TRANSPORTATION

PROBLEM
Determining optimal delivery allocation
 Types of Transportation Problem

• Balanced TP = when supply is equal to demand

• Unbalanced TP = when supply is not equal to
demand
 METHODS OF SOLVING TP

• NORTHWEST CORNER CELL METHOD

• LEAST COST METHOD
• VOGEL’S APPROXIMATION METHOD
 NORTHWEST CORNER METHOD
• Start allocation of supply from the northwest corner cell
• Provides a feasible solution to the TP
• Initial solution is derived but most of the time not optimal.
Source: Origin, Product lines

SAMPLE PROBLEM Destination: Customers,

End user, Dealers, Retailers

D1 D2 D3 SUPPLY

S1 4 8 8 70
Cost of transporting
From source to
S2 16 24 16 80 destination

S3 8 16 24 75
BALANCED
DEMAND 100 75 50 225/225 TP
APPLYING NORTHWEST CORNER
METHOD
D1 D2 D3 SUPPLY
70
S1 4 8 8 70 0
30 50
S2 16 24 16 80 50 0
25 50
S3 8 16 24 75 50 0

DEMAND 100 30 0 75 25 0 50 0 225/225

COST = (70 X 4) + (30 X 16) + (50 X 24) + (25 X 16) + (50 X 24) = Php 3, 560
 APPLYING THE LOWEST COST
METHOD
D1 D2 D3 SUPPLY
70
S1 4 8 8 70 0
30 50
S2 16 24 16 80 30 0
30 45
S3 8 16 24 75 45 0

DEMAND 100 30 0 75 30 0 50 0 225/225

Cost = (70 x 4) + (30 x 8) + (30 x 24) + (45 x 16) + (50 x 16) = Php 2,760
 Vogel’s Approximation Method (VAM)
• Is an algorithm that finds a feasible solution to a TP by considering a penalty
cost (as manifested by the row and column reduction)
PROCEDURE:
• STEP 1 – For each row and column, calculate the penalty cost by subtracting
the smallest entry from the 2nd smallest entry for minimization problem.
• STEP 2 – Identify the row or column with the largest penalty cost
• STEP 3 – Within that row or column allocate the maximum allowable units to
the lowest cost cell.
VOGEL’S APPROXIMATION METHOD

D1 D2 D3 SUPPLY

S1 4 8 8 70

S2 16 24 16 80

S3 8 16 24 75

DEMAND 100 75 50 225/225

 Row reduction

D1 D2 D3 SUPPLY
70
4 4
S1 4 8 8 70 0
25 5 50
S2 16 24 16 80 75 50 0 0 0 0
75
S3 8 16 24 75 0 8

DEMAND 100 25 0 75 5 0 50 0 225/225

4 8 8
Column reduction 12 16 8

16 24 16

Total cost = (25x16)+(75x8)+(70x8)+(5x24)+(50x16)= Php 2,480

 Solving Unbalanced TP
• Make the TP balanced
• When demand is greater than supply, add a dummy row bearing the
lacking supply to make it balanced
• When supply is greater than demand, add a dummy column bearing the
lacking demand to make it balanced
• All cells that belong to a dummy row or column will have a cost & profit
of zero.
 PROBLEM

D1 D2 D3 D4 SUPPLY

S1 9 11 15 12 250

S2 14 16 12 8 300

S3 19 22 11 8 300

DEMAND 200 225 275 250 850/950

 UNBALANCE TP (demand>Supply)

D1 D2 D3 D4 SUPPLY

S1 9 11 15 12 250

S2 14 16 12 8 300

S3 19 22 11 8 300
S4 (dummy) 0 0 0 0 100
DEMAND 200 225 275 250 950/ 950
UNBALANCE TP (supply>demand)
D5
D1 D2 D3 D4 (dummy) SUPPLY

S1 9 11 15 12 0 250

S2 14 16 12 8 0 300

S3 19 22 11 8 0 400

DEMAND 200 225 275 150 100 950/950

 CLASS ACTIVITY 12-5-2023

MAXIMATION of potential profit for TP

(all figures are not a cost per unit but a profit per unit)
D1 D2 D3 D4 SUPPLY

S1 9 11 15 12 250

S2 14 16 12 8 300

S3 19 22 11 8 400

DEMAND 200 225 275 250 950/950

 PROCEDURE IN MAXIMATION TP
• STEP 1- Identify the highest profit from all the cell values (based on the example
it is 22)
• STEP 2 – Replace the values of all cells by subtracting each cell value from the
highest cell value you have identified. (This would entail that you have identified
the possible profit loss scenario which you need to minimize in order to maximize
your total potential profit)
• STEP 3 – Apply the same procedure in minimizing cost.
• STEP 4 – Once you are done with the allocation, you will multiply each allocation
with the original profit values.
 MAXIMATION of potential profit for TP
(cont. This is the converted matrix to minimization)
D1 D2 D3 D4 SUPPLY

S1 13 11 7 10 250

S2 8 6 10 14 300

S3 3 0 11 14 400

DEMAND 200 225 275 250 950/950

 PROBLEM

D1 D2 D3 SUPPLY

S1 14 18 18 140

S2 26 34 26 160

S3 18 26 34 150

DEMAND 200 150 100 450/450