Chapter 3: Transportation and Assignment Problems (DISTRIBUTION

MODELS)
• The transportation problem arises frequently in planning for the
distribution of goods and services from several supp0ly locations to
several demand locations.
• It is necessary to have the following information to develop transportation
model these are.
A. Supply quantity (capacity of each origin)
B. Demand quantity of each destination
C. Unit transportation cost for each origin - destination route
• The transportation algorithm requires the assumptions that all goods be
homogeneous and supply is equal to the demand.
• Both transportation and assignment problems are members of a category
of linear programming techniques called network flow problems.
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CONT’D

Uses of transportation techniques:

1. Reduce distribution or transportation cost
2. Improve competitiveness of product
3. Assist proper location of warehouses
3. Assist proper location of new factories or plants being planned.
4. Close down warehouses which are found costly and uneconomical.

The objective of transportation problem is:

1. To identify the optimal shipping routes-minimum cost route
2. To identify the maximum amount that can be shipped over the optimum
route
3. To determine the total transformation cost or the profit of transportation
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CONT’D

The solution algorithm to a transportation problem has the following

steps:
Step 1:Formulate the problem and set up in the matrix form. The
formulation of the problem is similar to the linear programming.
Step 2:Obtain an initial basic feasible solution
There are 3 methods to find the initial feasible solution.
• North-West Corner Method (NWCM)
• Least Cost Method (LCM)
• Vogel’s Approximation Method (VAM)

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CONT’D

• The initial solution obtained by any of the three methods must satisfy
the following condition:
• The solution must be feasible: It must satisfy all the supply and
demand constraints
• The number of positive allocations must equal to m+n-1, where
m=the number of rows (or origins or supply centers) and n= the
number of columns(or destination centers or demand centers)
Step 3. Test the initial solution for optimality
Testing for optimality can be made using the following approaches:
• Stepping stone approach
• Modified distribution method
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CONT’D: Example

Origin/ SS
D1 D2 D3 D4
Destination
3
S1 500
2 7 6
5 2
7 3
200
S2

5 4 5
S3 2 300

1. Express the following transportation problem as an LPP

DD 200 400 300 100 1000

2. Make an allocation (find initial feasible solution) using NWCM

3. Compute the total cost of transportation

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CONT’D: Example

Origin/ SS
D1 D2 D3 D4
Destination
3
S1 500
2 7 6
5 2
7 3
200
S2

5 4 5
S3 2 300

1. Express the following transportation problem as an LPP

DD 200 400 300 100 1000

2. Make an allocation (find initial feasible solution) using LCM

3. Compute the total cost of transportation

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CONT’D: Example

• VOGEL'S APPROXIMATION METHOD (VAM) or PENALTY METHOD

VAM is preferred to the other two methods described above. In this method each allocation
is made on the basis of the opportunity (or penalty or extra) cost that would have incurred if
allocation in certain cells with minimum unit transportation cost were missed.
Origin/ SS
D1 D2 D3 D4
Destination
3
S1 500
2 7 6
5 2
7 3
200
S2

5 4 5
S3 2 300

DD 200 400 300 100 1000

1. Express the following transportation problem as an LPP

2. Make an allocation (find initial feasible solution) using VAM
3. Compute the total cost of transportation
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OPTIMALITY TESTS
• An optimal solution is one in which there is no opportunity cost. That
is, there is no other set of transportation routes (allocations) that will
reduce the total opportunity cost.
• The purpose of the optimality test is to see if the proposed solution
just generated can be improved or not. The solution to be checked for
optimality must be non-degenerate i.e the no of occupied cells must be
m+n-1.
• The Procedure for testing optimality is analogous to that of the
simplex method. A distinction is made between basic variables, those
associated with occupied cells & non-basic variables, those associated
with the empty cells.

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OPTIMALITY TESTS
Optimum solution to a TP can be obtained by following two methods.
These methods are much simpler compared to simplex method of an
LPP.
A. Stepping stone Method
B. Modified Distribution method (MODI Method)
A. Stepping-stone method
The Stepping-stone method is an iterative technique for moving from
an initial feasible solution to an optimal solution in transportation
problems.
For the stopping- stone method to be applied, the no of occupied cells
must be m+n-1.
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OPTIMALITY TESTS

Origin/ SS
D1 D2 D3
Destination
8 4 16
S1 200
100 100
2 18
10 200 200
400
S2

14 12 6
S3 400 400

DD
• Develop an initial feasible solution using the NWCM. And compute
100 300 600 1000

the total cost for this solution.

• Evaluate the solution using the stepping-stone method. Is the solution
optimal? Explain.
• What is the total cost for the optimal solution?

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OPTIMALITY TESTS

Note:
• A cell evaluator of 0 indicates the existence of another solution just as
good as the current solution. Thus, in the final solution, if cell evaluators
of 0 exist, this indicates the existence of multiple optimal solutions.
• If two or more cells have the same value, then either may be selected.
• If two or more of the "losing" cells contain the same no of units, both will
become empty simultaneously and a “degenerate" solution will result.
• For the minimization case; when one or more cell evaluators are
negatives, the cell with the largest negative should be brought into
solution because that route has the largest potential for improvement
per unit.
• The loop starts and ends at the selected unoccupied cell. Every corner
element of the loop must be an occupied cell.
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OPTIMALITY TESTS

B. Modified Distribution Method (MODI Method)

• The MODI method allows us to compute improvement indices quickly
for each unused cell without drawing all of the closed paths. Because
of this, it can often provide considerable time savings over the
stepping-stone method
Steps in theMODI Methodfor solving transportation problems.
The steps to evaluate unoccupied calls are as follows:
1. For an initial basic feasible solution, calculate Ui and Vj ;for rows and
columns and set

Cij =Ui +Vj for all occupied calls (i , j)

i.e: Cell cost=Raw Index +Column Index

2. For unoccupied cells, calculate opportunity cost by usingthe relation:

Kij =Cij– (Ui +Vj); for all j and j.

Where Kij is the cell evaluator or opportunity cost

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Special cases

Prohibited Transportation Routes.

• The situation may arise such as road hazards (snow, foods, etc), traffic
regulation etc, when it is not possible to transport goods from certain
sources to certain destinations. In this case, the appropriate cell may
either be completely crossed out or a very large per unit
transportation cost assign to it (M).
• Multiple optimal solutions
• Degeneracy

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Special cases

UNEQUAL SUPPLY AND DEMAND

• To deal with such cases add dummy row(origin) or dummy
column(destination). The dummy is assigned unit costs of zero for
each cell. To Project Project Project
From 1 2 3 Supply

Area-A 4 2 8 100

Area-B 5 1 9 200

Area-C 7 6 3 200

dummy 0 0 0 50

Demand 50 200 300

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ASSIGNMENT PROBLEMS
• The Assignment Problem(AP) refers to the class of LPPs that involves
determining the most efficient assignment of people to projects,
salespeople to territories, contracts to bidders ,jobs to machines, and
so on.
• The objective is to assign a number of resources to an equal number
of activities so as to minimize total costs or total time or maximize
total profit of allocation.
Following are the assumptions:
• Number of jobs is equal to the number of machines or persons
• Each man or machine is loaded with one and only one job.
• Each man or machine is independently capable of handling any of the
jobs being presented.
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ASSIGNMENT PROBLEMS
• Step.1. Develop the cost table from the given problem
• Step 2.Find the opportunity cost table: It involves two operations:
a. Perform row operation
b. Perform column operation
Step 3.Test for an optimal assignment
• If the number of lines equals either the number of rows or columns in
the table, an optimal assignment can be made.
• If the number of lines is less than the number of rows or columns, an
improvement is possible (we proceed to step 4).

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ASSIGNMENT PROBLEMS
Step 4.Improve the present opportunity cost table (matrix)
• a. Find the smallest entry in the uncovered cells (cells with no lines through
them) and subtract it from all entries in the uncovered cells.
• b. Add the same smallest entry to those cells in which the lines intersect
(cells with two lines them)
• c. Cells with one line through them are transferred (i.e. unchanged to the
improved table).
• In those problems where the first improvement does not yield an optimal
solution, we keep on improving the solution by repeating step 4 until an
optimal solution is achieved.
Step 5: Make an optimal assignment
• An optimal assignment should be made to cells with a zero entry,
maintaining the one-to-one requirement
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ASSIGNMENT PROBLEMS
Example: the time taken by four employees to perform four jobs is
given below. Assign the four jobs to the four employees in order to
minimize the total time consumption.

Employees
A B C D
1 D10 20 18 IV
14 V
I II
2 15 25 9 25
III
Jobs

3 30 19 17 12
4 19 24 20 10

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SPECIAL CASES IN THE ASSIGNMENT PROBLEMS
A. Multiple Optimal Solutions
B. Maximization case in assignment problems
C. Unbalanced Assignment problem
D. Restrictions on Assignments

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