of
missing basic variables you need to find = (m+n-1)-(the number of positive
allocations in the BF solution)

14-11-2024 Deepti Mohan | Goa Institute of Management

Example 4 Finding the missing basic
variable(s)
D1 D2 D3 D4 Supply m=3, n=4
m +n-1=6
Number of cells with positive
O1 1 2 4 4
6 values =5 < 6
0? 6 0 0
O2 4 3 2 0
This BFS is degenerate. There is 6-5=1
8 basic variable among the zero
0 0 2 6 allocation cells
O3 0 2 2 1
10 To find this, find a zero allocation cell
4 0 6 0? such that no closed loop can be
Demand
4 6 8 6 24\ 24 formed. Try the least cost cell among
the zero allocation cells first.

14-11-2024 Deepti Mohan | Goa Institute of Management

Example 4 Finding the missing basic
variable(s)
D1 D2 D3 D4 Supply
To find this, find a zero allocation cell
such that no closed loop can be
O1 1 2 4 4 formed. Try the least cost cell among
6 the zero allocation cells first.
𝑥11 = 0 𝑥12 = 6 0 0 𝑥11 satisfies the condition and hence
B B N N is marked as basic.
O2 4 3 2 0
8
0 0 𝑥23 = 2 𝑥24 = 6
N N B B
O3 0 2 2 1
10
𝑥31 = 4 0 𝑥33 = 6 0
B N B N
Demand
4 6 8 6 24\ 24
14-11-2024 Deepti Mohan | Goa Institute of Management
Example 4 Finding u and v values

D1 D2 D3 D4 Supply

O1 1 2 4 4 𝑢1 = 0
6
0 B 6 B 0 0
O2 4 3 2 0 𝑢2 = −1
8
0 0 2 B 6 B
O3 0 2 2 1 𝑢3 = −1
10
4 B 0 6 B 0
Demand
4 6 8 6 24\ 24

𝑣1 = 1 𝑣2 = 2 𝑣3 = 3 𝑣4 = 1
14-11-2024 Deepti Mohan | Goa Institute of Management
Example 4 Check for optimality

D1 D2 D3 D4 Supply 𝑐𝑖𝑗 − 𝑢𝑖 − 𝑣𝑗 values for

Nonbasic variables:
O1 1 2 4 4 𝑢1 = 0 For 𝑥13 : 1
6 For 𝑥14 : 3
0 B 6 B 0 0 For 𝑥21 : 4
O2 4 3 2 0 𝑢2 = −1 For 𝑥22 : 0
8
For 𝑥32 : 1
0 0 2 B 6 B For 𝑥34 : 1
O3 0 2 2 1 𝑢3 = −1
10
4 B 0 6 B 0
Demand A BF solution is optimal if and only if
4 6 8 6 24\ 24 𝑐𝑖𝑗 − 𝑢𝑖 − 𝑣𝑗 ≥ 0 for nonbasic variable.
Hence the given solution is optimal.
𝑣1 = 1 𝑣2 = 2 𝑣3 = 3 𝑣4 = 1 Multiple optimal solutions are present for
this problem. Optimal transportation
14-11-2024 Deepti Mohan | Goa Institute of Management
cost=28
Summary of the Transportation Simplex Method.
1) Represent the Transportation problem in cost matrix form.
2) Check if the problem is balanced. If not, add dummy row/column as needed to make the problem
balanced.
3) Define your decision variables and other parameters of the problem (𝒙𝒊𝒋 , 𝒄𝒊𝒋 , 𝒎, 𝒏)
4) Initialization: Construct an initial BF solution by NWCR/MMM/VAM.
5) Check for degeneracy. Identify basic and nonbasic variables in the BFS.
6) Optimality test:. Compute 𝑢𝑖 𝑠 and 𝑣𝑗 s such that 𝑐𝑖𝑗 − 𝑢𝑖 − 𝑣𝑗 = 0 ⇒ 𝑐𝑖𝑗 = 𝑢𝑖 − 𝑣𝑗 for all basic variables.
To derive this, set u1=0 and solve the set of equations 𝑐𝑖𝑗 = 𝑢𝑖 + 𝑣𝑗 for each (i, j) such that 𝑥𝑖𝑗 is basic.
• If 𝑐𝑖𝑗 − 𝑢𝑖 − 𝑣𝑗 ≥ 0 for every (i, j) such that 𝑥𝑖𝑗 is nonbasic, then the current solution is optimal, STOP. Otherwise, go to step-7)
• If 𝑐𝑖𝑗 − 𝑢𝑖 − 𝑣𝑗 =0 for any nonbasic variable when the algorithm terminates, the problem has multiple/infinite solutions. If 𝑐𝑖𝑗 −
𝑢𝑖 − 𝑣𝑗 > 0 for all nonbasic variables, then the problem has a unique solution which is the current BFS.
7) Finding new BFS (next iteration)
1. Determine the entering basic variable: Select the nonbasic variable xij having the most negative value of cij - ui - vj.
2. Determine the leaving basic variable: Identify the closed loop required to retain feasibility when the entering nonbasic variable is
increased by x. From the cells with –x, the basic variable having the smallest value (this will be x) will be the leaving variable.
3. Determine the new BF solution: Substitute thevalue of x in all turning points of the loop to get the new BFS.
8) Go to step 5)

14-11-2024 Deepti Mohan | Goa Institute of Management

14-11-2024 Deepti Mohan | Goa Institute of Management