CHAPTER THREE:

TRANSPORTATION AND
ASSIGNMENT PROBLEM
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Transportation Models
• Transportation model deals with a special class of
linear programming problem in which the objective
is to transport a homogenous commodity from
various origins or factories to different destinations
or markets at a total minimum cost.
• The purpose of this LP Model is to identify a
distribution plan that would minimize the cost of
transporting commodities from the origin
(factory warehouses) to the destination or the
market (retail stores), taking into account
warehouse supplies and retail store demands as
well as transportation costs.
 3

Transportation Problem
• Transportation problems deals with shipments from

a number of sources to a number of destinations.

• Typically each source is supply limited, each
destination has known demand and the shipment cost
between sources and destinations are given.
• The objective of such models is to determine how

many units should be shipped from each source

/origin to each destination/market so that total
transportation costs are minimized.
 4

Characteristics of transportation problems

1. A limited supply of commodity is available at
certain sources or origins such as factories.
2. There is a demand for the commodity at several
destinations such as warehouse, distribution
centers, and retail stores
3. The quantity of supply at each source and the
demand or requirements at each destination is
assumed to be constant.
4. The shipping (transportation ) costs per unit
from each source to each destination are assumed
to be constant.
 5

Characteristics of transportation problems

5. No shipments are allowed between sources or

between destinations and again all supply and

demand quantities are given in whole numbers
(integers)
6. The problem is to determine how many units

to ship from each source to each destinations

so that all demand are satisfied at the
minimum total shipping cost.
 6

Assumptions
• A transportation LPM has the following assumptions

1. All goods be homogeneous, so that any origin is

capable of supplying any destination,
2. Transportation costs are a direct linear function
of the quantity shipped over any route

3. The total quantity available is equal to the

total demand required

 7

Formulating transportation Model

• A transportation problem 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.

• In order to develop a model of a transportation problem,

it is necessary to have the following information :

1. Supply quantity (capacity) of each origin

2. Demand quantity of each destination

3. Unit transportation cost for each origin-

destination route.
 8

Overview of the transportation method

• The transportation method is similar in certain aspects to
simplex technique because both involve initial feasible
solution that is evaluated to determine if it can be improved
• More over, both involve displaying initial and improved
solutions in a series of tableaus/tables.
• Transportation method, however, requires considerably less
computational effort
• A solution to a transportation problem consists of quantities
that are assigned to the various routes (i.e. cells in the
tables)
• The quantities (values) can range from zero, which implies
that no units will be shipped over that route, to a
maximum that equals the smaller of the two
quantities: the row (supply) and column (demand)
 9

Example
Transportation table

To Project Project Project Supply

From #1 #2 #3
Farm A C11 C12 C13 S1
Farm B C21 C22 C23 S2
Farm C C31 C32 C33 S3
Demand D1 D2 D3
 10

Methods for Finding Initial Solution

There are three methods to develop initial
feasible solution
1. The Northwest-Corner method.

2. Least cost method (An intuitive approach)

3. Vogel’s Approximation Method

 11

1. The Northwest-Corner method(NCM)

• The Northwest-Corner method is a systematic approach for

developing an initial feasible solution.

• Its chief advantages are that it is simple to use and easy to
understand. Its chief drawback is that it does not take transportation
costs into account.
• The northwest corner method gets its name because the starting

point for the allocation process is the upper left-hand

(Northwest) corner of the transportation table.

• Example: For the ABC company problem, this would be the cell
that represents the route from Farm A to Project #1. The following
set of principles guides the allocation:
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1. The Northwest-corner method(NCM)

1. Begin with the upper left-hand cell (Northwest-Corner), and

allocate as many units as possible to that cell. This will be

the smaller of the row supply and the column demand
(Adjust the row and column quantities to reflect the
allocation).
2. Remain in a row or column until its supply or demand

is completely exhausted or satisfied, allocating the

maximum number of units to each cell in turn, until all
supply has been allocated (and all demand has been
satisfied because we assume total supply and demand are
equal).
 13

Example
ABC company has contracted to provide topsoil for three
residential housing developments. Topsoil can be supplied
from three different “farms” as follows:
Farm Weekly capacity (cubic
yards)
A 100
B 200
C 200
Demand for the topsoil generated by the construction
projects is:
Project Weekly demand(cubic
yards)
1 50
2 150
 14

Example
The manager of the ABC company has estimated the
cost (in USD) per cubic yard to ship over each of the
possible routes:
Cost per cubic yard to
From Project #1 Project #2 Project
#3
Farm A 4 2 8
Farm B 5 1 9
Farm C 7 6 3

Required: Solve the problem using a Northwest-

Corner method
 15

Solution
• The first step is to arrange the information into a
transportation table. This is shown in the
following table:

To Project Project Project Supply

From #1 #2 #3
Farm A 4 2 8 100
Farm B 5 1 9 200
Farm C 7 6 3 200
Demand 50 150 300 500
 16

Initial Feasible Solution

To Project #1 Project #2 Project #3 Supply

From
Farm A 4 2 8 100
50(first) 50(second)
Farm B 5 1 9 200
100(third) 100(fourth)
Farm C 7 6 3 200
200(last)
Demand 50 150 300 500
 17

Solution
• The total cost is found by multiplying the
quantities in “completed” (i.e. non-empty) cells by
the cell’s unit cost and, then, summing those
amounts. Thus:
• Total cost = 50(4) + 50(2) + 100(1) + 100(9) +

200(3) = $1900
 18

2. Least Cost Method(LCM)

• This approach, also known as the Minimum-Cost
Method, uses lowest cell cost as the basis for selecting
routes. The procedure is as follows:
1. Identify the cell that has the lowest unit cost. If
there is a tie, select one arbitrarily. Allocate a quantity
to this cell that is equal to the lower of the available
supply for the row and the demand for the column.
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. Allocate a quantity to this cell that is
equal to the lower of the available supply of the row and
the demand for the column.
4. Repeat steps (2) and (3) until all supply and demand
 19

Example
ABC company has contracted to provide topsoil for three
residential housing developments. Topsoil can be supplied
from three different “farms” as follows:
Farm Weekly capacity (cubic
yards)
A 100
B 200
C 200
Demand for the topsoil generated by the construction
projects is:
Project Weekly demand(cubic
yards)
1 50
2 150
 20

Example
The manager of the ABC company has estimated the
cost per cubic yard (in USD) to ship over each of the
possible routes:
Cost per cubic yard to
From Project #1 Project #2
Project #3
Farm A 4 2 8
Farm B 5 1 9
Farm C 7 6 3

Required: Solve the problem by least cost method

 21

Solution
• The first step is to arrange the information into a
transportation table. This is shown in the following
table:

To Project Project Project Supply

From #1 #2 #3
Farm A 4 2 8 100
Farm B 5 1 9 200
Farm C 7 6 3 200
Demand 50 150 300 500
 22

Solution
• Initial Feasible Solution for the ABC company
using the LCM

To Project #1 Project #2 Project #3 Supply

From
Farm A 4 2 8 100
50
50
Farm B 5 1 9 200
150 50
Farm C 7 6 3 200
200
Demand 50 150 300 500
 23

Solution
Therefore :
• Total cost = 50(4) + 50(8) + 150(1) + 50(9) + 200(3) = $1800
 24

3. Vogel’s Approximation Method (VAM)

• The third method for determining an initial solution is based on

the concept of penalty cost or regret.

• If a decision maker incorrectly chooses from several

alternative courses of action, a penalty may be suffered (and the

decision maker may regret the decision that was made).

• VAM Method use the concept of opportunity cost (the

penalty for not taking the correct decision)

• In transportation problem, the courses of action are the alternative

routes and a wrong decision is allocating to a cell that does not

contain the lowest cost.

 25

3. Vogel’s Approximation Method (VAM)

• With VAM the basis of allocation is unit cost

penalty i.e. that column or row which has

the highest unit cost penalty (difference
between the lowest and the next
highest cost) is selected first for
allocation and the subsequent allocations in
cells are also done keeping in view the
highest unit cost penalty
 26

Steps in VAM
Step 1: For each column and row, determine
its penalty cost by subtracting their two of
their least cost .
Step 2: Select row/column that has the
highest penalty cost in step 1
Step 3:Assign as much as allocation to the
selected row/column that has the least
cost
Step 4: Block those cells that cannot be
further allocated
Step 5: Repeat above steps until all
allocations have been
 27

Example

From To A B C Supply
1 6 8 10 150
2 7 11 11 175
3 4 5 12 275
Demand 200 100 300 600
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Solution
Step1: Determine the penalty cost

(8-6)

(11-7)

(5-4)

(6-4) (8-5) (11-10)

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Solution
Step 2:
Highest penalty
cost

Step 3: assign the maximum allocation to the least cost

 30

Solution

Step 4: 1st Iteration

 31

Solution
Step 5: Second Iteration
 32

Solution
Step 6: Third Iteration
 33

Solution

Therefore,
Total cost = (150x10)+(7x175) +(25x4)+(100x5)+(150x12)= $5,125
 34

Evaluating a Solution for Optimality

• There are two optimality evaluation

methods. These are:
1. The Stepping-stone method
2. The MODI method
 35

The Stepping-stone method

• The Stepping-stone method involves tracing a series of

closed paths in the transportation table, using one such path

for each empty cell.
• The path represents a shift of one unit into an empty

cell, and it enables the manager or analyst to answer a

“what-if” question
• The stepping-stone path also can be used to determine the

maximum number of units that can be shifted into the empty

cell, as well as modifications to other completed cells needed
to compensate for the shift into the previously unused cell.
 36

The Stepping-stone method

• Rules for tracing Stepping-stone paths:

1. All unoccupied cells must be evaluated.

Evaluate cells one at a time.
2. Except for the cell being evaluated, only add or

subtract in occupied cells. (It is permissible to

skip over unoccupied cells to find an occupied cell
from which the path can continue.)
3. A path will consist of only horizontal and vertical

moves, starting and ending with the empty cell that

is being evaluated.
 37

The Stepping-stone method

• The general implication of the plus

and minus signs is that cells with “+”

signs mean one unit would be added,
cells with a “–” sign indicate one unit
would be subtracted.
 38

The Stepping-stone method

xample: Let’s consider the following initial tableau from the
Min Cost algorithm

There are
Non-basic variables

These are basic

variables
 39

The Stepping-stone method

+ -

- +

Add min value of all –ve cells into cell that has “+” sign, and
subtracts the same value to the “-ve” cells Thus, max –ve is
min (200,25) = 25, and we add 25 to cell A1 and B3, and
subtract it from B1 and A3
 40

Stepping stone

The above New tableau gives the min cost = 25*6 + 125*10 + 175*11
175*4 + 100* 5 = $4525
 41

The Modified Distribution Method (MODI)

MODI (MOdified DIstribution) is a modified version

of the stepping-stone method in which mathematical
equations replace the stepping-stone paths.

- In the table, the extra left-hand column with the ui

symbols and the extra top row with the vj symbols

represent values that must be computed.

- Computed for all cells with allocations :

ui + vj = cij = unit transportation cost for cell ij

 42

The Modified Distribution Method (MODI)

There are five steps for MODI Method:
1. Develop an initial solution.
2. Compute the ui and vj values for each row and
column.
3. Compute the cost change, kij, for each empty
cell.
4. Allocate as much as possible to the empty cell
that will result in the greatest net decrease in
cost (most negative kij)
5. Repeat steps 2 through 4 until all kij values are
positive or zero
 43

Example
• Initial feasible solution
• Total cost=
(8*25)+(125*10)+(175*11)+(200*4)+(75*5)=4450

From TO A B C Supply
1 6 8 10 150
25 125
2 7 11 11 175
175
3 4 5 12 275
200 75
Demand 200 100 300 600
 44

Solution

The Minimum Cell Cost Initial Solution

 45

The Modified Distribution Method (MODI)

- Formulas for cells containing allocations:

x1B: u1 + vB = 8
x1C: u1 + vC = 10
x2C: u2 + vC = 11
x3A: u3 + vA = 4
x3B: u3 + vB = 5

The Initial Solution with All ui and vj Values

We have five equations with 6 unknowns, therefore let u1 = 0 and

solve to obtain:
v = 8, v = 10, u = 1, u = -3, v = 7
 46

The Modified Distribution Method (MODI)

• Each MODI allocation replicates the stepping-stone

allocation.
• Use following to evaluate all empty cells:
cij - ui - vj = kij
where kij equals the cost increase or decrease that would occur by
allocating to a cell.
- For the empty cells in the table :
x1A: k1A = c1A - u1 - vA = 6 - 0 - 7 = -1
x2A: k2A = c2A - u2 - vA = 7 - 1 - 7 = -1
x2B: k2B = c2B - u2 - vB = 11- 1 - 8 = +2
x3C: k3C = c3C - u3 -vC = 12 - (-3) - 10 = +5
 47

The Modified Distribution Method (MODI)

- After each allocation to an empty cell, the ui and vj values must be
recomputed.

The Second Iteration of the MODI Solution Method

 48

The Modified Distribution Method (MODI)

Recomputing ui and vj values:

x1A: u1 + vA = 6, vA = 6 x1C: u1 + vC = 10, vC = 10 x2C: u2 + vC
= 11, u2 = 1
x3A: u3 + vA = 4, u3 = -2 x3B: u3 + vB = 5, vB = 7

The New ui and vj Values for the Second

Iteration
 49

The Modified Distribution Method (MODI)

- Cost changes for the empty cells, cij - ui - vj = kij;

x1B: k1B = c1B - u1 - vB = 8 - 0 - 7 = +1
x2A: k2A = c2A - u2 - vA = 7 - 1 - 6 = 0
x2B: k2B = c2B - u2 - vB = 11 - 1 -7 = +3
x3C: k2B = c2B - u3 - vC = 12 - (-2) - 10 = +4
- Since none of the values are negative, solution
obtained is optimal.
- Cell 2A with a zero cost change indicates a
multiple optimal solution. Therefore:
Total cost:
(6*25)+(10*125)+(11*175)+(175*4)+(5*100)=45
 50

Special Issues

1. Alternate Optimal Solutions- Sometimes, transportation

problems have multiple optimal solutions. In such cases, it
can be useful for a manager to be aware of alternate
solutions, because this gives the manager an option of
bringing non-quantitative considerations into the decision.
2. 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. i.e., there are too few
occupied cells to enable all the empty cells to be evaluated
(m+n-1 < number of occupied cell).
 51

Special Issues
3. Unacceptable Routes-In some cases, an origin-destination
combination may be unacceptable. This may be due to
weather factors, equipment breakdowns, labor problems, or
skill requirements that either prohibit, or make undesirable,
certain combinations (routes).

4. Unequal Supply and Demand- if supply and demand are

not equal, it is necessary to modify the original problem so
that supply and demand are equal. This is accomplished by
adding either a dummy column or a dummy row ( with a
zero cell costs).
 52

ASSIGNMENT PROBLEMS
 53

Assignment Problems
• The Assignment Problem is a special case of
Transportation Problem in which the number of
sources and destinations are the same, and the
objective is to assign the given job (task) to most
appropriate machine (person) so as to optimize the
objective like minimizing cost.
• Assignment is a problem because people possess
varying abilities for performing different jobs and,
therefore, the costs of performing the jobs by
different people are different.
• Obviously, if all persons could do a job in the same
time or at the same cost then it would not matter
who of them is assigned the job.
• Example : Assignment of workers to machines,
 54

Characteristics of the Assignment Problem

1. The availability of resources are finite in numbers
such as availability of workers, machines, project
managers, sales man, jobs etc.
2. These availability of resources can be assigned only
on one to one basis. i.e job can be assigned to
particular employee only once.
3. The outcome (result) are expressed in terms of
cost, time or profit
4. The assignment methods aim at either cost
minimization or profit maximization.
5. For one to one assignment, the problem has to be of
the balanced type, otherwise it has to be converted
into a balanced problem or in to square matrix.
 55

Presentation of the assignment problem

• The problem can be presented by the
following tables:
Worker Jobs
s A B C D

1 C1a C1b C1c C1d

2 C2a C2b C2c C2d
3 C3a C3b C3c C3d
4 C4a C4b C4c C4d

Cost or time taken by workers on various job is

indicated in matrix cells as Cij
 56

Hungarian Assignment method (HAM)

There are 6 steps :
Step 1. Locate the smallest cost element in
each row of the cost matrix. Then, subtract this
smallest from each element in that row. As a
result, there shall be at least one zero in each
row of this new matrix.
Step 2. Now consider each column of the
reduced cost matrix from step 1 and locate
smallest element in it. Subtract the smallest
value from each element of the column .
There would , again be at least one zero in each
column of the second reduced cost matrix.
 57

Hungarian Assignment method (HAM)

Step 3: Draw the minimum number of horizontal and
vertical lines to cover all zero elements. If the number of
lines drawn is equal to the number of rows/columns
(n) the solution is optimal, and proceeds to step 6. If
the number of lines drawn is smaller than n, go to step 4.
Step 4. Select the smallest uncovered cost element of the
modified matrix from step 3. 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: Make feasible job assignments on zero elements .
 58

Example
• Assign workers 1,2,3,4 to jobs A,B,C,D. Time taken

by workers from different jobs are given in the

matrix.
Workers Jobs
A B C D
1 45 40 51 67
2 55 40 61 53
3 49 52 48 64
4 41 45 60 55
 59

Solution
Step 1: Row minima's have been identified. These
values are to be subtracted from all values of the
respective
Workers rows
Jobs Row
minima
A B C D

1 45 40 51 67 40
2 55 40 61 53 40
3 49 52 48 64 48
4 41 45 60 55 41
 60

Solution
Reduced time matrix is obtained thus ( revised
time matrix I)

Workers jobs
A B C D
1 5 0 11 27
2 15 0 21 13
3 1 4 0 16
4 0 4 19 14
Column minima 0 0 0 13
 61

Solution
Step 2: Now we obtain minimum values of each
column from the above reduced time matrix I and
subtract these from each respective column
elements to achieve revised matrix II
Workers Jobs
A B C D
1 5 0 11 14
2 15 0 21 0
3 1 4 0 3
4 0 4 19 1
 62

Solution
Step 3: Now drawing minimum number of
horizontal/ vertical lines to cover all zero elements
we get matrix III below
Workers Jobs
A B C D
1 5 0 11 14
2 15 0 21 0
3 1 4 0 3
4 0 4 19 1
 63

Solution
• Since, the number of lines drawn is 4=n, the
solution is optimal. So, proceed step 6
Step 6: making assignments on zero elements , we
obtain
Workers Jobs
A B C D
1 5 0 11 14
2 15 0 21 0
3 1 4 0 3
4 0 4 19 1

Hence, jobs have been assigned on zero elements

4A,1B,3C,2D
Total time=41+40+48+53=182 min(optimal)
 64

Special Cases in Assignment Problems

 Certain situations can arise in which the model deviates slightly
from that previously described. Among those situations are the
following:

1. The number of rows does not equal the number of columns

(Unbalanced Assignment Problems)

2. Certain matches are undesirable or not allowed (Prohibited

Assignment Problems)

3. The problem involves maximization rather than minimization

(Maximization Assignment Problem)…(Reading Assignment)…
get opportunity loss table and follow the same procedure.
4. Multiple solution exist
 65

Thank you