CHAPTER THREE

TRANSPORTATION AND
ASSIGNMENT MODELS
3.1. Transportation Model
 Transportation model is special type of linear
programming model which is easy to express
mathematically in terms of LP model.
 It can be solved by simplex method, but since
it involves a large number of variables and
constraints; it takes a long time to solve it.
 As a result of this, other transportation
algorithm; namely stepping stone and MODI
(modified Distribution) method have been
developed.
 Transportation model deals with transporting goods and
services from several supply centers or origins to several
destinations or demand centers through different shipping
routes.
 The objective is determining the number of units of an
items that should be shipped from an origin to a
destination in order to satisfy the required quantity of
goods at each destination and the total cost of
transportation or time will be minimized.
 The study of transportation problem helps to identify
optimal transportation routes along with units of
commodity to be shipped in order to minimize total
transportation cost.
Mathematical model of transportation problem
 A transportation problem typically involves a set of
sending locations which are referred to as origins or
supply centers, and a set of receiving locations, which
are referred to as destinations or demand centers.
 In order to develop a model of a transportation
problem, it is necessary to have the following
information.
• Supply of quantity or capacity of each origin
• Quantity demanded at each destination
• Unit cost of transporting one unit of product from each
origin to each destination.
Solving the transportation model
Step 1: Formulating the problem and arranging
the data in the matrix form
Step 2: Find the initial basic feasible solution
 There are three types of techniques available to
find initial basic feasible solution. These are:
• North West Corner method
• The Least Cost Method
• Vogel’s Approximation Method (VAM) method
N.B. the initial solution obtained by any of the three
 The solution must be feasible i.e. it must satisfy all
the supply and demand constraints (also called rim
condition)
 The number of positive allocations must be equal
to m+n-1, when m is the number of rows and n is
the number of columns. Any solution that satisfies
the above conditions is called non degenerate basic
feasible solution, otherwise degenerate solution.
Step 3: Test for optimality
 There are two techniques of testing optimality.
These are: stepping stone and MODI (Modified
Distribution) method.
3.2 Methods Of Finding Initial Feasible Solution
North –West Corner method
 Start with the cell at the upper (North West) corner of
transportation matrix and allocate commodity equal to
the minimum of the rim values for the first row and first
column
 check whether exactly one of the row/column
corresponding to the North West corner cell has zero
supply/demand respectively
 Delete row or column with respect to the current North
West corner cell which has the zero supply/demand
 Delete both the row and the column with respect to the
current North West corner cell.
Least Cost Method
 This method takes into account the minimum unit cost
of transportation for obtaining the initial solution. With
this method;
 Select the cell with the lowest unit cost in the entire
transportation matrix and allocate as much as possible to
this cell. Then, eliminate or line out that row or column
in which either the supply or demand is exhausted.
 After adjusting the supply and demand for all uncrossed
out rows and columns, repeat step 1 until the entire
available supply at various sources and demand at
various destinations is satisfied.
Vogel’s Approximation Method (VAM)
Step1: Calculate the penalties for each row and column by
taking the difference between the smallest and next smallest
unit transportation cost in the same row and column. The
difference indicates the penalty or extra cost that has to be paid
if one fails to allocate to the cell with the minimum unit
transportation cost.
Step2: Select the row or column with the largest penalty and
allocate as much as possible in the cell that has the least cost in
the selected row or column and satisfies the rim conditions.
N.B. If there is a tie in the values of penalities, it can be broken
by selecting the cell where a maximum allocation can be made.
Step3: Adjust the supply and demand and cross out the
satisfied row and column
take the following transportation matrix table
with three sources and four destinations. And
then, find the initial feasible solution by using
North West Corner, Least Cost, and VAM
methods.
 Destinations

From supply
D1 D2 D3 D4
To
.
S1 3 1 7 4 300
Sources
S2 2 6 5 9 400

S3 8 3 3 2 500

Demand 250 350 400 200 1200

NWC
Total cost =3*250+1*50+6*300+5*100+3*300+2*200 =$4400

To Supply
D1 D2 D3 D4
From

3 300
S1 1 50 7 4
250

6 5 400
S2 2 9
300 100

3 500
S3 8 3 2 200
300

Demand 250 350 400 200 1200

LCM
Total cost = 1*300 +2*250+6*50+5*100+3*300+2*200 =2900
To From supply
D1 D2 D3 D4

3 1 300
S1 7 4
300

2 5 400
S2 6 50 9
250 100

3 500
S3 8 3 2 200
300

Demand 250 350 400 200 1200

VAM
Total cost =300*1+2*250+5*150+50*3+3*250+200*2 =2850

From To D1 D2 D3 D4 supply Row penalty

S1 3 1 300 7 4 300 2 3*

S2 2 250 6 5 150 9 400 3 * 1 1*

S3 8 3 50 3250 2 200 500 1 10

Demand 250 350 400 200 1200

Column penalty 1 2 2 2
2 2 2
3 2 7
3 2
3.3. TESTS FOR OPTIMALITY
 Once an initial solution is obtained, the next
step is to check for its optimality.
 An optimal solution is one where there is no
other set of transportation routes (allocations)
that will further reduce the total transportation
cost.
 evaluate each unoccupied cell or unused route
in the transportation table in terms of an
opportunity of reducing total transportation
cost.
 in order to test the optimal of a given feasible
transportation problem two basic techniques
are available.
 These are the stepping stone and MODI
(Modified Distribution) methods.
1. Stepping stone method
Step1: Solve the problem and find the initial
feasible solution by one of three methods
(NWCM, LCM and VAM) and then select one of
the empty cell and put + sign in that empty cell
Step2: Starting from the chosen empty cell, trace a
path in the matrix consisting of a series of alternate
horizontal and vertical lines. The path begins and
ends in the chosen cell.
Step 3.Calculate the opportunity cost of each empty
cells along a series of paths as Actual cost of the
empty cellij– cost of the loaded or occupied cells in
the loop for the chosen cell
Step 4: Check for optimality which means:If any
cell evaluation is negative, the cost can be reduced
so that the solution under consideration can be
improved i.e. it is not optimal.
Step 5: Identify the cell with the lowest load or
quantity allocated in the cells marked with
negative sign.
Step 6: Add this lowest load to the cells where
plus sing is marked and subtract from the load of
the cell where negative sign is marked.
Example: consider the previous example of
transportation problem involving three sources
and four destinations.
Destinations

From supply
D1 D2 D3 D4
To

S1 3 1 7 4 300

S2 2 6 5 9 400
Sources
S3 8 3 3 2 500

Demand 250 350 400 200 1200

Required: Obtain the initial feasible solution by using
North West Corner Method and then; optimize the
solution using stepping stone method.
To From supply
D1 D2 D3 D4

S1 3 250 1 50 7 4 300

S2 2 6 300 5 100 9 400

S3 8 3 3 300 2 200 500

Demand 250 350 400 200 1200

Evaluate the opportunity cost of each empty cell by
drawing a loop for each empty cell
Cell Path way (loop) Net evaluation

(2, 1) -3(1, 1) (1, 2) +1 3-6+1-3 = -6

+3 (2, 1) (2, 2) -6

(3, 1) (3, 1) (3, 3) (2, 3) (2, 2) (1, 2)(1,1) =8-3+5-6+1-3 =2

(3.2) (3, 2) (3, 3) (2, 3) (2, 2) =3-3+5-6 =-1

(1, 3) (1, 3) (1, 2) (2, 2) (2, 3) = 7-1+6-5 =7

(1,4) (1,4) (1,2) (2,2) (2,3) (3,3) (3,4) =4-1+6-5+3-2=5

(2, 4) (2, 4) (2, 3) (3, 3) (3, 4) = 9-5+3-2 =5

Since cell (2, 1) and (3, 2) are negative, the cost can be reduced
so that the solution under consideration can be improved.
Therefore, since cell (2,1) is the most negative cell, by allocating
one unit to this cell, the cost will be reduced by $6.

To supply
D1 D2 D3 D4
From

S1 3 1 300 7 4 300

S2 2 250 6 50 5 100 9 400

S3 8 3 3 300 2 200 500

Demand 250 350 400 200 1200

 Again, evaluate the opportunity cost of each empty cell by
drawing a loop (closed path) for each as follow

Cell loop or path net evaluation

(1, 1) (1, 1) (2, 1) (2, 2) (1, 2) =3-2+6-1 =6

(3, 1) (3, 1) (2, 1) (2, 3) (3, 3) = 8-2+5-3 =8

(3, 2) (3, 2) (2, 2) (2, 3) (3, 3) =3-6+5-3 = -1

(1, 3) (1, 3) (1, 2) (2, 2) (2, 3) =7-1+6-5 =7

(1, 4) (1, 4) 1, 2) (2, 2) (2, 3) (3, 3) (3, 4) =4-1+6-5+3-2 =5

(2, 4) (2,4) (2,3) (3,3) (3,4) (2,4) =9-5+3-2 =5

Looking at the opportunity cost of cell (3, 2), there is
still the tendency to reduce transportation cost by
allocating more units to the cell (3, 2).
To From Supply
D1 D2 D3 D4

S1 3 1 300 7 4 300

5 400
S2 2 250 6 9
150

3 3 500
S3 8 2 200
50 250

Demand 250 350 400 200 1200

Cell path net evaluation

(1, 1) (1, 1) (2, 1) (2, 3) (3, 3) (3, 2)(1, 2) = 3-2+5-3+3 =5

(3, 1) (3, 1) (3, 3) (2, 3) (2, 1) = 8-3+5-2 =8

(2, 2) (3, 2) (3, 3) (2, 3) = 6-3+3-5=1

(1, 3) (1, 3) (3, 3) (3, 2) (1, 2) =7-3+3-1=6

(1, 4) (1, 4) (1, 2) (3, 2) (3, 4) =4-1+3-2 =4

(2, 4) (2, 4) (2, 3) (3, 3) (3, 4) =9-5+3-2 =5

 since no empty cell with negative opportunity
cost from the above evaluation, then the
current is optimal solution and the optimal
total transportation cost is 2850 which is
calculated as follow;
 Total transportation at optimal level = (1*300)
+ (2*250) + (5*150)+ (3*50) + (3*250) +
(2*200) =2850
2. MODI or U-V Method
Step-1 for an initial basic feasible solution calculate Ui and
Vj for rows and columns. The initial solution can be
obtained by any of the three methods. Ui +Vj =Cij for
occupied cells and also calculate Ui +Vj for unoccupied cell
based the Ui+Vj relationship
Step 2: Calculate an opportunity cost for unoccupied cell.
An opportunity cost for unoccupied which indicates the per
unit cost reduction that can be achieved by an allocation in
the occupied cell by using the following relationship.
• dij = cij – (ui+vj) where dij represent an opportunity cost
of empty cell
Step-3 Examine sign of each dij. If one or more dij0,
then an improved solution can be obtained by
entering unoccupied cell in the basis. An
unoccupied cell having the largest negative value of
dij is chosen for entering into the solution mix .
Step-4 constructs a closed path (loop) for the
unoccupied cells with largest negative opportunity
cost. Start the closed path with the selected
unoccupied cell and mark a plus sign in this cell.
Allocate this value to the selected unoccupied cells
and add it to other occupied cells marked with plus
signs.
Step -6 obtain a new improved solution by
allocating units to the unoccupied cells and
calculate the new total transportation cost
Step-7 Further tests the revised solution for
optimality. The procedure terminates when all d ij
0 for unoccupied cells.
Example
Consider the previous example of transportation
model and Find the initial feasible solution by
Least cost Method and optimize it by MODI
method.
 V1 = -3 V2=1 V3 = 0 V4= -1
To From Supply
D1 D2 D3 D4

U1=0 1 300 300

S1 3 7 4

U2=5 5 100 400

S2 2 250 6 50 9
U3=3 3 300 2 200 500
S3 8 3
1200
Demand 250 350 400 200
For occupied cells

Let U1 =0, then

U1+V2 =1, 0+V2 =1, V2=1

U2+V1 =2, 5+V1=2, V1=-3

U2+V2 =6, U2+1=6, U2=5

U2+V3 =5 5+V3=5, V3=0

U3+V3 =3 U3+0=3, U3 =3

U3+V4 =2 3+V4=2, V4 =-1

Step -2 calculate the opportunity cost for each
unoccupied cells by using the following relationship
Cell

(1, 1) 3-(U1+V1) = 3-(0-3) = 3+3 =6

(1, 3) 7-(U1+V3) = 7-(0+0) =7-0 =7

(1, 4) 4-(U1+V4) =4-(0-1) =4+1 =5

(2, 4) 9-(U2+V4) =9-(5-1) =9-4 =5

(3, 1) 8-(U3+V1) =8-(3-3) =8-0 =8

(3, 2) 3-(U3+V2) = 3-(3+1) =3-4 =-1

Since cell (3,2) has negative opportunity cost of -1
which means allocating one unit to this cell will the
reduce the cost by 1.
V1 = -2 V2=1 V3 = 1 V 4= 0
To From Supply
D1 D2 D3 D4

U1=0 3 1 300 300

S1 7 4

U2=4 5 150 400

S2 2 250 6 9
U3=2 500
S3 8 3 50 3 250 2 200

1200
Demand 250 350 400 200
 Again, calculate the Ui’s and Vj’s for the
occupied cells as follow.Let U1=0
U1+V2 =1, 0+V2 =1, V2=1

U2+V1 =2, 4+V1=2, V1=-2

U3+V2 =3 U2+1=3, U3=2

U2+V3 =5 U2+1=5, U2=4

U3+V3 =3 2+V3=3, V3 =1

U3+V4 =2 2+V4=2, V4 = 0
 Calculate an opportunity cost for each
unoccupied cells as follow
Cell

(1, 1) 3-(U1+V2) = 3-(0-2) =3+2 =5

(1, 3) 7-(U1+V3) = 7-(0+1) =6

(1, 4) 4-(U2+V4) =4-(0+0)=4

(2, 2) 6-(U2+V2) = 6-(4+1) =1

(2, 4) 9-(U2+V4) =9-(4+0) =5

(3, 1) 8-(U3+V3) =8-(2-2) =8

 since the opportunity cost of all empty cells
are positive, then the current solution is
optimal and the corresponding total
transportation cost is 2850 which is obtained
as follow.
 Total transportation at optimal level =1*300
+2*250+5*150 +3*50+3*250+2*200 =2850
3.5 ASSIGNMENT MODELS
 The assignment is a problem because people
posses varying abilities from performing
different jobs and, therefore, the costs of
performing the jobs by different people are
different.
 Thus, in assignment problem, the question is
how should the assignment be made in order
that the total cost involved is minimized (or
the total value is maximized when pay-offs are
given in terms of, say, profits).
Assumptions of the Assignment model
 Cost vector (Cij) ; the cost of assigning ith job
(Task) to jth machine (person),is given
 Each man or machine is assigned to one and
only one job.
 One person (machine)cannot do more than one
job
 One job cannot do by more than one person
 Number of jobs equal to number of machines or
persons.
Hungarian Assignment Method (HAM)
 A method, designed specially to handle the
assignment problems in an efficient way, called the
Hungarian Assignment Method, is available, which
is based on the concept of opportunity cost.
Step 1. Select the smallest cost element in each row
of the cost table and subtract this smallest cost from
each element in that row.
Step 2. In the reduced cost table obtained, consider
each column and locate the smallest element in it and
subtract the smallest value from every other entry in
the column.
Step 3.Draw the minimum number of horizontal and
vertical lines (not diagonal ones) that are required to
cover the entire ‘zero’ elements. If the number of
lines drawn is equal to n(the number of
rows/columns) the solution is optimal, and proceeds
to step 6. If the number of lines drawn is smallest
than n, go to step 4.
Step 4. Select the smallest uncovered (by the lines)
cost element. Subtract this element from all
uncovered elements including it and add this element
to each value located at the intersection of any lines.
The cost elements through which only one line passes
remain unaltered.
Step 5. Repeat steps 3 and 4 until an optimal solution is obtained.
Step 6.Given the optimal solution, make the job assignments as
indicated by the ‘zero’ elements as follows.
• Locate a row/column which has only single ‘zero’ element.
Assign the job corresponding to this element to its
corresponding person and cross out that row/column.
• If there is no row or column with only a single ’zero’ element
left, then select a row/column arbitrarily and choose one of the
jobs (or persons) and make the assignment. Now cross the
remaining zeros in the column and row in respect of which the
assignment is made.
• Repeat steps (a) through (c) until all assignments are made.
• Determine the total cost with reference to the original cost
table.
 Example 1: Solve the assignment problem using
HAM and find total cost.
Project

Person 1 2 3

Abebe 11 14 6

Aster 8 10 11

Kebede 9 12 7
Example 1: Solve the assignment problem given
for optimal solution using HAM.
Time Taken (in minutes) by 4 workers
Job
Worker A B C D
1 45 40 51 67
2 57 42 63 55
3 49 52 48 64
4 41 45 60 55