Transportation problem

Linear programming
Introduction
• The transportation problem is a special type of linear programming
problem, where the objective is to minimize the cost of distributing a
product from a number of sources to a number of destinations.
• The transportation problem deals with a special class of linear
programming problems in which the objective is to transport a
homogeneous product manufactured at several plants (origins) to a
number of different destinations at a minimum total cost.
Introduction
• Our objective is to determine the optimal allocation that results in
minimum total shipping cost.
Mathematical representation of transportation
problem
•  A firm has 3 factories - A, E, and K. There are four major warehouses
situated at B, C, D, and M. Average daily product at A, E, K is 30, 40,
and 50 units respectively. The average daily requirement of this
product at B, C, D, and M is 35, 28, 32, 25 units respectively. The
transportation cost (in Rs.) per unit of product from each factory to
each warehouse is given below:
Example

Warehouse

Factory B C D M Supply

A 6 8 8 5 30

E 5 11 9 7 40

K 8 9 7 13 50

Demand 35 28 32 25  
Example
• The problem is to determine a routing plan that minimizes total
transportation costs.
Example
Example
• Let xij = no. of units of a product transported from ith factory(i = 1, 2,
3) to jth warehouse (j = 1, 2, 3, 4).
• It should be noted that if in a particular solution the xij value is missing
for a cell, this means that nothing is shipped between factory and
warehouse.
• The problem can be formulated mathematically in the linear
programming form as
Example
• Minimize = 6x11 + 8x12 + 8x13 + 5x14 
+ 5x21 + 11x22 + 9x23 + 7x24
+ 8x31 + 9x32 + 7x33 + 13x34
Example
• subject to
Capacity constraints
x11 + x12 + x13 + x14 = 30
x21 + x22 + x23 + x24 = 40
x31 + x32 + x33 + x34 = 50
• Requirement constraints
x11 + x21 + x31 = 35
x12 + x22 + x32 = 28
x13 + x23 + x33 = 32
x14 + x24 + x34 = 25
xij ≥ 0
Example
• The above problem has 7 constraints and 12 variables. Since no. of
variables is very high, simplex method is not applicable. Therefore,
more efficient methods have been developed to solve transportation
problems
General Mathematical Model
Example
• For a feasible solution to exist, it is necessary that total capacity
equals total requirements. 
Total supply = total demand.
Or Σ ai = Σ bj.
• If total supply = total demand then it is a balanced transportation
problem.
There will be (m + n - 1) basic independent variables out of (m x n)
variables.
Assumptions in Transportation Problem
Basic Terminology
• Origin
• It is the location from which shipments are dispatched.
• Destination
• It is the location to which shipments are transported.
• Unit Transportation cost
• It is the cost of transporting one unit of the consignment from an origin to a
destination.
• Perturbation Technique
• It is a method used for modifying a degenerate transportation problem, so
that the degeneracy can be resolved.
Basic Terminology
• Feasible Solution
• A solution that satisfies the row and column sum restrictions and also the non-
negativity restrictions is a feasible solution.
• Basic Feasible Solution
• A feasible solution of (m X n) transportation problem is said to be basic feasible
solution, when the total number of allocations is equal to (m + n – 1).
• Optimal Solution
• A feasible solution is said to be optimal solution when the total transportation cost
will be the minimum cost.
• In the sections that follow, we will concentrate on algorithms for finding solutions
to transportation problems.
 Methods for finding an initial basic feasible solution:

• North West Corner Rule

• Matrix Minimum Method
• Vogel Approximation Method
North West Corner Rule
• The North West corner rule is a method for computing a basic
feasible solution of a transportation problem, where the basic
variables are selected from the North – West corner ( i.e., top left
corner ).
Steps in North West Corner Rule
1. Select the upper left-hand corner cell of the transportation table
and allocate as many units as possible equal to the minimum
between available supply and demand, i.e., min(s1, d1).
2. Adjust the supply and demand numbers in the respective rows and
columns.
3. If the demand for the first cell is satisfied, then move horizontally to
the next cell in the second column.
Steps in North West Corner Rule
4. If the supply for the first row is exhausted, then move down to the
first cell in the second row.
5. If for any cell, supply equals demand, then the next allocation can be
made in cell either in the next row or column.
6. Continue the process until all supply and demand values are
exhausted.
Example 1: North West Corner Rule
• The Amulya Milk Company has three plants located throughout a
state with production capacity 50, 75 and 25 gallons. Each day the
firm must furnish its four retail shops R1, R2, R3, & R4 with at least 20,
20 , 50, and 60 gallons respectively. The transportation costs (in Rs.)
are given below.
Example

Retail Shop
Plant Supply
R1 R2 R3 R4

P1 3 5 7 6 50

P2 2 5 8 2 75

P3 3 6 9 2 25

Demand 20 20 50 60  
Question
• The economic problem is to distribute the available product to
different retail shops in such a way so that the total transportation
cost is minimum
Solution
• Starting from the North west corner, we allocate min (50, 20) to P1R1,
i.e., 20 units to cell P1R1. The demand for the first column is satisfied.
The allocation is shown in the following table.
Solution
• Now we move horizontally to the second column in the first row and
allocate 20 units to cell P1R2. The demand for the second column is
also satisfied.
Solution
• Proceeding in this way, we observe that P1R3 = 10, P2R3 = 40, P2R4 = 35,
P3R4 = 25. The resulting feasible solution is shown in the following
table.
Solution
• Here, number of retail shops(n) = 4, and
Number of plants (m) = 3

• Number of basic variables = m + n – 1 = 3 + 4 – 1 = 6.

• Initial basic feasible solution
• The total transportation cost is calculated by multiplying each xij in an
occupied cell with the corresponding cij and adding as follows:
• 20 X 3 + 20 X 5 + 10 X 7 + 40 X 8 + 35 X 2 + 25 X 2 = 670
• 
Matrix Minimum (Least cost) Method
• Matrix minimum (Least cost) method is a method for computing a
basic feasible solution of a transportation problem, where the basic
variables are chosen according to the unit cost of transportation.
• This method is very useful because it reduces the computation and
the time required to determine the optimal solution. 
Steps in Matrix Minimum Method for Transportation Problem

1. Identify the box having minimum unit transportation cost (cij).

2. If the minimum cost is not unique, then you are at liberty to choose
any cell.
3. Choose the value of the corresponding xij as much as possible
subject to the capacity and requirement constraints.
4. Repeat steps 1-3 until all restrictions are satisfied.
Example 1
• Consider the transportation problem presented in the following table:
Solution
• We observe that c21 =2, which is the minimum transportation cost. So
x21 = 20. The demand for the first column is satisfied. The allocation is
shown in the following table.
Solution
• Now we observe that c24 =2, which is the minimum transportation
cost, so x24 = 55. The supply for the second row is exhausted.
Solution
• Proceeding in this way, we observe that x34 = 5, x12 = 20, x13 = 30, x33 =
20. The resulting feasible solution is shown in the following table.
Solution
• Number of basic variables = m + n –1 = 3 + 4 – 1 = 6.
•
Initial basic feasible solution

• The total transportation cost associated with this solution is

calculated as given below:
20 X 2 + 20 X 5 + 30 X 7 + 55 X 2 + 20 X 9 + 5 X 2 = 650.
Vogel Approximation Method

• The Vogel approximation method (Unit cost penalty method) is an

iterative procedure for computing a basic feasible solution of a
transportation problem
• This method is preferred over the two methods discussed in the
previous sections, because the initial basic feasible solution obtained
by this method is either optimal or very close to the optimal solution.
Steps in Vogel Approximation Method
(VAM)
1. Identify the boxes 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.
2. Identify the boxes having minimum and next to minimum
transportation cost in each column and write the difference
(penalty) against the corresponding column
Steps in Vogel Approximation Method
(VAM)
3. Identify the maximum penalty. If it is along the side of the table,
make maximum allotment to the box having minimum cost of
transportation in that row. If it is below the table, make maximum
allotment to the box having minimum cost of transportation in that
column.
4. If the penalties corresponding to two or more rows or columns are
equal, you are at liberty to break the tie arbitrarily.
5. Repeat the above steps until all restrictions are satisfied.
Example 1
• Consider the transportation problem presented in the following
table:
Solution
• Calculating penalty for table 1
• 17 - 4 = 13, 9 - 7 = 2, 20 - 15 = 5
24 - 20 = 4, 37 - 22 = 15, 17 - 9 = 8, 7 - 4 = 3
Solution
• The highest penalty occurs in the second column. The minimum cij in
this column is c12 (i.e., 22). So x12 = 40 and the second column is
eliminated. The new reduced matrix is shown below:
• Now again calculate the penalty.
Solution
• The highest penalty occurs in the first row. The minimum cij in this row
is c14 (i.e., 4). So x14 = 80 and the first row is eliminated. The new
reduced matrix is shown below:
Solution
• The highest penalty occurs in the second column. The minimum cij in
this column is c23 (i.e., 9). So x23 = 30 and the second column is
eliminated. The reduced matrix is given in the following table.
The following table shows the computation of
penalty for various rows and columns.
Initial basic feasible solution
• (22*40) + (4*80) + (24*10) + (9*30) + (7*30) + (32*50) = 3520
Stepping Stone Method
• After computing an initial basic feasible solution, we must now
proceed to determine whether the solution so obtained is optimal or
not.
• The Stepping Stone Method is for finding the optimal solution of a
transportation problem.
Steps in Stepping Stone Method
1.  Determine an initial basic feasible solution using any one of the
following:
North West Corner Rule
Matrix Minimum 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.
Steps in Stepping Stone Method
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.
4. 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.
5. 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
Steps in Stepping Stone Method
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.
Example
• A company has three factories A, B, and C with production capacity
700, 400, and 600 units per week respectively. These units are to be
shipped to four depots D, E, F, and G with requirement of 400, 450,
350, and 500 units per week respectively. The transportation costs (in
Rs.) per unit between factories and depots are given below
Example
Example
• The decision problem is to minimize the total transportation cost for
all factory-depot shipping patterns.
Solution
• An initial basic feasible solution is obtained by Matrix Minimum
Method and is shown below
Solution
• Here, m + n - 1 = 6. So the solution is not degenerate.
Initial basic feasible solution
• 6 X 450 + 6 X 250 + 3 X 50 + 2 X 350 + 3 X 350 + 5 X 250 = 7350
Solution
• The cell AD (4) is empty so allocate one unit to it. Now draw a closed
path from AD. The result of allocating one unit along with the
necessary adjustments in the adjacent cells is indicated below:
Solution
• 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.
Solution
• 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:
Solution
• 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.
Solution
• We must evaluate all such unoccupied cells in this manner by finding
closed paths and calculating the net cost change as shown below.
Solution
• 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
QUESTIONS