Transportation Algorithm for Minimization Problem (MODI Method)

Step 1
Construct the transportation table entering the origin capacities a i, the destination requirement bj and
the cost cij
Step 2
Find an initial basic feasible solution by vogel’s method or by any of the given method.
Step 3
For all the basic variables xij, solve the system of equations ui + vj = cij, for all i, j for which cell (i, j) is in
the basis, starting initially with some ui = 0, calculate the values of ui and vj on the transportation table
Step 4
Compute the cost differences dij = ( ui + vj - cij ) for all the non-basic cells
Step 5
Apply optimality test by examining the sign of each dij
 If all dij < 0, the current basic feasible solution is optimal.
 If dij <= 0, then the solution is optimal, but an alternate solution exist.
 If at least one dij > 0, select the variable xrs (most positive) to enter the basis.
 Solution under test is not optimal if any dij is positive and further improvement is required by
repeating the above process.
Step 6
Let the variable xrs enter the basis. Allocate an unknown quantity Ө to the cell (r, s). Then construct a
loop that starts and ends at the cell (r, s) and connects some of the basic cells. The amount Ө is added to
and subtracted from the transition cells of the loop in such a manner that the availabilities and
requirements remain satisfied.
Step 7
Assign the largest possible value to the Ө in such a way that the value of at least one basic variable
becomes zero and the other basic variables remain non-negative. The basic cell whose allocation has
been made zero will leave the basis.
Step 8
Now, return to step 3 and repeat the process until an optimal solution is obtained.
Worked Examples
Q1. Sole the following transportation problem using NWC method and then find the optimal solution
using MODI method.
A B C D Supply
P 10 2 20 11 15
Q 12 7 9 20 25
R 4 14 16 18 10
Demand 5 15 15 15
Initial basic solution by NWC Method
A B C D Supply
P 5 10 10 2 20 11 15
Q 12 5 7 15 9 5 20 25
R 4 14 16 10 18 10
Demand 5 15 15 15
The starting basic solution is given as:
X11 = 5, X12 = 10, X22 = 5, X23 = 15, X24 = 5, X34 = 10,
The associated cost of the schedule is z = (5*10)+(10*2)+(5*7)+(15*9)+(5*20)+(10*18) = Rs.520

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Test for optimality:
Test for degeneracy: Here number of allocated cells is 6 which is equal to m+n-1. So, this TP is non-
degenerate.
Step – 3 of MODI algorithm:
MODI METHOD
ui + vj = cij for all basic xij
Basic variable (Allocated cells) (u,v) equation Solution
X11 u1 + v1 = 10 Let u1 = 0 then v1 = 10
X12 u1 + v2 = 2 u1 = 0 then v2 = 2
X22 u2 + v2 = 7 v2 = 2 then u2 = 5
X23 u2 + v3 = 9 u2 = 5 then v3 = 4
X24 u2 + v4 = 20 u2 = 5 then v4 = 15
X34 u3 + v4 = 18 v4 = 15 then u3 = 3
Step – 4 of MODI algorithm:
Non basic variable (Un allocated cells) ui + vj - cij
X13 u1 + v3 – c13 = 0 + 4 – 20 = -16
X14 u1 + v4 – c14 = 0 + 15 – 11 = 4
X21 u2 + v1 – c21 = 5 + 10 – 12 = 3
X31 u3 + v1 – c31 = 3 + 10 – 4 = 9
X32 u3 + v2 – c32 = 3 + 2 – 14 = - 9
X33 u3 + v3 – c33 = 3 + 4 – 16 = - 9
Step – 5 of MODI algorithm:
Test for optimality: the value of all (ui + vj - cij) is not all negative, so this is not an optimal solution.
Step – 6 of MODI algorithm:
The largest positive value here is 9. This value is corresponding to non basic variable X31. X31 will enter
the basis and we have allocated an unknown ɵ to this cell. Then construct a loop that starts and ends at
the cell X31 (R, A) and connects some of the basic cells. The amount Ө is added to and subtracted from
the transition cells of the loop in such a manner that the availabilities and requirements remain
satisfied.
A B C D Supply
P 5-ɵ 10 10 + ɵ 2 20 11 15
Q 12 5 - ɵ 7 15 9 5+ɵ 20 25
R ɵ 4 14 16 10 - ɵ 18 10
Demand 5 15 15 15
Step 7 of MODI algorithm:
X11 = 5 - ɵ >= 0
X22 = 5 - ɵ >= 0
X34 = 10 - ɵ >= 0
Assign the largest possible value to the Ө in such a way that the value of at least one basic variable
becomes zero and the other basic variables remain non-negative. The basic cell whose allocation has
been made zero will leave the basis.
Here, the largest value of Ө will be 5. The table after adjusting the value of Ө will look like this:
A B C D Supply
P 10 15 2 20 11 15
Q 12 7 15 9 10 20 25
R 5 4 14 16 5 18 10
Demand 5 15 15 15

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The total cost associated with the new schedule is 9 *5 = 45 less than in the previous schedule. Thus the
new cost is 520 – 45 = 475.
Given the new basic we return to step 3 and repeat the process until an optimal solution is obtained.
A B C D Supply
P 10 15 2 20 11 15
Q 12 7 15 9 10 20 25
R 5 4 14 16 5 18 10
Demand 5 15 15 15
Test for degeneracy: Here number of allocated cells is 5 which is less than m+n-1. So, this TP is
degenerate. To make it non-degenerate we have to allocate a very small amount ε to any of the non
basic cell. We have allocated ε to cell X22 (Q, B) to make the transportation problem to non-degenerate.
A B C D Supply
P 10 15 2 20 11 15
Q 12 ε 7 15 9 10 20 25
R 5 4 14 16 5 18 10
Demand 5 15 15 15
Step – 3 of MODI algorithm:
ui + vj = cij for all basic xij
Basic variable (Allocated cells) (u,v) equation Solution
X12 u1 + v2 = 2 Let u1 = 0 then v2 = 2
X22 u2 + v2 = 7 v2 = 2 then u2 = 5
X23 u2 + v3 = 9 u2 = 5 then v3 = 4
X24 u2 + v4 = 20 u2 = 5 then v4 = 15
X31 u3 + v1 = 4 u3 = 3 then v1 = 1
X34 u3 + v4 = 18 v4 = 15 then u3 = 3
Step – 4 of MODI algorithm:
Non basic variable ui + vj - cij
X11 u1 + v1 – c11 = 0 + 1 – 10 = -9
X13 u1 + v3 – c13 = 0 + 4 – 20 = -16
X14 u1 + v4 – c14 = 0 + 15 – 11 = 4
X21 u2 + v1 – c21 = 5 + 1 – 12 = -6
X32 u3 + v2 – c32 = 3 + 2 – 14 = - 9
X33 u3 + v3 – c33 = 3 + 4 – 16 = - 9
Step – 5 of MODI algorithm:
Test for optimality: the value of all (ui + vj - cij) is not all negative, so this is not an optimal solution.
Step – 6 of MODI algorithm:
The largest positive value here is 4. This value is corresponding to non basic variable X 14. X14 will enter
the basis and we have allocated an unknown ɵ to this cell. Then construct a loop that starts and ends at
the cell X14 (P, D) and connects some of the basic cells. The amount Ө is added to and subtracted from
the transition cells of the loop in such a manner that the availabilities and requirements remain
satisfied.
A B C D Supply
P 10 15 - ɵ 2 20 ɵ 11 15
Q 12 ε + ɵ 7 15 9 10 - ɵ 20 25
R 5 4 14 16 5 18 10
Demand 5 15 15 15

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Step 7 of MODI algorithm:
X12 = 15 - ɵ >= 0
X24 = 10 - ɵ >= 0
Assign the largest possible value to the Ө in such a way that the value of at least one basic variable
becomes zero and the other basic variables remain non-negative. The basic cell whose allocation has
been made zero will leave the basis.
Here, the largest value of Ө will be 10. The table after adjusting the value of Ө will look like this:
A B C D Supply
P 10 5 2 20 10 11 15
Q 12 10 7 15 9 20 25
R 5 4 14 16 5 18 10
Demand 5 15 15 15

Test for degeneracy: Here number of allocated cells is 6 which is equal to m+n-1. So, this TP is non-
degenerate.
Step – 3 of MODI algorithm:
ui + vj = cij for all basic xij
Basic variable (u,v) equation Solution
X12 u1 + v2 = 2 Let u1 = 0 then v2 = 2
X14 u1 + v4 = 11 u1 = 0 then v4 = 11
X22 u2 + v2 = 7 v2 = 2 then u2 = 5
X23 u2 + v3 = 9 u2 = 5 then v3 = 4
X31 u3 + v1 = 4 u3 = 7 then v1 = -3
X34 u3 + v4 = 18 v4 = 11 then u3 = 7
Step – 4 of MODI algorithm:
Non basic variable ui + vj - cij
X11 u1 + v1 – c11 = 0 + -3 – 10 = -13
X13 u1 + v3 – c13 = 0 + 4 – 20 = -16
X21 u2 + v1 – c21 = 5 + -3 – 11 = -9
X24 u2 + v4 – c24 = 5 + 11 – 20 = -4
X32 u3 + v2 – c32 = 7 + 2 – 14 = - 5
X33 u3 + v3 – c33 = 7 + 4 – 16 = - 5
Step – 5 of MODI algorithm:
Test for optimality: Here the value of all (ui + vj - cij) comes out to be all negative, so this is an optimal
solution.
A B C D Supply
P 10 5 2 20 10 11 15
Q 12 10 7 15 9 20 25
R 5 4 14 16 5 18 10
Demand 5 15 15 15

TC = (5*2) +(10*11) +(10*7) +(15*9) +(5*4) +(5*18) = 10+110+70+135+20+90 = 435

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