Transportation

Transportation model
The transportation problem deals with the
distribution of goods from several points of
supply (sources) to a number of points of
demand (destinations)
Usually we are given the capacity of goods at
each source and the requirements at each
destination
Typically the objective is to minimize total
transportation and production costs

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 Introduction

• Example of a transportation problem in a network format

Factories Warehouses
(Sources) (Destinations)

100 Units Biratnagar Province 1 300 Units

300 Units Butwal Province 4 200 Units

300 Units Kathmandu Province 6 200 Units

Capacities Shipping Routes Requirements

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 Setting Up a Transportation Problem

• Production costs are the same at the three factories so the

only relevant costs are shipping from each source to each
destination
• Costs are constant no matter the quantity shipped
• The transportation problem can be described as how to select
the shipping routes to be used and the number of desks to be
shipped on each route so as to minimize total transportation
cost
• Restrictions regarding factory capacities and warehouse
requirements must be observed

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 Setting Up a Transportation Problem

• The first step is setting up the transportation table

• Its purpose is to summarize all the relevant data and keep
track of algorithm computations

Transportation costs per desk for Executive Furniture

TO
FROM Province 1 Province 4 Province 6

Biratnagar 5 4 3
Butwal 8 4 3
Kathmandu 9 7 5

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 Steps involved in transportation problem
 Compiling all information in a single table
(Making cost table/profit table)
 Checking whether the given problem is a balanced or an unbalanced
problem
(for unbalanced problem we have to add one dummy origin or destination
to make the balanced)
 Checking whether the given problem is a minimization or maximization
problem
(for max problem we have to subtract all elements from the highest one)
 Obtaining an initial solution (North west method, Vogels Approximation
method, Least cost method)
 Testing for degeneracy (Problem should be non degenerate)
 Testing for optimality (Modified distribution method)

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 Setting Up a Transportation Problem

Des Moines
• Transportation table for Executive Furniture capacity
constraint

WAREHOUSE WAREHOUSE WAREHOUSE

TO
AT AT AT FACTORY
FROM
Province 1 Province 4 Province 6 CAPACITY

Biratnagar 5 4 3 100

Butwal 8 4 3 300

Kathmandu 9 7 5 300

WAREHOUSE
300 200 200 700
REQUIREMENTS

Cell representing a source-

Total supply to-destination (Butwal to
Cost of shipping 1 unit from Province 5 Province 6) shipping
Kathmandu to Province 4 and demand
demand assignment that could be
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 Setting Up a Transportation Problem

• In this table, total factory supply exactly equals total

warehouse demand
• When equal demand and supply occur, a balanced
problem is said to exist
• This is uncommon in the real world and we have
techniques to deal with unbalanced problems

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 Example 2
• A firm owns facilities at seven places. A, B and C with daily output of 500,
300, and 200 units of an item respectively. It has warehouses at places P, Q,
R and S with daily requirements of 180, 150, 350 and 320 units
respectively. Per unit shipping charges on different routes are given below.

To P Q R S
From
From A 12 10 12 13
From B 7 11 8 14
From C 6 16 11 7
 
The firm wants to send the output from various plants to warehouses
involving minimum transportation cost. How should it route the product so
as to achieve its objectives.

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 Table 1 (Initial Cost Table)
From To P Q R S Supply
A 12 10 12 13 500
B 7 11 8 12 300
C 6 16 11 7 200
Demand 180 150 350 320 1000
1000

Total Demand = Total Supply

(Hence the given problem is a balanced Transportation
Problem)

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 Steps in Vogel’s Approximation Method
• VAM Step 1. For each row and column of the transportation table,
find the difference between the two least values (cost).
• VAM Step 2. identify the row or column with the greatest
opportunity cost, or difference
• VAM Step 3.Assign as many units as possible to the lowest-cost
square in the row or column selected
• VAM Step 4. Eliminate any row or column that has been completely
satisfied by the assignment just made by placing Xs in each
appropriate square
• VAM Step 5. Recompute the cost differences for the transportation
table, omitting rows or columns eliminated in the previous step
• VAM Step 6. Return to step 2 for the rows and columns remaining
and repeat the steps until an initial feasible solution has been
obtained
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 Obtaining an initial solution by VAM
To P Q R S Supply Row
Difference
From (I)
A 12 10 12 13 500 2
B 7 11 8 12 300 1
C 6 16 11 7 200 1
Demand 180 150 350 320 1000
Column 1 1 4 5
Difference (I)

Identification of two least values on each row and column

Computation of their difference
Give arrow on the highest value among the values of all row and column
differences
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 Obtaining an initial solution by VAM
To P Q R S Supply Row
Difference
From (I)
A 12 10 12 13 500 2
B 7 11 8 12 300 1
C 6 16 11 7 200 1
Demand 180 150 350 200
320 120 1000
Column 1 1 4 5
Difference (I)

Select the least cost on corresponding column/row (Here column) i.e. 7

Put a box on 7
Then see corresponding supply and demand and identify least one (least is 200)
Then put the least value on box
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 Obtaining an initial solution by VAM
To P Q R S Supply Row II III
Diff
From (I)
A 12 10 12 13 500 2
B 7 11 8 12 300 1
C 6 16 11 7 200 1
Demand 18 150 350 320 200 1000
0 120
Col Diff (I) 1 1 4 5
II
III

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 Obtaining an initial solution by VAM
To P Q R S RowSupply Row Diff
Diff (II)
From (I)
A 12 10 12 13 500 2 2
B 7 11 8 12 300 120 1 1
180
C 6 16 11 7 200 1
Demand 180 150 350 320 200 1000
120
Col Diff (I) 1 1 3 5
Col Diff (II) 5 1 4 1

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 Obtaining an initial solution by VAM
To P Q R S Supply Row Row Row
Diff Diff Diff
From (I) (II) (III)
A 12 10 150 12 13 120 500 2 2 2
230
B 7 11 8 12 300 1 1 3
180 120 120
C 6 16 11 7 200 1
Demand 180 150 350 320 200 1000
230 120
Col Diff (I) 1 1 3 5
Col Diff (II) 5 1 4 1
Col Diff 1 4 1
(III)

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 Testing for degeneracy

• No of occupied cells = 6

• No of rows + no of columns – 1 = 3+4-1 = 6

• Hence the given problem is non degenerate

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 Modified Distribution Method (MODI)
For occupied cells
To P Q R S Supply Ri

From

A 12 10 150 12 230 13 120 500 R1=0

B 7 11 8 12 300 R2=
180 120

C 6 16 11 7 200 R3=
200
Demand 180 150 350 320 1000

Kj K1= K2= K3= K4=

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 Modified Distribution Method (MODI)
For occupied cells
To P Q R S Supply Ri

From

A 12 10 150 12 230 13 120 500 R1=0

B 7 11 8 12 300 R2=-4
180 120

C 6 16 11 7 200 R3=-6
200
Demand 180 150 350 320 1000

Kj K1=11 K2=10 K3=12 K4=13

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 For unoccupied cells
Improvement Index [Δij = Cij - (Ri + Kj)]

Unoccupied Δij = Cij - (Ri + Kj)

Cells
(1,1) Δ11 = C11 – R1-K1 = 12-0-12 =0
(2,2) Δ22 = C22 – R2 – K2 = 11- (-4) – 10 =5
(2,4) Δ24 = C24 – R2 – K4= 12 – (-4) – 13 = 3
(3,1) Δ31 = C31 – R3 – K1= 6- (-6)- 12 = 0
(3,2) Δ32 = C32 – R3 –K1= 16 – (-6) – 12 = 10
(3,3) Δ33 = C33 – R3 – K3= 11 – (-6) – 12 = 5

Here all Δij is >= 0. Hence optimal solution has been reached.
Optimal Solution is X12= 150, X13= 230, X14 = 120, X21 = 180, X23 =120
X34 = 200
Optimum value = 10 X 150 + 12 X 230 + 13 X 120 + 7 X 180 + 8 X 120 + 7
X 200 = 9440

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 Unbalanced Transportation Problems

• In real-life problems, total demand is frequently not equal to

total supply
• These unbalanced problems can be handled easily by
introducing dummy sources or dummy destinations
• If total supply is greater than total demand, a dummy
destination (warehouse), with demand exactly equal to the
surplus, is created
• If total demand is greater than total supply, we introduce a
dummy source (factory) with a supply equal to the excess of
demand over supply
 Unbalanced Transportation Problems

• In either case, shipping cost coefficients of zero are assigned

to each dummy location or route as no goods will actually be
shipped
• Any units assigned to a dummy destination represent excess
capacity
• Any units assigned to a dummy source represent unmet
demand
 Thank You

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