Transportation, Transshipment,

and Assignment
• Transportation, transshipment,
and assignment problems are
special types of linear
programming problems known
as network flow problems.

• There solution approaches are

variations of the traditional
simplex solution procedure.
Transportation, Transshipment, and Assignment
Transportation Model
 Transportation Model
• Transportation models are formulated to solve problems
where:
A product is transported from a number of sources to
a number of destinations at the minimum possible
cost.
Each source is able to supply a fixed number of units
of the product, and each destination has a fixed
demand for the product.
 L-300
X-
30 600
A- M-450
500
10
Y-
B- 400
400 N-350

C-
600 50 Z-
O-400 500

Supply
Demand
Points 1500
Points 1500
Transship
ment
MOdel
 Transportation Model
• In a transportation problem, items are
allocated from sources to destinations
at a minimum cost.
• The linear programming model for a
transportation problem has constraints
for supply at each source and demand at
each destination.
 Transportation Model
• A Transportation can be a:
1. Balanced transportation model in which supply
equals demand, all constraints are equalities.
Supply = Demand
2. Unbalanced transportation model in which supply
exceeds demand or demand exceeds supply:
Supply < Demand Supply >
Demand
Transportation problems are usually solved manually
within a tableau format.
Transportation, Transshipment, and Assignment
The Transshipment Model
 Transshipment Model
• The transshipment model is an
extension of the transportation
model in which intermediate
transshipment points are added
between the sources and
destinations.

• An example of a transshipment
point is a distribution center or
warehouse located between
plants and stores.
 Transshipment Model
• In a transshipment problem, items may
be transported:
1. From sources through transshipment
points on to destinations,
2. From one source to another,
3. From one transshipment point to
another,
 Transshipment Model
4. From one destination to another,
5. Or directly from sources to
destinations,
6. Or some combination of these
alternatives.
• The transshipment model includes
intermediate points between sources
and destinations.
Transportation, Transshipment, and Assignment
Transportation: Worked Example
 Transportation: Worked Example
• Wheat is harvested in the Midwest and stored in grain
elevators in three different cities - Kansas City, Omaha, and
Des Moines.
• These grain elevators supply three flour mills, located in
Chicago, St. Louis, and Cincinnati.
• The cost of transporting one ton of wheat from each grain
elevator (source) to each mill (destination) differs according
to the distance and rail system.
• The problem is to determine how many tons of wheat to
transport from each grain elevator to each mill on a monthly
basis in order to minimize the total cost of transportation.
 Transportation: Worked Example
Grain Elevator Supply Mill Demand
1. Kansas City 150 A. Chicago 200
2. Omaha 175 B. St. Louis 100
3. Des Moines 275 C. Cincinnati 300
Total 600 Total 600

Mills
Grain Elevator A. Chicago B. St. Louis C. Cincinnati
1. Kansas City $6 $8 $10
2. Omaha $7 $11 $11
3. Des Moines $4 $5 $12
Transportation, Transshipment, and Assignment
Transportation: Worked Example
Transportation
 Transportation: Worked Example
Grain Elevator Supply Mill Demand
1. Kansas City 150 A. Chicago 200
2. Omaha 175 B. St. Louis 100
3. Des Moines 275 C. Cincinnati 300
Total 600 Total 600

Mills
Grain Elevator A. Chicago B. St. Louis C. Cincinnati
1. Kansas City $6 $8 $10
2. Omaha $7 $11 $11
3. Des Moines $4 $5 $12
 Rates for moving 1 ton on each route
Mills
Grain Elevators A. Chicago B. St. Louis C. Cincinnati
1. Kansas City $6 $8 $10
2. Omaha $7 $11 $11
3. Des Moines $4 $5 $12

Decision Variables: Xij = Tons transported from ‘Source - i’ to ‘Destination – j’

Mills
Grain Elevators A. Chicago B. St. Louis C. Cincinnati
1. Kansas City X1A X1B X1C
2. Omaha X2A X2B X2C
3. Des Moines X3A X3B X3C
 Converting into LP Problem
Minimize Z (Transportation Cost) =
= $6 X1A + $8X1B + $10X1C + $7X2A + $11X2B + $11X2C + $4X3A + $5X3B + $12X3C

Subject to: Xij - the number of tons of wheat

Supply Constraints
• x1A + x1B + x1C = 150
• x2A + x2B + x2C = 175
• x3A + x3B + x3C = 275
Demand Constraints
• x1A + x2A + x3A = 200
• x1B + x2B + x3B = 100
• x1C + x2C + x3C = 300
Non-negativity
• xij ≥ 0
transported from each grain elevator,
i - (where i = 1, 2, 3), to each mill,
j -(where j = A, B, C).
Example
Supply Constraint, x1A + x1B + x1C = 150
Kansas City to all three mills: Chicago (x1A),
St. Louis (x1B), and Cincinnati (x1C).
Constraints are an equation ( = ) and not a
inequality (≤), because all of wheat available
is needed to meet demand of 600 tons.
 Transportation
Minimize Z = $61A + $81B + $101C + $72A + $112B + $112B + $43A + $53B + $123C
Subject to:
x1A + x1B + x1C = 150 x1A + x2A + x3A = 200 xij ≥ 0
x2A + x2B + x2C = 175 x1B + x2B + x3B = 100
x3A + x3B + x3C = 275 x1C + x2C + x3C = 300

To
•Each cell in a transportation
From tableau is analogous to a
decision variable that indicates
the amount allocated from a
source to a destination.

•The supply and demand

values along the outside of the
rim of the tableau are called
rim requirements.
 Transportation: Worked Example
• 2 -Methods for solving a Transportation Model –
1. The Stepping-Stone Method
2. The Modified Distribution Method (also known
as MODI)
BUT

• Must be given an Initial Solution

1. The Northwest Corner Method
2. The Minimum Cell Cost Method
3. Vogel’s Approximation Method
 Transportation
To Northwest Corner Method
From
the largest possible
allocation is made in the
150
cell in the upper left hand
corner of the tableau,
50 100 25 followed by allocations to
adjacent feasible cells.
275
The initial solution is
complete when all rim
requirements are satisfied.

The cost of the initial cost is obtained by substituting the allocations in the objective
function
Z = $6X1A + $8X1B + $10X1C + $7X2A + $11X2B + $11X2C + $4X3A + $5X3B + $12X3C
= 6(150) + 8(0) + 10(0) + 7(50) + 11(100) + 11(25) + 4(0) + 5(0) + 12(275) = $5,925
 Transportation
To The Minimum Cost
From
Method as much as
25 125 possible is allocated to
the cell with the
175 minimum cost.

200 75 The initial solution is

complete when all rim
requirements are
satisfied.

The cost of the initial cost is obtained by substituting the allocations in the objective
function
Z = $6X1A + $8X1A + $10X1C + $7X2A + $11X2B + $11X2B + $4X3A + $5X3B + $12X3C
= 6(0) + 8(25) + 10(125) + 7(0) + 11(0) + 11(175) + 4(200) + 5(75) + 12(0) = $4,550
 Transportation
• Vogel's Approximation Model is based on the
concept of penalty cost or regret.

• A Penalty Cost is the difference between the lowest

and next lowest cell cost in a row (or column).

• VAM allocates as much as possible to the minimum

cost cell in the row or column with the largest
penalty cost.
 Transportation
• Vogel's Approximation Model Steps
1. Determine the penalty cost for each row and
column by subtracting the lowest cell cost in
the row or column from the next lowest cell
cost in the same row or column.
• Column A: L C -4, Next LC -6. As such 6-4 = 2
2. Select the row or column with the highest
penalty cost (breaking ties arbitrarily or
choosing the lowest-cost cell).
 Transportation
• Vogel's Approximation Model Steps
3. Allocate as much as possible to the
feasible cell with the lowest
transportation cost in the row or
column with the highest penalty cost.

4. Repeat steps 1, 2, and 3 until all rim

requirements have been met.
 Transportation
To
From

4
175

2 3 1
 Transportation
To
From

175

100 1
8

2 3 1
After each VAM cell allocation, all row and column penalty costs are
recomputed
 Transportation
To
From

2
150

175

25 100 150 8

2 1
After each VAM cell allocation, all row and column penalty costs are
recomputed
 Transportation
To
From

150

175

25 100 150

The cost of the initial cost is obtained by substituting the allocations in the objective
function
Z = $61A + $81A + $101C + $72A + $112B + $112B + $43A + $53B + $123C
= 6(0) + 8(0) + 10(150) + 7(175) + 11(0) + 11(0) + 4(25) + 5(100) + 12(150) = $5,125
 Transportation
• After obtaining the initial solution, the problem may be
solved using:
1. Stepping-Stone Method
2. Modified Distribution Method (MODI)

Stepping Stone Method – determines if there is a cell with no

allocation that would reduce cost if used.

Modified Distribution Method (MODI)– a modified version

of the stepping-stone method. However, the individual cell
cost changes are determined mathematically.
 Transportation
• Stepping Stone Method

• Step 1: Determine the stepping-stone path and cost

changes for each empty cell in the tableau.

• Step 2: Allocate as much as possible to the empty cell

with the greatest net decrease in cost.

• Step 3: Repeat steps 1 and 2 until an empty cell have

positive cost changes that indicates an optimal solution.
 Transportation
To Step 1: Determine the
From
stepping-stone path
X 25 125 and cost changes for
each empty cell in the
X X 175 tableau.

200 75 X But First Identify

Empty Cells :
1A
2A
2B
3C
 Transportation
To Evaluation of Cell
From
+1 -1 1A
25 125
In evaluating the empty
cells the constraint of the
175
problems cannot be
-1 +1 violated, and feasibility
200 75 must be maintained.

Review of the cost

increase/reduction of the
process.
1A 1B 3B 3A

$6 - $8 + $5 - $4 = -$1
 Transportation
To Evaluation of Cell
From
-1 +1 2A
25 125
+1 -1 Review of the cost
175 increase/reduction of
-1 +1
the process.
200 75

2A 2C 1C 1B 3B 3A

+$7 - $11 + $10 - $8 +$5 - $4 = -$1

 Transportation
To Evaluation of Cell
From
-1 +1 1A
25 125 2A
+1 -1 2B
175 3C

200 75 Review of the cost

increase/reduction of the
process.

2B 2C 1C 1B

+$11 - $11 + $10 - $8 = +$2

 Transportation
To Evaluation of Cell
From
+1 -1 1A
25 +1 125 -1 2A
2B
175 3C
-1 +1
200 75 -1
Review of the cost
increase/reduction of the
process.

3C 3B 1B 1C
+$12 - $5 + $8 - $10 = +$5
 Transportation
To Summary
From

25 125 1A – reduction $1
2A – reduction $1
175 2B – increase $2
3C – increase $5
200 75
 Transportation
To Evaluation of Cell
From
+1 -1 1A
25 25 -25= 0 125 2A
2B
175 3C
-1 +1
200 -25 = 175 75 + 25 = 100 Identify the minimum in
the stepping stone path.

The optimal cost of the transportation is obtained by substituting the allocations in the
objective function
Z = $6X1A + $8X1A + $10X1C + $7X2A + $11X2B + $11X2B + $4X3A + $5X3B + $12X3C
= 6(25) + 8(0) + 10(125) + 7(0) + 11(0) + 11(175) + 4(175) + 5(100) + 12(0) = $4,525
 MODI (Modified Distribution) Method

Begin with an initial solution obtained by using the northwest corner rule or any other rule.

Now we must compute a value for each row (call the values R1, R2, R3 if there are three
rows) and for each column (K1, K2, K3 ) in the transportation table

The MODI method then requires five steps:

1. To compute the values for each row and column, set
Ri + Kj = Cij
but only for those squares that are currently used or occupied. For example, if the
square at the intersection of row 2 and column 1 is occupied, we set R2 + K1 = C21.

2. After all equations have been written, set R1 = 0.

3. Solve the system of equations for all R and K values.

4. Compute the improvement index for each unused square by the formula
improvement index (Iij) = Cij - Ri - Kj.

5. Select the largest negative index and proceed to solve the problem as you did using
the stepping-stone method.
Consider the following ‘Initial Feasible Solution’ for a transportation problem:

set up an equation for each occupied square:

1. R1 + K1 = 5 2. R2 + K1 = 8
3. R2 + K2 = 4 4. R3 + K2 = 7
5. R3 + K3 = 5
Transportation, Transshipment, and Assignment
The Assignment Model
 Assignment Model
• The Assignment Model is a special form
of a linear programming model that is
similar to the transportation model.

• The difference, however, is that the

supply at each source and the demand
at each destination are each limited to
one unit.
 Assignment Model
• The linear programming formulation is
similar to the formulation of the
transportation model, except all the
supply values for each source equal one,
and all the demand values at each
destination equal one.
Transportation, Transshipment, and Assignment
The Assignment Model
 Assignment Model
An assignment problem is a special form of
transportation problem where all supply and
demand values equal one.

Steps of the assignment solution method are:

1. Perform row reductions by subtracting the
minimum value in each row from all row
values.
 Assignment Model
Steps of the assignment solution method (Continued)
2. Perform column reductions by subtracting
the minimum value in each column from all
column value.

3. In the completed Opportunity Cost Table,

cross out all zeros, using the minimum
number of horizontal or vertical lines.
 Assignment Model
Steps of the assignment solution method (Continued)
4. If fewer than m lines are required (where m
= the number of rows or column), subtract
the minimum uncrossed value from all the
other uncrossed values, and add this same
minimum uncrossed value where two lines
intersect. Leave all other values unchanged.
 Assignment Model
(Continued)
5. If m lines are required, the tableau contains
the optimal solution and m unique
assignments are made. If fewer than m lines
are required, repeat step 4.
Transportation, Transshipment, and Assignment
The Assignment Model
- A Worked Example
 Assignment Model - Example
• The Atlantic Coast Conference
has four football games on a
particular night.

• The conference office wants to

assign four teams of officials to
the four games in a way that will
minimize the total distance
traveled by the officials.

• The distances in miles for each

team of officials to each game
location are shown below.
 Assignment Model

Step 1: Perform row reductions by subtracting the minimum value in each

row from all row values.
 Assignment Model

Step 1: Perform column reductions by subtracting the minimum value in

each column from all column value.
 Assignment Model
Step 3: In the completed opportunity cost
table, cross out all zeros, using the minimum
number of horizontal or vertical lines.
 Assignment Model
Step 4: If fewer than m lines are required (where m = the number of
rows or column), subtract the minimum uncrossed value from all the
other uncrossed values, and add this same minimum uncrossed value
where two lines intersect. Leave all other values unchanged.
 Assignment Model
Step 4: If m lines are required, the tableau contains the
optimal solution and m unique assignments are made.
If fewer than m lines are required, repeat step 4.

Assignment Distance
Team A-Atlanta 90
Team B-Raleigh 100
Team C-Durham 140
Team D-Clemson 120
Total 420
 Assignment Model
Unbalanced Assignment Tableau with a dummy column

•When demand exceeds supply, a dummy row is added to the assignment

tableau.
•When supply exceeds demands, a dummy column is added to the
assignment tableau.