MBA 662

3-4:Transportation and Assignment Models

What is a Transportation Problem?
 Transporting goods from several origins to several destinations efficiently is called the “transportation problem.”
 It can be solved with LP as well as with a special algorithm.

 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.

 Because of its special structure the usual simplex method is not suitable for solving transportation problems. These problems
require special method of solution.

 The problem of finding the minimum-cost distribution of a given commodity from a group of supply centers (sources) i=1,…,m to
a group of receiving centers (destinations) j=1,…,n •

 Each source has a certain supply (si) • Each destination has a certain demand (dj) •
 The cost of shipping from a source to a destination is directly proportional to the number of units shipped
Transportation Model Characteristic
 A product is to be transported from a number of sources to a number of destinations at the minimum possible cost. •
 Each source is able to supply a fixed number of units of the product, and each destination has a fixed demand for the product.

 The linear programming model has constraints for supply at each source and demand at each destination.
 All constraints are equalities in a balanced transportation model where supply equals demand.
 Constraints contain inequalities in unbalanced models where supply is not equal to demand.

 Two Types of Transportation Problem .

 Balanced Transportation Problem where the total supply equals total demand.

 Unbalanced Transportation Problem where the total supply is not equal to the total demand
Formulation
 Phases of Solution of Transportation Problem •
 Phase I- obtains the initial basic feasible solution
 • Phase II-obtains the optimal basic solution
 Eg. The Executive Furniture Corporation is faced with the transportation problem

 The company would like to minimize the transportation costs while meeting the demand at each destination and not
exceeding the supply at each source

 program, there are three supply constraints (one for each source) and three demand constraints
 (one for each destination).

 The decisions to be made are the number of units to ship on each route, so there is one decision variable for each arc
(arrow) in the network
Network Representation of a Transportation problem, with Costs, Demands, and
Supplies
Cont’d
Method of finding BFS
 The number of variables and constraints for a typical transportation problem
can be found from the number of sources and destinations.

 In general, for a transportation problem with m sources and n destination, the

number of variables is mn, and the number of constraints is (n+m).

 For example, if there are 5 (i.e.m=5 ) constraints and 8 (i.e., n=8) variables, the
linear program would have(8*5=40) variables and constraints (5+8=13).

 When formulating a linear program for this, the objective is to minimize the
transportation costs.
Cont’d
Developing an Initial Solution: Northwest Corner Rule

 When the data have been arranged in tabular form, we must establish an initial
feasible solution to the problem.
 One systematic procedure, known as the northwest corner rule, requires that we
start in the upper-left-hand cell (or northwest corner) of the table and allocate units
to shipping routes as follows:
1. Exhaust the supply (factory capacity) at each row before moving down to the next
row.
2. Exhaust the (warehouse) requirements of each column before moving to the right
to the next column.
3. Check that all supply and demands are met.
Transportation Table for Executive Furniture Corporation
Initial Solution to Executive Furniture Problem Using the Northwest Corner Method.
It takes five steps in this example to make the initial shipping assignments (see Table
1. Beginning the upper-left-hand corner, we assign 100 units
from Des Moines to Albuquerque. This exhausts the capacity
or supply at the Des Moines factory. But it still
leaves the warehouse at Albuquerque 200 desks short. Move
down to the second row in the same column.
2. Assign 200 units from Evansville to Albuquerque. This meets
Albuquerque’s demand for a total of 300 desks. The Evansville factory
has 100 units remaining, so we move to the right to the next column of
the second row.

3. Assign 100 units from Evansville to Boston. The Evansville

supply has now been exhausted, but Boston’s warehouse is still
short by 100 desks. At this point, we move down vertically in the
Boston column to the next row.
4. Assign 100 units from Fort Lauderdale to Boston. This shipment will
fulfill Boston’s demand for a total of 200 units. We note, though, that the
Fort Lauderdale factory still has 200 units available that have not been
shipped

5. Assign 200 units from Fort Lauderdale to Cleveland. This final move
exhausts Cleveland’s demand and Fort Lauderdale’s supply. This always
happens with a balanced problem. The initial shipment schedule is now
complete.
Cont’d
 A feasible solution is reached when all
 demand and supply constraints are met.
Cont’d
 This solution is feasible since demand and supply constraints are all satisfied.
 It was also very quick and easy to reach. However, we would be very lucky if this
solution yielded the optimal transportation cost for the problem, because this route-
loading method totally ignored the costs of shipping over each of the routes.


After the initial solution has been found, it must be evaluated to see if it is
optimal. We compute an improvement index for each empty cell using the
stepping-stone method.

Matrix minima method
 Matrix reduction reduces the table to a set of opportunity costs. These show the penalty of not making the
least-cost (or best) assignment.

 The matrix minima method of assignment provides us with an efficient means of finding the optimal solution
without having to make a direct comparison of every option.

 It operates on a principle of matrix reduction, which means that by subtracting and adding appropriate
numbers in the cost table or matrix, we can reduce the problem to a matrix of opportunity costs.

 Opportunity costs show the relative penalties associated with assigning any person to a project as opposed to
making the best, or least-cost, assignment.

 We would like to make assignments such that the opportunity cost for each assignment is zero
Here are the three steps of the assignment method Step 1: Find the
Opportunity Cost Table

 theopportunity cost of any decision we make in life consists of the

opportunities that are sacrificed in making that decision.

 Row and column opportunity costs reflect the cost we are sacrificing by not
making the least-cost selection.

 For example, the opportunity cost of the unpaid time a person spends starting a
new business is the salary that person would earn for those hours that he or she
could have worked on another job.
 Fix-It Shop problem

We note at this point that although the assignment of Cooper to project 3 is the cheapest way to make use
of Cooper, it is not necessarily the least-expensive approach to completing project 3.

Adams can perform the same task for only $6. In other words, if we look at this assignment problem from
a project angle instead of a people angle, the column opportunity costs may be completely different.
 Step 2: Test for an Optimal Assignment.
 The objective of the Fix-It Shop owner is to assign the three workers to the repair projects in such a way that total
labor costs are kept at a minimum.
 An optimal solution has zero opportunity costs for all of the assignments.
 When a zero opportunity cost is found for all of the assignments, an optimal assignment can be made.
 But, it is not yet possible to make an assignment yielding a total opportunity cost of zero.
 Step 3: Revise the Opportunity-Cost Table.
 An optimal solution is seldom obtained from the initial opportunity cost table.
 Often, we need to revise the table in order to shift one (or more) of the zero costs from its present location (covered by
lines) to a new uncovered location in the table.

 Intuitively, we would want this uncovered location to emerge with a new zero opportunity cost.
Unbalanced Transportation Problems
 A situation occurring quite frequently in real-life problems is the case in which total demand is not equal to total
supply.
 These unbalanced problems can be handled easily by the preceding solution procedures if we first introduce
dummy sources or dummy destinations.

 In the event that total supply is greater than total demand, a dummy destination (warehouse), with demand
exactly equal to the surplus, is created.

 If total demand is greater than total supply, we introduce a dummy source (factory) with a supply equal to the
excess of demand over supply.

 In either case, shipping cost coefficients of zero are assigned to each dummy location or route because no
shipments will actually be made from a dummy factory or to a dummy warehouse.
Cont’d
 Any units assigned to a dummy destination represent excess capacity, and units assigned to a
dummy source represent unmet demand.
 Initial Solution to an Unbalanced Problem Where Demand is Less than Supply
DEMAND LESS THAN SUPPLY
 Considering the original Executive Furniture Corporation problem, suppose that the Des Moines factory increases its
rate of production to 250 desks.

 (That factory’s capacity used to be 100 desks per production period.)

 The firm is now able to supply a total of 850 desks each period. Warehouse requirements, however, remain the same
(at 700 desks), so the row and column totals do not balance.

 To balance this type of problem, we simply add a dummy column that will represent a fake warehouse requiring 150
desks.

 This is somewhat analogous to adding a slack variable in solving an LP problem. Just as slack variables were assigned
a value of zero dollars in the LP objective function, the shipping costs to this dummy warehouse are all set equal to
zero
Cont’d
 Note that the 150 units from Fort Lauderdale to the dummy warehouse represent 150 units that are not
shipped from Fort Lauderdale.
 DEMAND GREATER THAN SUPPLY:
 The second type of unbalanced condition occurs when total demand is greater than total supply.

 This means that customers or warehouses require more of a product than the firm’s factories can provide.

 In this case we need to add a dummy row representing a fake factory.

 The new factory will have a supply exactly equal to the difference between total demand
 and total real supply. The shipping costs from the dummy factory to each destination will be zero.
Unbalanced Assignment Problems
 Balanced assignment problem. number of rows in the table equal the number of
columns.
 Often, however, the number of people or objects to be assigned does not equal the
number of tasks or clients or machines listed in the columns, and the problem is
unbalanced
 When this occurs, and we have more rows than columns, we simply add a
dummy column.
 If the number of tasks that need to be done exceeds the number of people
available, we add a dummy row.
 This creates a table of equal dimensions and allows us to solve the problem as
before. Since the dummy task or person is really nonexistent, it is reasonable to
enter zeros in its row or column as the cost or time estimate
Cont’d
 Letus set up such an unbalanced problem for the Happy Sound Stereo
Company.

 Happy Sound assembles high-fidelity stereophonic systems at three plants

and distributes through three regional warehouses.

 The production capacities at each plant, demand at each warehouse, and

unit shipping costs are presented in Table below.
Cont’d
Maximization Transportation Problems
 If the objective in a transportation problem is to maximize profit, a minor change is required in the transportation
algorithm.

 Since the improvement index for an empty cell indicates how the objective function value will change if one unit is
placed in that empty cell, the optimal solution is reached when all the improvement indices are negative or zero.

 A prohibited route is assigned a very high cost to prevent it from being used.
 At times there are transportation problems in which one of the sources is unable to ship to one or more of the
destinations.

 When this occurs, the problem is said to have an unacceptable or prohibited route. In a minimization problem, such
a prohibited route is assigned a very high cost to prevent this route from ever being used in the optimal solution
Other Transportation Methods: Vogel’s approximation method
 While the northwest corner method is very easy to use, there are other methods for
finding an initial solution to a transportation problem.

 In Operation Research, obtaining significant result for Transportation Problems is

very important now-a-days.

 Vogel’s Approximation Method (VAM) is the very efficient algorithm to solve the
transportation problem for feasible solution which is nearer to optimal solution.

 The main concept of VAM is to determine penalty cost which obtains from the
difference of smallest and next to smallest cost in each row or column and make
maximum allocation in lowest cost cell of that row or column which have largest
penalty.
Cont’d
 The concept penalty cost (difference of smallest and next to smallest cost in row or column)
 Consider a Transportation Problem with m sources and n destinations

 where Cij is the unit transportation cost from the i source to the j destination. Let Si be the supply amount of
the i source and Dj be the demand amount of the j destination.

 We have to find the transported amount of commodity xij so that total transportation cost will be minimized.
 The above problem in LPP model can be express as follows
We have to convert this LPP in the following mathematical Model and applying transportation methods
to find feasible solution.
Cont’d
The algorithm of VAM is given below:
 Step-1:

 a. Identify the cells having minimum and next to minimum transportation cost in each row and
write the difference (Penalty) along the side of the table against the corresponding row.

 b. Identify the cells having minimum and next to minimum transportation cost in each column
and write the difference (Penalty) along the side of the table against the corresponding column.

 Step-2: If minimum cost appear in two or more times in a row or column then select
these same cost as a minimum and next to minimum cost and penalty will be zero
Cont’d
 Step-3:
 a. Identify the row and column with the largest penalty, breaking ties arbitrarily.
 Allocate as much as possible to the variable with the least cost in the selected row or column. Adjust the supply and
demand and cross out the satisfied row or column.

 If a row and column are satisfies simultaneously, only one of them is crossed out and remaining row or column is
assigned a zero supply or demand.
 Step-4:
 a. If exactly one row or one column with zero supply or demand remains uncrossed out, Stop.
 b. If only one row or column with positive supply or demand remains uncrossed out, determine the basic variables in the
row or column by the Least-Cost Method.
 c. If all uncrossed out rows or column have (remaining) zero supply or demand, determined the zero basic variables by
the Least-Cost Method. Stop.
 d. Otherwise, go to Step-1.
Advanced Vogel’s Approximation Method (AVAM)
 when smallest cost appear in two or more times in a row or column then penalty determined by
difference of two minimum cost taken one of them as a minimum and following smallest cost other
than equal smallest costs as a next to minimum.

 As an example, if 3, 10, 3, 7, 9 are the costs of a row or column then select 3 as a smallest cost and
select 7 as a next to smallest cost instead of 3 again and penalty will be 4.

 In that case penalty is not zero and if this penalty has the largest magnitude then probability of the
chance of taking larger cost in next iteration will be decreased because of at least one more smallest
cost remains.
 The algorithm of AVAM is given follows:
Cont’d
Numerical Simulation
 Consider some special types of transportation problems where smallest cost is appear in two or more in rows
or columns and solve them using Advanced Vogel‟s Approximation Method (AVAM) and compare these
results with the solution of Vogel‟s Approximation Method (VAM).
Cont’d
 Now solve this problem using AVAM and VAM respectively in below:
Cont’d
Cont’d
Cont’d
Cont’d
Cont’d
 We observed in above examples that Advanced Vogel‟s Approximation Method (AVAM) gives the lower
feasible solution other than Vogel‟s Approximation Method (VAM).

 Results using AVAM are very close to or equal to optimal solution. The comparison table of
 AVAM and VAM result are follows:
MODI METHOD
 The MODI (modified distribution) method allows us to compute improvement indices quickly for each
unused square without drawing all of the closed paths.

 MODI provides a new means of finding the unused route with the largest negative improvement index.
Once the largest index is identified, we are required to trace only one closed path. This path helps determine
the maximum number of units that can be shipped via the best unused route.
 How to Use the MODI Method
 In applying the MODI method, we begin with an initial solution obtained by using the northwest corner rule
or any other rule. But now we must compute a value for each row (call the values R 1, R2, R3 if there are
three rows) and for each column (K1, K2, K3 ) in the transportation table. In general, we let
 Ri = value assigned to row
 Kj = value assigned to column
 Cij = cost in square (cost of shipping from source to destination )
Solving the Arizona Plumbing Problem with MODI
 Let us try out these rules on the Arizona Plumbing problem. The initial
northwest corner solution is shown in Table T4.1.
 MODI will be used to compute an improvement index for each unused square.
Note that the only change in the transportation table is the border labeling
the Ri s (rows) and Kj s (columns)
 The next step is to compute the improvement index for each unused cell.
That formula is
 Because one of the indices is negative, the current solution is not optimal. Now it is necessary to
trace only the one closed path, for Fort Lauderdale–Albuquerque, in order to proceed with the
solution procedures.
 Reading assignment :The MODI and VAM Methods of Solving Transportation Problems reading
Material
Assignment Models
 The assignment problem refers to the class of LP problem that involve determining the most
efficient assignment of people to projects, sales people to territories, auditors to companies for
audits, contracts to bidders, jobs to machines, heavy equipment (such as cranes) to construction
jobs, and so on.

 The objective is most often to minimize total costs or total time of performing the tasks at hand.
 One important characteristic of assignment problems is that only one job or worker is assigned to
one machine or project.
 The Transshipment Problem
 In a transportation problem, if the items being transported must go through an intermediate point
 (called a transshipment point) before reaching a final destination, the problem is called a
 transshipment problem.
Network Representation of Transshipment Example
 Minimize cost
 subject to
 1. The number of units shipped from Toronto is not
more than 800
 2. The number of units shipped from Detroit is not more
than 700
 3. The number of units shipped to New York is 450
 4. The number of units shipped to Philadelphia is 350
 5. The number of units shipped to St. Louis is 300
 6. The number of units shipped out of Chicago is equal
to the number of units shipped into Chicago
 7. The number of units shipped out of Buffalo is equal
to the number of units shipped into Buffalo.
This provides a network representation of a transshipment problem. In this example, there are two sources,
two transshipment points, and three final destinations.
Linear Program for Transshipment Example
Frosty Machine Transshipment Data
Cont’d
 The decision variables should represent the number of units shipped from each source to each
 transshipment point and the number of units shipped from each transshipment point to each
final destination, as these are the decisions management must make.
 The numbers are the nodes shown in Figure, and there is one variable for each arc (route) in
 the figure. The LP model is

The solution found using Solver in Excel 2010

 Traveling sales man problem
 Given a set of cities and distance between every pair of cities, the problem is to find the shortest
possible route that visits every city exactly once and returns to the starting point.
 The challenge of the problem is that the traveling salesman wants to minimize the total length of
the trip
 Consider the following set of cities:

The problem lies in finding a minimal path passing from all vertices once. For example the path
Path1 {A, B, C, D, E, A} and the path Path2 {A, B, C, E, D, A} pass all the vertices but Path1 has a total length of
24 and Path2 has a total length of 31.

A Hamiltonian cycle is a cycle in a graph passing through all the vertices once