Transportation Problems

Dr. Bianka Ray Chaudhury

 Transportation Problem

 Transportation: It is a mathematical model which seeks to minimize the cost of transporting commodities from a number of
origins (supply side ) to different destinations (demand side)

Which is the dependent variable?

Cost matrix D1 D2 D3 D4 Supply

O1 1 2 1 4 30
O2 3 3 2 1 50
O3 4 2 5 9 20
Demand 20 40 30 10 100

OBJECTIVE?
 Methods to Solve

Cost matrix D1 D2 D3 D4 Supply

O1 1 2 1 4 30
O2 3 3 2 1 50
O3 4 2 5 9 20
Demand 20 40 30 10 100

At every step, before we reach to the basic feasible solution, cost is minimized and allocations of demand and supply are done.
The cost minimization method varies on the basis of the model chosen.

 Vogel’s Approximation method (VAM)

 North-West Corner method

 Least Cost Entry method

 Cost Minimization Method ( VAM )

Cost matrix D1 D2 D3 D4 Supply

O1 1 2 1 4 30
O2 3 3 2 1 50
O3 4 2 5 9 20
Demand 20 40 30 10 100

 Vogel’s Approximation method (VAM):

i. Select the minimum cost the second most minimum cost and take a difference between them. Do this row wise and column
wise.
ii. Select the highest difference and from that row or column choose the minimum most cost.

Cost matrix D1 D2 D3 D4 Supply Diff. of cost

O1 1 2 1 4 30 0
O2 3 3 2 1 50 1
O3 4 2 5 9 20 2
Demand 20 40 30 10 100
Diff. of cost 2 0 1 3
 Cost Minimization Method: North West Corner Method

Cost matrix D1 D2 D3 D4 Supply

O1 1 2 1 4 30
O2 3 3 2 1 50
O3 4 2 5 9 20
Demand 20 40 30 10 100

 North West Corner Method:

i. Select the north west corner of the cost matrix and start from there in every iteration, making that cell as the minimum cost

Cost matrix D1 D2 D3 D4 Supply

O1 1 2 1 4 30
O2 3 3 2 1 50
O3 4 2 5 9 20
Demand 20 40 30 10 100
 Cost Minimization Method: Least Cost Entry Method

Cost matrix D1 D2 D3 D4 Supply

O1 1 2 1 4 30
O2 3 3 2 1 50
O3 4 2 5 9 20
Demand 20 40 30 10 100

 Least Cost Entry Method:

i. Select the minimum cost from the entire cost matrix at every iteration

Cost matrix D1 D2 D3 D4 Supply

O1 1 2 1 4 30
O2 3 3 2 1 50
O3 4 2 5 9 20
Demand 20 40 30 10 100
 Steps of VAM

Q1) Cost matrix D1 D2 D3 D4 Supply

O1 1 2 1 4 30
O2 3 3 2 1 50
O3 4 2 5 9 20
Demand 20 40 30 10 100

Step I: Select the minimum cost the second most minimum cost and take a difference between the. Do this row wise and column
wise. Select the highest difference and from that row or column choose the minimum most cost.

Cost matrix D1 D2 D3 D4 Supply Diff. of cost

O1 1 2 1 4 30 0
O2 3 3 2 10
1 50 1
O3 4 2 5 9 20 2
Demand 20 40 30 10 100
Diff. of cost 2 0 1 3

Step 2: In the identified minimum cost, compare the demand and supply values and allocate whichever is minimum
Step 3: Once the allocation is done, strike the respective column or row and omit it
 Steps of VAM
Step 4: Write down below the amputed table, where the new supply value changes

Cost matrix D1 D2 D3 Supply

O1 20
1 2 1 30
O2 3 3 2 40
O3 4 2 5 20
Demand 20 40 30 100

Step 5: Keep Repeating all these steps till all the allocation are done
Cost matrix D2 D3 Supply Cost matrix D2 D3 Supply
O1 2 1 10 O1 2 10
1 10
O2 3 2 40 O2 3 2 40
O3 20
2 5 20 Demand 20 30 100
Demand 40 30 100
Cost matrix D2 D3 Supply
O2 20
3 20
2 40
Demand 20 20 100
 Steps of VAM

Cost matrix D1 D2 D3 D4 Ui Supply

20 10
O1 1 2 1 4 -1 30
20 20 10
O2 3 3 2 1 0 50
20
O3 4 2 5 9 -1 20
Vj 2 3 2 1

Demand 20 40 30 10

Step 6: Check if the Number of allocated cells = No. of rows + No. of columns – 1
If it matches, then we have reached to the basic feasible solution

Step 7: For Allocated cells / Basic cells: Cij = Ui + Vj [Note: Assign 0 to the row or column which has the highest no. of allocations]
For Non Allocated cells / Non – Basic cells: Δij = Cij – ( Ui + Vj )

Step 8: Check if all If all Δij ≥ 0. If all the conditions match, then we can find the optimal solution

Step 9: Calculate Minimum Cost from the optimal allocations of transporting goods done:
(20*1) + (10*1) + (20*3) + (20*2) + (10*1) + (20*2) = 180
 Different Cases

I. Cost Minimization

II. Profit / Revenue Maximization

Note: Select the maximum cell value and subtract all other cell values from it to convert it into a min table
Profit D1 D2 D3 D4 Ss. Profit D1 D2 D3 D4 Ss.
Matrix Matrix
O1 5 3 6 2 19 O1 4 6 3 7 19
O2 4 7 9 1 37 O2 5 2 0 8 37
O3 3 4 7 5 34 O3 6 5 2 4 34
Dd. 16 18 31 25 90 Dd. 16 18 31 25 90

III. Unbalanced Problem

Note: When total Dd ≠ Ss and so we add dummy row or dummy columns with the amount of difference

Cost D E F G Ss. Cost D E F G Dummy Ss.

Matrix Matrix
A 5 3 6 2 160 A 5 3 6 2 0 160
B 4 7 9 1 150 B 4 7 9 1 0 150
C 3 4 7 5 190 C 3 4 7 5 0 190
Dd. 80 90 110 160 - Dd. 80 90 110 160 60 500
 Different Cases

IV. Problem of Degeneracy [ Number of allocated cells ≠ No. of rows + No. of columns – 1 ]
Note: We bring in θ and form closed loops

V. Non-Optimal Solution [ Some Δij < 0 ]

Note: We bring in Ф and see wherever closed loops cannot be formed

VI. Missing Data

Note: We select the highest element from the entire matrix, add 1 to it and replace the missing cells.
 Solver Solution

Cost matrix D1 D2 D3 D4 Supply

O1 1 2 1 4 30
O2 3 3 2 1 50
O3 4 2 5 9 20
Demand 20 40 30 10 100

LPP Formulation:
Minimize time = 1x11 + 2x12 + 1x13 + 4x14 + 3x21 + 3x22 + 2x23 + 1x24 + 4x31 + 2x32 + 5x33 + 9x34
Subject to x11 + x12 + x13 + x14 ≤ 30
x21 + x22 + x32 + x24 ≤ 50
x31 + x32 + x33 + x34 ≤ 20
x11 + x21 + x31 ≥ 20
x21 + x22 + x23 ≥ 40
x31 + x32 + x33 ≥ 30
x41 + x42 + x43 ≥ 10
xij ≥ 0
 Problem

Q2) Hindustan Oil Company has three oil refineries. The company has the opportunity to sell certain oil products to the market.
The potential profit from the sale of the products is given in the following table:

Plant / Gasoline Kerosene Diesel Jet Fuel Asphalt

Product
1 .165 - .140 .125 .128
2 .140 .146 .126 - .133
3 - .139 .134 .125 .130

Hindustan has the capacity of 70,000 barrels at plant 1; 90,000 barrels at plant 2 and 40,000 barrels at plant 3. They have been
requested to supply 60,000 barrels of gasoline; 15000 barrels of kerosene, 40,000 barrels of diesel fuel and 25,000 barrels of
asphalt. Management wants to schedule production and supply of these products at the three plants with a view to maximize
profit.
Problem
 Problem

Q3) MG Auto has 3 plants in Los Angles, Detroit and New Orleans and 2 major distribution centers in Denver and Miami. The
capacities of the 3 plants are 1000, 1500 and 1200 cars. The demand at the two distribution centers are 2300 and 1400 cars. The
mileage chart between the plants and the distribution centers are given below:

Plant /
Distribution Denver Miami
Centre
LA 1000 2690
Detroit 1250 1350
New Orleans 1275 850

The trucking company in charge of transporting the cars charges 8 cents per mile per car. Devise the plan for transportation.
 Problem

Q3)