Chapter Three

Transportation, Transshipment, and

Assignment
 Transportation
Transportation Problems
Problems
• A distribution type problem in which
supplies of goods that are held at
various locations are to be distributed
to other receiving locations.
• The solution of a transportation
problem will indicate to a manager the
quantities and costs of various routes
and the resulting minimum cost.
• Used to compare location alternatives
in deciding where to locate factories
and warehouses to achieve the
minimum cost distribution
 Formulating
Formulating the
the Model
Model
• Typically involves a set of sending
locations, which are referred to as
origins, and a set of receiving locations,
which are referred to as destinations.
• 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.
Overview
Overview of
of the
the Transportation
Transportation Method
Method
 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 / 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
Example
Example
Gravel Construction Materials has
contracted to provide sand for three
residential housing developments projects.
Sand can be supplied Demand for the sand
from three different generated by the
areas as follows: construction projects
is:
 The manager has estimated the cost per
cubic yard to ship each of the possible routes:

Transportation Table for Gravel

Construction Materials
 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
Initial Feasible
Feasible Solution
Solution Using
Using Northwest
Northwest
Corner
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
 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)
Based on the penalty cost or regret
1) Compute a penalty for each row by subtracting
the lowest cell cost in the row from the next
lowest cell cost in the same row or column
2) Identify the row and column with the largest
penalty; allocate and cross out the exhausted row
3) Repeat steps 1 to 3 for the reduced table until
the entire capabilities are used to fill the
requirement at different warehouses.
4) From step 4 we will get initial feasible solution.
NB: After the initial allocation is made, all of the
penalty costs must be recomputed
 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
 Empty
Empty Cell
Cell Evaluation
Evaluation
• Cell B-1: + 2 = 5 – 1 + 2 – 4
• Cell C-1: +12 = 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
• Developing Solution
Solution
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
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.
 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.
 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
 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.
 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
Transshipme
nt Model
 Introduction
Introduction
 A transportation problem allows only
shipments that go directly from
supply points to demand points.
 Sometimes there may also be points
through which goods can be
transshipped on their journey from a
supply point to a demand point
called transshipment points.
 The transshipment model is an
extension of the transportation
model in which intermediate
transshipment points are added
 Steps
Steps

• Step1: If necessary, add a dummy

demand point to balance the
problem.
• Step2: Construct a transportation
tableau
Example:
Example:
• Ethiopian Steel PLC manufactures
roofing tiles at two factories, one in
Butajira and one in Adama. The Butajira
factory can produce as many as 150
tiles per day, and the Adama factory
can produce as many as 200 tiles per
day. Tiles are shipped to customers
residing in Debre Zeit and Addis Ababa.
The customers in Debre Zeit require
100 tiles and 250 tiles in Addis Ababa
per day. Ethiopian Steel PLC believes
that it may be cheaper to first move
some roofing tiles to Ziway or Modjo
The costs of transporting a tile
are shown in Table below.
Ethiopian Steel PLC wants to
minimize the total cost of
shipping the required
Ziway Modjo tiles
DZ to
AA its
customers.
Butajira 8 13 25 28

Adama 15 12 26 25

Ziway 0 6 16 17

Modjo 6 0 14 16
 Ziway Modjo DZ AA Available

8 13 25 28

Butajira 150

15 12 26 25

Adama 200

0 6 16 17

Ziway 350
6 0 14 16

Modjo 350
Required 350 350 100 250
 Ziway Modjo DZ AA Available

8 13 25 28

Butajira 10 50 150
0
15 12 26 25

Adama 200 200

0 6 16 17

Ziway 350 350

6 0 14 16

Modjo 350 350

Required 350 350 100 250

Assignment
Model
 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
 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
 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,
Example
Example
Column
Column Reduction
Reduction of
of Opportunity
Opportunity (Row
(Row
Reduction)
Reduction) Costs
Costs
Determine
Determinethe
theMinimum
MinimumNumber
Numberof
ofLines
Lines
Needed
NeededtotoCover
Cover
the
theZeros
Zeros

Further
FurtherRevision
Revisionof
ofthe
theCost
CostTable
Table
Optimal
Optimal Assignments
Assignments
 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
• In suchProblems
Problems
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
Thanks!