TRANSPORTATION PROBLEM

LINEAR PROGRAMMING

TRANSPORTATION PROBLEM
One important application of linear programming is in the area of physical distribution (transportation) of goods and services from several supply centres to several demand centres.

 The objective is to determine the number of units of an item (commodity or product) which should be shipped from an origin to destination in order to satisfy the demanded quantity of goods and services at each destination centre, within the limited quantity of goods or services available at each supply centre, at the minimum transportation cost and/or time. The commodity transported from sources to destinations is a homogeneous commodity.

Demand Center 1/ Destination 1 Supply Center 1 / Source 1 Supply Center 2 / Source 2 Supply Center 3 / Source 3

Demand Center 2/ Destination 2

Demand Center 3/ Destination 3

Demand Center 4/ Destination 4

Supply

c1
c2

c3

Demand

b1

b2

b3

b4

Mathematical Model of Transportation Problem

Consider this case: A company has three production facilities S1, S2, and S3 with production capacity of 7, 9 and 18 units (in 100s) per week of a product, respectively. These units are to be shipped to four warehouses D1, D2, D3 and D4 with requirement of 5, 6, 7 and 14 units (in 100s) per week, respectively.

 The transportation costs (in Rupees) per unit between factories and warehouses are given in the table below:
D1 S1 S2 S3 Demand 19 70 40 5 D2 30 30 8 8 D3 50 40 70 7 D4 10 60 20 14 Capacity 7 9 18 34

Now, let us formulate this transportation problem as a Linear Programming model to minimise the total transportation cost. Model Formulation
Let xij = number of units of the product to be transported from factory i (i=1,2,...m) to warehouse j (j = 1,2, ..., n) The objective function is: Minimize Z = 19 x11 + 30x12 + 50x13 + 10x14 + 70x21 + 30x22 + 40x23 + 60x24 + 40x31 + 8x32 + 70x33 + 20x34 (Z = Total transportation cost)

 Subject to the constraints: Supply constraints

x11 + x12 + x13 + x14 = 7 x21 + x22 + x23 + x24 = 9 x31 + x32 + x33 + x34 = 18

Demand constraints
x11 + x21 + x31 = 5 x12 + x22 + x32 = 8 x13 + x23 + x33 = 7 x14 + x24 + x34 = 14

 Non-negativity condition
xij for i and j

The above LP model has (m x n) = 3 x 4 = 12 decision variables. And The above LP model has (m + n 1) = 3 + 4 -1 = 6 constraints. Where m is the number of rows and n is the number of columns in the general transportation table.

General Mathematical Model of Transportation Problem

Let ai is the available supply at the ith source. (i = 1, 2, ....m) Let bj is the demand at the jth destination. (j = 1, 2, ....n) Let cij be the cost of transporting one unit from the ith source to the jth destination. Let xij be the number of units transported from the ith source to the jth destination.

m i= 1

n CijXij j= 1

Our objective function is:

Minimize Z =

Subject to the constraints

Sigma j=1 to n xij

= ai; i = 1, 2, m (supply conditions) Sigma i=1 to m xij = bi; j = 1, 2, n (demand conditions) And Xij for all i and j

Existence of Feasible Solution

A necessary and sufficient condition for the existence of a feasible solution to the transportation problem is:
Sigma i=1 to m

That is, the total capacity (or supply) must equal total requirement (demand). Any feasible solution for a transportation problem must have exactly (m+n-1) nonnegative basic variables (or allocations) xij satisfying rim conditions.

ai =

Sigma j=1 to n

bi

D1 S1 c11 X11 S2 c11 X11 c11 c11

D2

... c11 ... c11

Dn

Supply a1

X11

X11

X11

...

X11

:
Sm c11

:
c11 X11

:
... c11 X11 b2 ... ...

X11 bn
Total supply = Total demand

Demand bj

b1

Remarks
1. When the total supply equals total demand, the problem is called a balanced transportation problem, otherwise an unbalanced transportation problem. 2. When the number if positive allocations (values of the decision variable xij) at any stage of the feasible solution is less than the (m+n1), the solution is said to be degenerate, otherwise non-degenerate.

The Transportation Algorithm

Step 1: Formulate the problem and arrange the data in the matrix form Step 2: Obtain an initial feasible solution
Three different methods to obtain an initial feasible solution:
1. North-West Corner Method 2. Least Cost Method 3. Vogels Approximation (or Penalty) Method

 Step 3: Test the initial solution for optimality

The Modified Distribution (MODI) method is used to test the optimality of the solution obtained in Step 2.

Step 4: Updating the solution

Repeat Step 3 until an optimal solution is reached.

Warehouse (Demand)

Factory (Supply)

Cell

Production Capacity (aj)

Total Requirement

(bi) Our aim is to satisfy demand using the available supply. Two possibilities exit: 1. Satisfy demand completely (bi moves into the cell) 2. Finish available stock and satisfy demand to the extent possible (aj moves into the cell).

North-West Corner Method

Step 1:
Start with the cell at the upper left (north-west) corner of the transportation matrix, and allocate as much as possible equal to the minimum rim values of the first row and first column. That is, minimum of a1 and b1

Step 2:
a) If allocation made in step 1 is equal to the supply available at first source (a1, in first row), then move vertically down to cell (2,1) in the second row and first column and apply step 1 again, for next allocation.

b) If allocation made in step 1 equal to the demand of the first destination (b1 in first column), then move horizontally to the cell (1,2) in the first row and second column and apply Step 1 gain for next allocation.

c) If a1=b1, allocate x11 = a1 or b1 and move diagonally to the cell (2,2)

Step 3:
Continue the procedure step by step till an allocation is made in the south-east corner cell of the transportation table.

D1
19 30

D2
50

D3
10

D4

Supply

S1
70

5
30

2
40 60

S2
40 8

6
70

3
20

S3 Demand 5 8

4 7

14 14

18
34

Total cost = (5x19) + (2x30) + (6x30) + (3x40) + (4x70) + (14x20) = Rs.1,015

Least Cost Method (LCM)

Since the objective is to minimize the total transportation cost, we must try to transport as much as possible through routes (cells)where the unit transportation cost is lowest.

 Step 1: Select the cell with the lowest unit cost in the entire transportation table and allocate as much as possible to this cell and eliminate (line out) that row or column in which either supply or demand is exhausted. If both a row and column are satisfied simultaneously, only one may be crossed out. In case the smallest unit cost is not unique, then select the cell where maximum allocation can be made.

 Step 2: After adjusting the supply and demand for all uncrossed-out rows and columns repeat the procedure with the next lowest unit cost among the remaining rows and columns of the transportation table and allocate as much as possible to this cell and eliminate (line out) that row and column in which either supply or demand is exhausted. Step 3: Repeat the procedure until the entire available supply at various sources and demand at various destinations is satisfied.

D1
19 30

D2
50

D3
10

D4

Supply

S1
70 30 40 60

7 7

S2
40

2
8 70

7
20

S3
Demand

3 5

8 8 7

7 14

18

34

Total Cost = (7x10) + (2x70) + (7x40) + (3x40) + (8x8) + (7x20) = Rs. 814

Vogels Approximation Method (VAM)

Vogels approximation (penalty or regret) method is a heuristic method and is preferred to the other two methods above. In this method, each allocation is made on the basis of the opportunity cost (or penalty) that would have been incurred if the allocation in certain cells with minimum unit transportation cost were missed. The advantage of this method is that it gives an initial solution which is nearer to an optimal solution or is the optimal solution itself.

 Step 1: Calculate the penalties for each row/column by taking the difference between the smallest and next smallest unit transportation cost in the same row/column. This difference indicated the penalty or extra cost which has to be paid if one fails to allocate to the cell with the minimum transportation cost. Step 2: Select the row/column with the largest penalty and allocate as much as possible in the cell having the least cost in the selected row/column satisfying the rim conditions. If there is a tie in the values of the penalties, it can be broken by selecting the cell where maximum allocation can be made.

 Step 3: Adjust the supply and demand and cross out the satisfied row/column. If a row and a column are satisfied simultaneously, only one of them is crossed out and the remaining row/column is assigned a zero supply (demand). Any row/column with zero supply or demand should not be used in computing future penalties. Step 4: Repeat steps 1 to 3 until the entire available supply at various sources and demand at various destinations are satisfied.

D1
19 30

D2
50

D3
10

D4

Supply

Row differences
9 9 40 40

S1
70

5
30 40 60

7 10 20 20 20

S2
40 8 70

7
20

9 12 20 50 -

S3
Demand

8 5 21 21 8 22 7 10 10

10 14 10 10

18
34

Column differences

10
10

10
50

Total Cost = (5x19) + (2x10) + (7x40) + (2x60) + (8x8) + (10x20) = Rs.779

Test For Optimality

Once an initial solution is obtained, the next step is to check for optimality. An optimal solution is one where there is no other set of transportation routes (allocation) that will further reduce the total transportation cost. Thus we have to evaluate each unoccupied cell (represents unused route) in the transportation table in terms of an opportunity of reducing total transportation cost.

There are two methods available for testing optimality.

1. The Stepping-stone Method
2. The Modified Distribution Method (MODI)

Stepping Stone Method

Steps
1. Determine an initial basic feasible solution using any one of the following:
North West Corner Rule Least Cost Method Vogel Approximation Method

2.

Make sure that the number of occupied cells is exactly equal to m+n-1, where m is the number of rows and n is the number of columns.

Stepping Stone Method

Steps 3. Select an unoccupied cell. Beginning at this cell, trace a closed path, starting from the selected unoccupied cell until finally returning to that same unoccupied cell.
(The cells at the turning points are called "Stepping Stones" on the path.)

4.

5.

Assign plus (+) and minus (-) signs alternatively on each corner cell of the closed path just traced, beginning with the plus sign at unoccupied cell to be evaluated. Add the unit transportation costs associated with each of the cell traced in the closed path. This will give net change in terms of cost.

Stepping Stone Method

Steps 6. Repeat steps 3 to 5 until all unoccupied cells are evaluated. 7. Check the sign of each of the net change in the unit transportation costs. If all the net changes computed are greater than or equal to zero, an optimal solution has been reached. If not, it is possible to improve the current solution and decrease the total transportation cost, so move to step 8. 8. Select the unoccupied cell having the most negative net cost change and determine the maximum number of units that can be assigned to this cell. The smallest value with a negative position on the closed path indicates the number of units that can be shipped to the entering cell. Add this number to the unoccupied cell and to all other cells on the path marked with a plus sign. Subtract this number from cells on the closed path marked with a minus sign.

Initial feasible solution

Distribution Centers
D A 4 3 3 6 5 9 E
450

F 8 2 6
350

G 6 5 5
250 250

Supply 700 400 600

Plant

B C

50

350

Demand

400

450

350

500

Initial basic feasible solution : 6 X 450 + 6 X 250 + 3 X 50 + 2 X 350 + 3 X 350 + 5 X 250 = 7350

The cell AD is empty so allocate one unit to it.

Distribution Centers
D A 4+ 3 3+1

E 6 5 9
450

F 8 2 6
350

G 65 5+
251 249

Supply 700 400 600

Plant

B C

50

349

Demand

400

450

350

500

The increase in the transportation cost per unit quantity of reallocation is +4 6 + 5 3 = 0. This indicates that every unit allocated to route AD will neither increase nor decrease the transportation cost. Thus, such a reallocation is unnecessary.

Choose another unoccupied cell. The cell BE is empty so allocate one unit to it. Now draw a closed path from BE as shown below in table

Distribution Centers
D A 4 33+ 65 9 E
249

F 8 2 6
350

G 6+ 5 5249 251

Supply 700 400 600

Plant

B C

49

+1

351

Demand

400

450

350

500

The increase in the transportation cost per unit quantity of reallocation is +5 6 + 6 5 + 3 3 = 0. This indicates that every unit allocated to route BE will neither increase nor decrease the transportation cost. Thus, such a reallocation is unnecessary.

 We must evaluate all such unoccupied cells in this manner by finding closed paths and calculating the net cost change as shown below.
Unoccupied cells CE CF AF BG Increase in cost per unit of reallocation +9 5 + 6 6 = 4 +6 3 + 3 2 = 4 +8 6 + 5 3 + 3 2 =5 +5 5 + 3 3 = 0 Remarks Cost Increases Cost Increases Cost Increases Neither increase nor decrease

Since all the values of unoccupied cells are greater than or equal to zero, the solution obtained is optimal. Minimum transportation cost is: 6 X 450 + 6 X 250 + 3 X 50 + 2 X 350 + 3 X 350 + 5 X 250 = Rs. 7350

MODI Method

Example
D1 S1 S2 S3 Demand
19 70 40 30 30 8

D2
50 40 70

D3
10 60 20

D4

Capacity 7 9 18

14

34

1.

An initial basic solution is shown in the table below: Distribution Centers D1 S1

19
5

D2
30 50

D3
10
7

D4
2

Supply

Plant

S2
S3

70
40

30
8
8

40
70

60
20

9
18

10

Demand

14

34

Here, m + n - 1 = 6. So the solution is not degenerate. Thus, an optimal solution can be obtained. The transportation cost at this stage is Rs.779

2. In order to calculate the values of uis (i-1,2,3,) and vjs (j=1,2,3,) for each occupied cell, we must arbitrarily assign v4=0 to simplify calculations.
Distribution Centers D1 S1 Plant S2 S3
Demand

D2
5

D3
50 40
7

D4
10 60 20
2

Supply

ui
u1 = 10 u2 = 60 u3 = 20

19 70 40

30 30 8
8

7 9 18

70

10

5
V1 = 9

8
V2 = -12

7
V3 = -20

14
V4 = 0

34

vj

2. The opportunity cost for each of the unoccupied cell is determined by using the relation dij = cij (ui + vj).
dij = cij (ui+vj)
Distribution Centers D1 S1 Plant S2 S3
Demand

D2
30
+32

D3
50
+60

D4
10
7 2

Supply

ui
u1 = 10 u2 = 60 u3 = 20

19 70

7 9 18

30
+1 -18

40
8

60 20

40
+21

70
+70

10

5
V1 = 9

8
V2 = -12

7
V3 = -20

14
V4 = 0

34

vj

 Step 3: Examine the sign of each dij

a) If dij > 0, then current basic feasible solution is optimal b) If dij = 0, then the current basic feasible solution will remain unaffected, but an alternate solution exists. c) If one or more dij <0, then an improved solution can be obtained by entering unoccupied cell (i,j) in the basis. d) An unoccupied cell having the largest negative value of dij is chosen for entering into the solution mix.

According to the optimality condition for cost minimizing transportation problem, the current solution is not optimal, since the opportunity cost of the unoccupied cell are not all zero or positive. The value of d22 = -18 in cell (S2, D2) is indicating that the total transportation cost can be reduced in multiple of 18 by shifting an allocation to this cell.
Distribution Centers D1 S1 Plant S2 S3
Demand

D2
30
+32

D3
50
+60

D4
10
7 2

Supply

ui
u1 = 10 u2 = 60 u3 = 20

19 70

7 9 18

30
+1 -18

40
8

60 20

40
+21

70
+70

10

5
V1 = 9

8
V2 = -12

7
V3 = -20

14
V4 = 0

34

vj

 Step 4:
Construct a closed-path (or loop) for the unoccupied cell with largest negative opportunity cost. Start the closed path with the selected unoccupied cell and mark plus sign (+) in this cell. Trace a path from this cell, along the rows (or columns) to an occupied cell, mark the corner with minus sign (-) and continue down the column (or row) to an occupied cell and mark the corner with plus sign (+) etc. Close the path back to the selected unoccupied cell.

A closed-loop(path) is traced along row S2 to an occupied cell (S3, D2). A plus sign is placed cell (S2, D2) and minus sign in cell (S3, D2). Now take3 a right-angle turn and locate an occupied cell in column D4. An occupied cell (S3, D4) exists at row S3, and a plus sign is placed in this cell. Continue the process and complete the closed path.
Distribution Centers D1 S1 Plant S2
19 70
+1
5

D2
30
+32

D3
50
+60

D4
10
7 2

Supply

ui
u1 = 10 u2 = 60

7 9

30
(+1)

40
-18
8

60

(-1)

S3
Demand

40
+21

8
(-1)

70
+70

20

10 (+1)

18

u3 = 20

5
V1 = 9

8
V2 = -12

7
V3 = -20

14
V4 = 0

34

vj

 Step 5:
Select the smallest quantity amongst the cells marked with minus sign on the corners of the closed loop. Allocate this value to the selected unoccupied cell and add it to other occupied cells marked with plus sign and subtract it from the occupied cells marked with minus sign.

In order to maintain feasibility, examine the occupied cell with minus sign at the corners of closed loop, and select the one that has the smallest allocation. This determines the maximum number of units that can be shifted along the closed path.
Distribution Centers D1 S1 Plant S2
19 70
+19
5

D2
30
+32

D3
50
+42

D4
10
7 2

Supply

ui
u1 = 0 u2= 32

7 9

30

40

60
+18

S3
Dema nd

40
+11

70
+52

20

12

18 34

u3 = 10

5
V1 = 19

8
V2 = -2

7
V3 = 8

14
V4 = 10

vj

 Since each dij is positive, the current basic feasible solution is optimal with minimum transportation cost. Transportation cost: (5x19) + (2x10) + (2x30) + (7x40) + (6x8) + (12x20) = Rs.743

Degeneracy
If the basic feasible solution of a transportation problem with m origins and n destinations has fewer than m + n 1 positive xij (occupied cells), the problem is said to be a degenerate transportation problem. Degeneracy can occur at two stages:
At the initial solution During the testing of the optimal solution

To resolve degeneracy, we make use of an artificial quantity (d). The quantity d is assigned to that unoccupied cell, which has the minimum transportation cost.

Example
Distribution Centers 1 A Plant B C Demand
2
4 3

2
2
6 2

3
2
4 1

4
4
3 0

Supply

1000 700 900

900

800

500

400

For calculation purposes, the value of d is assumed to be zero. The use of d is illustrated in the following example.

Example
Distribution Centers 1 A Plant B C Demand
2
4 3
900

2
2
6 2
100

3
2
4 1
500

4
4
3 0
400

Supply

1000 700 900

700

900

800

500

400

An initial basic feasible solution is obtained by VAM. Number of basic variables = m + n 1 = 3 + 4 1 = 6 Since number of basic variables is less than 6, therefore, it is a degenerate transportation problem.

Example
Distribution Centers 1 A Plant B C Demand
2
4 3
900

2
2
6 2
100

3
2
4 1
500

4
4
3 0
400

Supply

1000 700 900 +d

700

900

800+d

500

400

To resolve degeneracy, we make use of an artificial quantity(d). The quantity d is assigned to that unoccupied cell, which has the minimum transportation cost. The quantity d is so small that it does not affect the supply and demand constraints. In the above table, there is a tie in selecting the smallest unoccupied cell. In this situation, you can choose any cell arbitrarily. We select the cell C2 as shown in the following table.

 Now we use the Stepping Stone Method to find an optimal solution.

Unoccupied cells A3 A4 B1 B3 B4 C1 Increase in cost per Remarks unit of reallocation +2 2 + 2 1 = 1 +4 2 + 2 0 = 4 +4 6 + 2 2 = 2 +4 6 + 2 1 = 1 +3 6 + 2 0 = 1 +3 2 + 2 2 = 1 Cost Increases Cost Increases Cost Decreases Cost Decreases Cost Decreases Cost Increases

The cell B1 is having the maximum improvement potential, which is equal to -2. The maximum amount that can be allocated to B1 is 700 and this will make the current basic variable corresponding to cell B2 non basic. The improved solution is shown in the following table.

Example
Distribution Centers 1 A Plant B C Demand
2
4 3
200

2
2
6 2
d 800

3
2
4 1
500

4
4
3 0
400

Supply

1000 700 900

700

900

800

500

400

The optimal solution is 2 X 200 + 2 X 800 + 4 X 700 + 2 X d + 1 X 500 + 0 X 400 = 5300 + 2d. Notice that d is a very small quantity so it can be neglected in the optimal solution. Thus, the net transportation cost is Rs. 5300

Unbalanced Transportation Problem

So far we have assumed that the total supply at the origins is equal to the total requirement at the destinations. m n Specifically, Si Dj

i=

j=

But in certain situations, the total supply is not equal to the total demand. Thus, the transportation problem with unequal supply and demand is said to be unbalanced transportation problem.

How to solve an unbalanced transportation problem?

If the total supply is more than the total demand, we introduce an additional column, which will indicate the surplus supply with transportation cost zero. Similarly, if the total demand is more than the total supply, an additional row is introduced in the table, which represents unsatisfied demand with transportation cost zero. The balancing of an unbalanced transportation problem is illustrated in the following example.

Plant W1 A B Demand 28 19 250

Warehouse W2 17 12 250 W3 26 16 500

Supply 500 300

The total demand is 1000, whereas the total supply is 800.

m Si i= 1 j= 1 m Dj

Total supply < total demand. To solve the problem, we introduce an additional row with transportation cost zero indicating the unsatisfied demand.

Plant W1 A B Unsatisfied Demand Demand 28 19 0 250

Warehouse W2 17 12 0 250 W3 26 16 0 500

Supply 500 300 200 1000

The total demand is 1000, whereas the total supply is 800. Total supply < total demand. To solve the problem, we introduce an additional row with transportation cost zero indicating the unsatisfied demand.

Using Minimum Cost Method, we get the following allocations.

Plant W1 A
50

Warehouse W2 17
450

Supply W3 26 16
50

28 19
250

500 300 200 1000

B Unsatisfied Demand Demand

12 0 250

0
200

0 500

250

Initial basic feasible solution 50 X 28 + 450 X 26 + 250 X 12 + 50 X 16 + 200 X 0 = 16900.