CHAPTER THREE

THE
THE TRANSPORTATION
TRANSPORTATION
PROBLEM
PROBLEM
The
The Transportation
Transportation Problem
Problem

 The problem of finding the minimum distribution

cost of a given commodity from a group of supply
centers (sources) to a group of receiving centers
(destinations)
 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-2
 Figure
Figure6S–1
6S–1 Overview
Overviewofofthe
theTransportation
TransportationMethod
Method

Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 6S–3
 Formulating
Formulating the
the Model
Model

 To develop a model of a transportation problem,

it is necessary to have the following information:
 Supply quantity (capacity) of each origin
 Demand quantity of each destination
 Unit transportation cost for each origin-
destination route.

Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 6–4
Example
Example
Assume Sunshine Construction Materials has
contracted to provide sand for three residential
housing developments projects.
Sand can be supplied from Demand for the sand
three different areas as generated by the
follows: construction projects is:
 • The manager has estimated the cost per cubic yard to
ship each of the possible routes

Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 6–8
 Table
Table 11 Transportation
Transportation Table
Table format
format

Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 6–9
 Table
Table 22 Transportation
Transportation Table
Table

Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 6S–10
Problem
Problem formulation
formulation
Min Z = 4X11 + 2X12 + 8X13 + 5X21 + 1X22 +
9X23 +7X31 + 6X32 + 3X33

Subject to:

Supply constraints Demand constraints

X11 + X12 + X13 = 100 X11 + X21 + X31 = 50
X21 + X22 + X23 = 200 X12 + X22 + X32= 150
X31 + X32 + X33 =200 X13 + X23 + X33= 300

X11, …, X33  0
 Solution
Solution To
To Transportation
Transportation Problem
Problem

Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 6–12
 Finding
Finding Initial
Initial Feasible
Feasible Solution
Solution
• A feasible solution is one in which assignments are
made in such a way that all supply and demand
requirements are satisfied.
• The number of nonzero (occupied) cells should equal
one less than the sum of the number of rows and the
number of columns in a transportation table.
• Methods of finding initial feasible solution:
– The Northwest Corner Method
– An Intuitive Approach/Least Cost Method
– Vogel’s Approximation/ Penalty Method
 Finding
Finding an
an Initial
Initial Feasible
Feasible Solution:
Solution:
The
The Northwest
Northwest Corner
Corner Method
Method

• A systematic approach for developing an

initial feasible solution.
• Simple to use and easy to understand.
• Does not take transportation costs into
account.
• Gets its name because the starting point for
the allocation process is the upper left hand
(northwest) corner of the transportation table.
 Principles
Principles that
that Guides
Guides the
the
Allocation
Allocation
Begin with the upper left hand cell, and
allocate as many units as possible to that cell.
Remain in a row or column until its supply
or demand is completely exhausted or satisfied
 Initial
InitialFeasible
FeasibleSolution
SolutionUsing
UsingNorthwest
NorthwestCorner
Corner
Method
Method

Total Cost = 50(4) + 50(2) + 100(1) + 100(9) + 200(3)

= Birr 1900
 Finding
Finding an
an Initial
Initial Feasible
Feasible Solution:
Solution:
The
The Intuitive
Intuitive Approach
Approach

1. Identify the cell that has the lowest unit cost.

2. Cross out the cells in the row or column that has
been exhausted (or both, if both have been
exhausted), and adjust the remaining row or
column total accordingly.
3. Identify the cell with the lowest cost from the
remaining cells.
4. Repeat steps 2 and 3 until all supply and demand
have been allocated.
 Initial
Initial Feasible
Feasible Solution
Solution Using
Using the
the Intuitive
Intuitive
Approach
Approach

Total Cost = 50(4) + 50(8) + 150(1) + 50(9) + 200(3)

= Birr 1800
 Vogel’s
Vogel’s Approximation
Approximation Method
Method (VAM)
(VAM)
• Construct the cost, requirement, and
availability matrix
• Compute a penalty for each row(NLC-LC) and
column(NLC- LC ) then select the highest
penalty.
• Then the row and column with the largest
penalty; allocate and cross out the exhausted
row/column
• Repeat steps 1 to 3 for the reduced table until
the entire capabilities are used to fill the
requirement at different warehouses.
 Initial
InitialFeasible
FeasibleSolution
SolutionUsing
UsingVogel’s
Vogel’s
Approximation
ApproximationMethod
Method(VAM)
(VAM)

Total Cost: 1x150 + 3x200+4x50 + 8x50 + 9x50 = Birr

1800
 Evaluating
Evaluating aa Solution
Solution for
for Optimality
Optimality
• The test for optimality for a feasible solution
involves a cost evaluation of empty cells.
• We shall consider two methods for cell
evaluation:
–The Stepping Stone Method
–The MODI Method
 The
The Stepping
Stepping Stone
Stone Method
Method

• Involves tracing a series of closed paths in the

transportation table, using one such path for each
empty cell. Rules for tracing Stepping-stone paths:
• All unoccupied cells must be evaluated.
• Except for the cell being evaluated, only add or
subtract in occupied cells.
• A path will consist of only horizontal and vertical
moves, starting and ending with the empty cell that is
being evaluated.
• Alter + and – signs, beginning with a + sign in the
cell being evaluated.
Evaluation
Evaluation Path
Path for
for Cell
Cell C-1
C-1
 EmptyCell
Cell Evaluation
Empty Evaluation
• Cell B-1: + 2 = 5 – 1 + 2 – 4
• Cell C-1: +10 = 7 – 3 + 9 – 1 + 2 – 4
• Cell A-3: -2 = 8 – 9 + 1 – 2
• Cell C-2: +11 = 6 – 3 + 9 – 1
• The negative value for cell A-3 indicates
an improved solution is possible
 The
The MODI
MODI method
method
• Involves the use of index numbers that are established for
the rows and columns. These are based on the unit costs
of the occupied cells.
• The index numbers can be used to obtain the cell
evaluations for empty cells

The cell evaluations for each of the unoccupied cells are

determined using the relationship:
Cell
Cell Evaluations
Evaluations Using
Using the
the MODI
MODI Method
Method
 Developing
Developing an an Improved
Improved
Solution
Solution
• Developing an improved solution to a transportation
problem requires focusing on the unoccupied cell that
has the largest negative cell evaluation.
• Improving the solution involves reallocating
quantities in the transportation table.
• The stepping-stone path for that cell is used for
determining how many units can be reallocated (both
the magnitude and direction of changes)
• The + signs in the path indicate units to be added,
the – signs indicate units to be subtracted. The limit
on subtraction is the smallest quantity in a negative
position along the cell path.
Optimal
Optimal Solution
Solution
 Summary
Summary of
of the
the Transportation
Transportation Method
Method
1. Obtain an initial feasible solution. Use either the NWC
method, the intuitive method, or the VAM. Generally, the
intuitive method and Vogel’s approximation are the
preferred approaches.
2. Evaluate the solution to determine if it is optimal. Use
either the stepping-stone method or MODI. The solution
is not optimal if any unoccupied cell has a negative cell
evaluation.
3. If the solution is not optimal, select the cell that has the
most negative cell evaluation. Obtain an improved
solution using the stepping-stone method.
4. Repeat steps 2 and 3 until no cell evaluations (reduced
costs) are negative. Once you have identified the optimal
 Special
Special Issues
Issues
1. Determining if there are alternate optimal
solutions.
2. Recognizing and handling degeneracy (too
few occupied cells to permit evaluation of a
solution).
3. Avoiding unacceptable or prohibited route
assignments.
4. Dealing with problems in which supply and
demand are not equal.
5. Solving maximization problems.
 Alternate
Alternate Optimal
Optimal Solutions
Solutions
• The existence of an alternate solution is signaled by
an empty cell’s evaluation equal to zero.
 Degeneracy
Degeneracy
• A solution is degenerate if the number of occupied cells is
less than the number of rows plus the number of columns
minus one.
• The modification is to treat some of the empty cells as
occupied cells. This is accomplished by placing a delta
() in one of the empty cells. w/c is very smallest cost
 Unacceptable
Unacceptable Routes
Routes
 Certain origin-destination combinations may be
unacceptable due to weather factors, equipment
breakdowns, labor problems, or skill requirements
that either prohibit, or make undesirable, certain
combinations.
 In order to prevent that route from appearing in the
final solution, the manager could assign a unit cost to
that cell that was large enough to make that route
uneconomical and, hence, prohibit its occurrence.
 One rule of thumb would be to assign a cost that is
10 times the largest cost in the table (or a very big
+M).
 Maximization
Maximization
• Transportation-type problems that concern
profits or revenues rather than costs with the
objective to maximize profits rather than to
minimize costs.
• Such problems can be handled by adding one
additional step at the start:
• Identify the cell with the largest profit and
subtract all the other cell profits from that
value.
• Replace the cell profits with the resulting
values.
 Unequal
Unequal Supply
Supply and
and Demand
Demand
• Situations in which supply and demand are not
equal such that it is necessary to modify the
original problem so that supply and demand are
equalized.
• This is accomplished by adding either a dummy
column or a dummy row; a dummy row is added
if supply is less than demand and a dummy
column is added if demand is less than supply.
• The dummy is assigned unit costs of zero for
each cell, and it is given a supply (if a row) or a
demand (if a column) equal to the difference
 •End of Chapter
three

Copyright © 2007 The McGraw-Hill Companies. All rights reserved. McGraw-Hill/Irwin 6–38
4 Assignment
Problems
 Assignment
Assignment Problems
Problems
• Involve the matching or pairing of two sets of items
such as jobs and machines, secretaries and reports,
lawyers and cases, and so forth.
• Have different cost or time requirements for different
pairings.
The
The Hungarian
Hungarian Method
Method
• Provides a simple heuristic that can be used to find
the optimal set of assignments.
• It is based on minimization of opportunity costs that
would result from potential pairings. These are
additional costs that would be incurred if the lowest-
cost assignment is not made
Requirements
Requirements for
for Use
Use of
of the
the Hungarian
Hungarian Method
Method

• Situations in which the Hungarian method can be

used are characterized by the following:
 There needs to be a one-for-one matching of two
sets of items.
 The goal is to minimize costs (or to maximize
profits) or a similar objective
 The costs or profits are known or can be closely
estimated.
The
The Hungarian
Hungarian Method
Method
• Step 1: Locate the smallest cost element in each row of the cost table.
Now subtract this smallest from each element in that row.
• Step 2: Consider each column and locate the smallest element in it.
Subtract the smallest value from every other entry in the column.
• Step 3: Draw the minimum number of horizontal and vertical lines
required to cover the entire ‘zero’ elements. If the number of lines
drawn is equal to n (the number of rows/columns) the solution is
optimal
• Step 4: Select the smallest uncovered cost element. Subtract this
element from all uncovered elements including itself and add this
element to each value located at the intersection of any lines.
• Step 5: Repeat steps 3 and 4 until an optimal solution is obtained.
• Step 6: Given the optimal solution, make the job assignments as
indicated by the ‘zero’ elements.
Example
Example
Column
ColumnReduction
Reductionof
ofOpportunity
Opportunity(Row
(RowReduction)
Reduction)
Costs
Costs
Determine
Determinethe
theMinimum
MinimumNumber
NumberofofLines
LinesNeeded
NeededtotoCover
Cover
the
theZeros
Zeros

Further
FurtherRevision
Revisionofofthe
theCost
CostTable
Table
Optimal
OptimalAssignments
Assignments
 Example
Example
• A production supervisor is considering how he should assign the
four jobs that are performed, to four of the workers working
under him. He want to assign the jobs to the workers such that
the aggregate time to perform the job in the least. Based on the
previous experience, he has the information on the time taken by
the four workers in performing these jobs, as given in below
The final assignments is 1-B, 2-D, 3-C,
Special
Special Situations
Situations

• Among those situations are the following:

• The number of rows does not equal the number of
columns.
• The problem involves maximization rather than
minimization.
• Certain matches are undesirable or not allowed.
• Multiple optimal solutions exist.
 Unbalanced
Unbalanced Assignment
Assignment Problems
Problems
• In such situations, dummy column(s)/row(s),
whichever is smaller in number, are inserted with
zeros as the cost elements

A-1 B-4 C-3 D-2

 Constrained/Prohibited/
Constrained/Prohibited/Assignment
Assignment
Problems
Problems
• It happens sometimes that a worker cannot perform a certain job or is
not to be assigned a particular job. To cope with this situation, the cost
of performing that job by such person is taken to be extremely large
• Example: Determine the optimal set of pairings given the following
cost table. Note that assignment B-3 is undesirable, as denoted by the
M in that position:
 Multiple
Multiple Optimal
Optimal Solutions
Solutions
• In some cases, there are multiple optimal solutions to a
problem. This condition can be easily recognized when
making the optimal assignments.
• Example: Given this final assignment table, identify the
optimal solutions:
 Maximization
Maximization
• One extra step must be added to the start of the process.
• Identify the largest value in each column and then subtract
all numbers in each column from the column maximum.
• Example: Let’s consider the following assignment table
where the values are unit profits.

The optimal assignment will be to match A with 2, B

with 1 and C with 3 and the maximum profit is Br. 92 =
End of Chapter
Four