SPECIAL PURPOSE ALGORITHMS OF LINEAR PROGRAMMING:

TRANSPORTATION (DISTRIBUTION) MODELS

- are special algorithms of LP problems in which the objective of the decision maker or the
distributor of goods or services is to prepare a schedule of shipment from different sources
to different destinations such that the total cost of transportation is to be minimized
- there are a number of sources (factories, warehouses or distribution centers) from where
the supply of goods can be obtained and there are a number of destinations (customer
outlets, depots, or dealerships which require these products
- should be able to determine how many units of the products should be allocated along each
route so as to minimize the total cost of such allocations

ASSUMPTIONS TO BE CONSIDERED IN ANY TRANSPORTATION MODELS

1. The decision maker is expected to make the best possible match of sources to destinations in
allocating goods that will yield the minimum cost of transportation.
2. The cost per unit of transportation from every source to every destination is given.
3. The products are homogeneous in the sense that items allocated from different sources can be
freely interchanged.
4. All routes are acceptable except a dummy source or a dummy destination if injected.
5. The total cost along any route is the number of items allocated to that route multiplied by its
cost per unit.
6. Total supply equals total demand, i.e. the distribution or transportation is balanced.

TRANSPORTATION TABLEAU

-presents all the relevant data of a transportation problem in a concise form.

Example:

From / To Outlet 1 Outlet 2 Outlet 3 Outlet 4 Outlet 5 Supply

Source X 13 10 7 8 11
90
Source Y 7 11 9 7 4
40
Source Z 10 6 8 11 10
80
Demand
30 40 50 60 30 210

Components:

SECTION A ( Source X, Source Y, Source Z) – are the sources of goods also known as origins.
SECTION B ( Supply) – represents the capacity /supply of each source, also called the rim requirement of
the rows

SECTION C ( Outlets) – represents the capacity / supply of each source, also called rim requirement of
the rows

SECTION D (Demand) – represents the demand of the outlets

General Rule:

A transportation table should be balanced , i.e. the total supply equals the total demand so that
all suppliers from these sources shall be exhausted and that all demands of these outlets shall be
satisfied.

DIFFERENT WAYS OF ALLOCATING GOODS:

1. The Northwest Corner Rule

- Begin allocating the resources from the northwest corner that is from the to the upper left-
hand corner of the table as the first route, then move to the right until the supply has been
exhausted; then move downwards until the demand on each column has been satisfied
regardless of the cost. The path is actually in a ladder type or stair-step direction.

Example:

From / To Outlet 1 Outlet 2 Outlet 3 Outlet 4 Outlet 5 Supply

Source X 13 10 7 8 11
30 40 20 90
Source Y 7 11 9 7 4
30 10 40
Source Z 10 6 8 11 10
50 30 80
Demand
30 40 50 60 30 210

Shipment Schedule:

Source Destination Cost of Number of Total

Transportation Units Allocated
Source X Outlet 1 13 30 390
Source X Outlet 2 10 40 400
Source X Outlet 3 7 20 140
Source Y Outlet 3 9 30 270
Source Y Outlet 4 7 10 70
Source Z Outlet 4 11 50 550
Source Z Outlet 5 10 30 300
TOTAL 2,120
 So the total cost of transportation using the Northwest Corner Rule is 2,120.
2. The Minimum Cost Method
- Begin allocating the resources to a vacant cell with the least cost contribution in view of the
capacity of the corresponding source of supply and to the extent that each column
requirement is satisfied. Cover the row/column of which the rim requirement has been
satisfied since these remaining cells of that covered row or column can no longer accept
entries. Then keep on searching for next least cost among uncovered cells until all its units
have been allocated.

Example:

First allocation: From Source Y to Outlet 5

From / To Outlet 1 Outlet 2 Outlet 3 Outlet 4 Outlet 5 Supply

Source X 13 10 7 8 11
X 90
Source Y 7 11 9 7 4
30 40
Source Z 10 6 8 11 10
X 80
Demand
30 40 50 60 30 210

Second allocation: From Source Z to Outlet 2

From / To Outlet 1 Outlet 2 Outlet 3 Outlet 4 Outlet 5 Supply

Source X 13 10 7 8 11
X X 90
Source Y 7 11 9 7 4
X 30 40
Source Z 10 6 8 11 10
40 X 80
Demand
30 40 50 60 30 210
Third allocation: From Source Y to Outlet 1

From / To Outlet 1 Outlet 2 Outlet 3 Outlet 4 Outlet 5 Supply

Source X 13 10 7 8 11
X X 90
Source Y 7 11 9 7 4
10 X X X 30 40
Source Z 10 6 8 11 10
40 X 80
Demand
 30 40 50 60 30 210

Fourth allocation: From Source X to Outlet 3

From / To Outlet 1 Outlet 2 Outlet 3 Outlet 4 Outlet 5 Supply

Source X 13 10 7 8 11
X 50 X 90
Source Y 7 11 9 7 4
10 X X X 30 40
Source Z 10 6 8 11 10
40 X X 80
Demand
30 40 50 60 30 210

Fifth allocation: From Source X to Outlet 4

From / To Outlet 1 Outlet 2 Outlet 3 Outlet 4 Outlet 5 Supply

Source X 13 10 7 8 11
X X 50 40 X 90
Source Y 7 11 9 7 4
10 X X X 30 40
Source Z 10 6 8 11 10
40 X X 80
Demand
30 40 50 60 30 210

Sixth allocation: From Source Z to outlet 1

From / To Outlet 1 Outlet 2 Outlet 3 Outlet 4 Outlet 5 Supply

Source X 13 10 7 8 11
X X 50 40 X 90
Source Y 7 11 9 7 4
10 X X X 30 40
Source Z 10 6 8 11 10
20 40 X X 80
Demand
30 40 50 60 30 210
Seventh allocation: From Source Z to Outlet 4

From / To Outlet 1 Outlet 2 Outlet 3 Outlet 4 Outlet 5 Supply

Source X 13 10 7 8 11
X X 50 40 X 90
Source Y 7 11 9 7 4
10 X X X 30 40
Source Z 10 6 8 11 10
20 40 X 20 X 80
Demand
30 40 50 60 30 210

Shipment Schedule:

Source Destination Cost Number of units Total

allocated
Y Outlet 5 4 30 120
Z Outlet 2 6 40 240
Y Outlet 1 7 10 70
X Outlet 3 7 50 350
X Outlet 4 8 40 320
Z Outlet 1 10 20 200
Z Outlet 4 11 20 220
TOTAL 1,520
So the total cost of transportation using the Northwest Corner Rule is 1,520.

EXERCISES:

Apply the Northwest Corner Rule and the Minimum Cost method to allocate the resources.

From/To Outlet 1 Outlet 2 Outlet 3 Outlet 4 Outlet 5 Outlet 6 Supply

Source A 10 7 8 9 11 12
60
Source B 8 11 14 10 15 10
80
Source C 6 5 9 13 10 11
90
Source D 9 13 12 16 9 13
95
Source E 12 15 11 13 8 15
75
Demand 50 60 75 85 70 60 400