ST1202 03 Transportation Models

Operations Research I
ST 1202
Module 03:
Transportation Problems (TP)
1
TRANSPORTATION PROBLEMS cont…
Contents:
1. Learning Outcomes
2. Introduction
3. Formulating Transportation Models
4. Solving Transportation Models

• Finding the Initial solution (NWCM, MCM & VAM)
• Obtaining the Optimal Solution (Stepping Stone
Method & Modified Distribution Method (MODI))
2
5. Special Cases of Transportation Models
• Unbalanced Transportation Models
• Degeneracy in Transportation Models
• Unacceptable Routes
• Maximization Cases
6. Concluding Remarks
7. Review Questions
3
INTRODUCTION
Transportation models is a special case of linear programming
models.
 To be more specific:
• It is a simplified special case of the simplex method.
In other words:

 It is a class of LPPs applied on problems associated with
logistics planning (say, distribution or transportation of
resources from one place to another). 4
Why transportation models?
• It is applicable to problems involving transporting items or
products from several sources to several destinations (i.e.
supply and demand situation) at minimum costs.
• Note that: The objective is to keep transportation costs at a

minimum to maximize profits.
For example:
Manufacturing company having multiple plants while holding
inventories in scattered warehouses.
PLANTS → WAREHOUSES 5
Basic Terminologies:
1. Origin: It is the location from which shipments are
dispatched.
2. Destination: It is the location to which shipments are

transported.
3. Unit Transportation Cost: It is the cost of transporting

one unit of the consignment from an origin to a destination.
4. Feasible Solution: It is the solution that satisfies the row,

column sum, and non-negativity restrictions. 6
5. Basic Feasible Solution: It is the feasible solution when
the total number of allocations is equal to (m + n – 1).
6. Optimal Solution: It is the feasible solution when the total

transportation cost is at the minimum cost.
7. Perturbation Technique: It is a method used for

modifying a degenerate transportation problem, so that the
degeneracy can be resolved.
7
Required Information for Transportation Problems:
 Most important information necessary to make you use of
transportation models:
• A list of the origins and each one’s capacity supply per

period.
• A list of the destinations and each one’s demand per

period.
• The cost of shipping a unit of goods.

8
Basic Assumptions:
 Assumptions applied to transportation problems are;
• Only a single type of commodity is being shipped from an

origin to a destination.
• A shipping cost per unit is the same regardless of the

number of units shipped.
• Supply and demand are all positive integers.
• Total supply is equal to total demand.

9
FORMULATING TRANSPORTATION MODELS
• The general LPM of the m-origin and n-destination
transportation problem is given as:
m n
Min  c
i 1 j 1
ij xij
S.t.
 n
 xij  si for i  1, 2,  , m
 j 1

m
 xij  d j for j  1, 2,  , n
 i 1
 xij  0 for all i and j


 10
where;
i = index for origins, i = 1, 2, …, m
j = index for destinations, j = 1, 2, …, n
xij = number of units shipped from origin i to destination j
cij = cost per unit of shipping from origin i to destination j
si = supply or capacity in units at origin i

dj = demand or requirement in units at destination j 11
Table for the Transportation Problem:
Destination
Supply
1 2 … n
1 c11 c12 … c1n s1
2 c21 c22 … c2n s2
Source . . . … . .
. . . … . .
. . . … . .
m cm1 cm2 … cmn sm
Demand d1 d2 … dn 12
Revised Format of Transportation Tableau:
Destination
Supply
1 2 … n
1 c11 c12 c1n
… s1
2 c21 c22 c2n

… s2
Source . . . … . .
. . . … . .
. . . … . .
m cm1 cm2 cmn sm
…
Demand d1 d2 … dn 13
EXAMPLE 01:
A firm producing a certain product has three factories located
in different regions. There are three major warehouses
situated in major cities.
Each factory is able to supply the following number of tons on

a monthly basis:
Factory Supply
F1 150
F2 175
F3 275 14
Each warehouse demand the following number of tons per
month:
Warehouse Demand
W1 200
W2 100
W3 300
The transportation cost per ton of product from each factory

to each warehouse is given in the following table:
15
Warehouse
Factory
W1 W2 W3
F1 $6 $8 $10
F2 $7 $11 $11
F3 $4 $5 $12
The problem is to determine how many tons of product to

transport from each factory to each warehouse on a monthly
basis in order to minimize the total cost of transportation.
Required: Write the given problem in a form of LPM. 16

SOLUTION:
• Set the transportation tableau.
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 6 8 10 150
F2 7 11 11 175
F3 4 5 12 275
Demand 200 100 300 600\600
17
• The linear programming model for the given problem is
formulated in the equations that follow:
Let Xij be the number of products transported from ith factory

to jth warehouse.
The objective function is:
Minimize Cost = 6X11 + 8X12 + 10X13 +

7X21 + 11X22 + 11X23 +
4X31 + 5X32 + 12X33 18
Constraints/Restrictions are:
Supply or Capacity Constraints
X11 + X12 + X13 ≤ 150
X21 + X22 + X23 ≤ 175
X31 + X32 + X33 ≤ 275
Demand or Requirement Constraints
X11 + X21 + X31 = 200
X12 + X22 + X32 = 100
X13 + X23 + X33 = 300
Non-negativity Constraints 19
Thus, the LPM for the given problem is given as:
Minimize Cost = 6X11 + 8X12 + 10X13 + 7X21 + 11X22 + 11X23
+ 4X31+ 5X32 + 12X33
Subject to: X11 + X12 + X13 ≤ 150

X21 + X22 + X23 ≤ 175
X31 + X32 + X33 ≤ 275
X11 + X21 + X31 = 200
X12 + X22 + X32 = 100
X13 + X23 + X33 = 300 20
SOLVING TRANSPORTATION PROBLEMS:
Transportation models are solved by involving two main
phases namely:
 Initial Solution:
• Using any of three methods – NWCM, MCM and VAM.
 Optimal Solution:
• Using any of two methods – Stepping-Stone Method and

MODI. 21
Obtain Initial Solution
General steps for obtaining the initial solution are:
1. After setting up the transportation tableau/matrix.
2. Make initial allocations.
3. State the solution.
22
 North West Corner Method
• Detailed steps are:
1. Set up transportation tableau/matrix
2. Select the north west (upper left-hand) corner cell of

the tableau and allocate as many units as possible.
3. Adjust the supply and demand numbers in the

respective rows and columns.
4. If the demand for the first cell is satisfied, then move

horizontally to the next cell(s).
23
5. If the supply for the first row is exhausted, then
move down to the first cell in the second row.
6. Continue the process until all supply and demand

values are exhausted.
7. State the initial basic feasible solution.
24
EXAMPLE 02
Consider the given transportation problem in EXAMPLE 01.
Required:
Find the initial solution using north west corner method..
25
SOLUTION:
The transportation tableau for the given problem is:
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 6 8 10 150
F2 7 11 11 175
F3 4 5 12 275
Demand 200 100 300 600
26
Thus, the resulted transportation tableau is:
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 6 8 10 150
150
F2 7 11 11 175
50 100 25
4 5 12
F3 275 275
Demand 200 100 300 600
27
Thus,
The total transportation cost is obtained as follows:
F1 – W1 = $6 × 150 tons = $900

F2 – W1 = $7 × 50 tons = $350
F2 – W2 = $11 × 100 tons = $1,100
F2 – W3 = $11 × 25 tons = $275
F3 – W3 = $12 × 275 tons = $3,300
Total Transportation Cost = $5,925 28

 Minimum Cost Method (MCM)
• Sometimes it is called Intuitive or Least Cost Method

1. Set up transportation tableau/matrix.
2. Identify the cell having minimum unit transportation

cost and allocate as much possible subject to supply
and demand constraints.
• In case of a tie, select the cell where the

maximum allocation can be made.
29
3. Adjust the supply and demand numbers in the
respective rows and columns.
4. Continue the process (repeat step 2 and 3) until all

supply and demand values are exhausted.
5. Obtain the initial basic feasible solution.
30
EXAMPLE 03
Required:
Find the initial solution using minimum cost method.
31
SOLUTION:
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 6 8 10 150
F2 7 11 11 175
F3 4 5 12 275
Demand 200 100 300 600
32
Thus, the resulted transportation tableau is:
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 6 8 10 150
25 125
F2 7 11 11 175
175
4 5 12
F3 200 75 275
Demand 200 100 300 600\600
33
Thus,
The total transportation cost is obtained as follows:
F1 – W2 = $8 × 25 tons = $200
F1 – W3 = $10 × 125 tons = $1,250
F2 – W3 = $11 × 175 tons = $1,925
F3 – W1 = $4 × 200 tons = $800
F3 – W2 = $5 × 75 tons = $375
Total Transportation Cost = $4,550 34

 Vogel’s Approximation Method (VAM)
• It is also called penalty method.
• It is an iterative procedure for computing a basic feasible

solution.
• It is the most preferred method.

It is based upon the concept of minimizing opportunity
(or penalty) costs or regret.
It facilitates a very good initial solution since it takes

into account penalty faced if we should ship over the
second best route instead of the least-cost route. 35
Opportunity/Penalty Cost: Is the difference
between the lowest cost and the next lowest cost in a
row or column.

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.
If there are two or more smallest costs assign the

penalty cost = 0.
36
2. Select the row or column with the highest penalty
cost
In case of a tie, choose the row or column with the

lowest-cost cell.
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.
In case of a tie, select one where maximum

allocation can be made.
37
4. Repeat steps 1, 2, and 3 until all restrictions are
satisfied.
38
EXAMPLE 04
Required:
Find the initial solution using Vogel’s approximation method.
39
SOLUTION:
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 6 8 10 150
F2 7 11 11 175
F3 4 5 12 275
Demand 200 100 300 600
40
Thus, the iterations are as follows:
WAREHOUSE
FACTORY Supply Penalty
W1 W2 W3
F1 6 8 10 150 2
F2 7 11 11 175 4
F3 4 5 12 275 1
Demand 200 100 300 600
Penalty 2 3 1
41
Row F2 has the highest penalty cost. Then, we have to allocate
as much as possible to the cell F2 – W1.
WAREHOUSE
W1 W2 W3
F1 6 8 10 150 2
F2 7 11 11 175 4
175
4 5 12
F3 275 1
Demand 200 100 300 600
Penalty 2 3 1
42
The recomputed penalty costs after first allocation are shown
below:
WAREHOUSE
W1 W2 W3
F1 6 8 10 150 2
F2 7 11 11 175
175
4 5 12
F3 275 1
Demand 200 100 300 600
Penalty 2 3 2
43
Then, the second allocation is on cell F3 – W2
WAREHOUSE
W1 W2 W3
F1 6 8 10 150 2
F2 7 11 11 175
175
F3 4 5 12 275 1
100
Demand 200 100 300 600
Penalty 2 3 2
44
The recomputed penalty costs after second allocation are shown
below:
WAREHOUSE
W1 W2 W3
F1 6 8 10 150 4
F2 7 11 11 175
175
4 5 12
F3 100 275 8
Demand 200 100 300 600
Penalty 2 2
45
Then, the third allocation is on cell F3 – W1
WAREHOUSE
W1 W2 W3
F1 6 8 10 150 4
F2 7 11 11 175
175
F3 4 5 12 275 8
25 100
Demand 200 100 300 600
Penalty 2 2
46
The recomputed penalty costs after third allocation are shown
below:
WAREHOUSE
W1 W2 W3
F1 6 8 10 150
F2 7 11 11 175
175
4 5 12
F3 25 100 275
Demand 200 100 300 600
Penalty 2
47
Then, the fourth allocation is on cell F1 – W3 first then on cell
F3 – W3 as shown below:
WAREHOUSE
W1 W2 W3
F1 6 8 10 150
150
F2 7 11 11 175
175
4 5 12
F3 25 100 150 275
Demand 200 100 300 600
Penalty 2
48
Therefore;
The total cost of this initial VAM solution is:

F1-W3 $10 × 150 tons = $1,500
F2-W1 $7 × 175 tons =$1,225
F3-W1 $4 × 25 tons =$100
F3-W2 $5 × 100 tons =$500
F3-W3 $12 × 150 tons =$1,800
Total Transportation Cost = $5,125

49
CLASS ACTIVITY 01
A firm has three factories F1, F2 and F3 with production
capacities of 7, 10 and 18 units per week respectively. The
units produced by the three factories are to be shipped to four
warehouses W1, W2, W3 and W4 with demands of 5, 7, 8 and
15 units per week respectively. The transportation cost per unit
between each factory and each warehouse are as shown
below:
WAREHOUSE
W1 W2 W3 W4
F1 20 30 50 15
FACTOR
F2 70 35 40 60
Y
F3 40 12 60 25
50
REQUIRED:
(a)Develop the transportation table for this problem.
(b)Obtain initial allocation and total transportation cost using
North West Corner Method.
(c) Obtain initial allocation and total transportation cost using
Minimum Cost Method.
(d)Obtain initial allocation and total transportation cost using
Vogel’s Approximation Method.
NBAA NOVEMBER 2015 FOUNDATION LEVEL

PAPER CODE NO. A1
51
Obtain Optimal Solution
Once an initial basic feasible solution has been determined,
the next step is to solve the transportation problem for the
optimal solution.
HERE, THE IDEA IS:

 To evaluate all transportation routes and see if there is no
other routes that would reduce the total transportation cost.
 If such case occurs then, we have the optimal solution. If

not, the initial solution should be improved.
52
Note that:
 Initial solution can be improved if and only if the number of
occupied cells (N) = (m rows) + (n columns) – 1.
• Such solution is termed as “non-degenerate basic feasible

solution.”
• If N ≠ m + n – 1 the initial solution is said to be

degenerate. The solution is called “degenerate basic
feasible solution”.
Always check for degeneracy before improving the

initial basic feasible solution. 53
 Stepping-Stone Method
• This method determines if there is a cell (a transportation
route) with no allocation (an empty cell) that can reduce
total cost if used.
• That is:
─ Evaluate unused routes.
─ If we find such route, we will allocate as much as

possible to it.
54
1. Identify all the unoccupied cells, going horizontally
one after another.
2. Determine the stepping-stone path starting from

unoccupied cells to other occupied cells.
3. Determine cost changes for every unoccupied cell.
4. Allocate as much as possible to the empty cell with

the greatest net decrease in cost.
Here, we select the smallest allocated quantity in
the cell multiplied with –1 in the selected path. 55
5. Determine whether the solution is either optimal or
not by analyzing the reduced costs for unoccupied
cells listed in step 1.
If all unoccupied cells have positive or zero cost

changes then the solution is optimal.
If not, repeat the process.
56
EXAMPLE 05
Consider the minimum cost method solution obtained in

EXAMPLE 03.
Required:
Find the optimal solution using stepping stone method.
57
SOLUTION:
The minimum cost method solution is given as;
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 6 8 10 150
25 125
F2 7 11 11 175
175
F3 4 5 12 275
200 75
Demand 200 100 300 600
58
There are four empty cells (F1W1, F2W1, F2W2 and F3W3)
representing unused transportation routes.
Now,
We evaluate these empty cells to see whether the use of

any of them would reduce total cost.
If we find such route, then we will allocate as much as

possible to it.
59
First, let us consider cell F1W1 to be evaluated:
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 +1 6 –1 8 10 150
25 125
F2 7 11 11 175
175
–1 4 +1 5 12
F3 200 75 275
Demand 200 100 300 600\600
The increases and reductions in costs in this process:

Reduced cost for cell F1W1 = 6 – 8 + 5 – 4 = $–1 60
Let us test cell F2W1 to see if it reduces total costs:
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 6 –1 8 +1 10 150
25 125
F2 +1 7 11 –1 11 175
175
–1 4 +1 5 12
F3 200 75 275
Demand 200 100 300 600\600

Reduced cost for cell F2W1 = 7 – 11 + 10 – 8 + 5 – 4 = $–1
61
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 6 –1 8 +1 10 150
25 125
F2 7 +1 11 –1 11 175
175
F3 4 5 12 275
200 75
Demand 200 100 300 600\600

Reduced cost for cell F2W2 = 11 – 11 + 10 – 8 = $2 62
WAREHOUSE
FACTORY Supply
W1 W2 W3
6 +1 8 –1 10
F1 25 125 150
F2 7 11 11 175
175
4 –1 5 +1 12
F3 200 75 275
Demand 200 100 300 600\600

Note that:
After the evaluation of all four unused routes, there is a tie

of a reduction in cost of $1 for cells F1W1 and F2W1.
The tie can broken arbitrarily.
Suppose:
We select cell F1W1 to enter the solution by reallocating

as much as possible.
64
NOTE:
The path for cell F1W1 indicates that, tons of product must be
subtracted at cells F1W2 and F3W1 to meet the requirements
and thus satisfy the model constraints.
THUS,
If we allocate more than 25 tons to cell F1W1, then we must
subtract more than 25 tons from F1W2, which is impossible
because only 25 tons are available.
CONSEQUENTLY,
We have to reallocate only 25 tons to cell F1W1. 65
The resulted transportation table (iteration 1) is:
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 6 8 10 150
25 125
F2 7 11 11 175
175
F3 4 5 12 275
175 100
Demand 200 100 300 600
66
Then, we must check whether the solution in iteration 1 is, in
fact, optimal.
Test of optimality:
Evaluate unused routes (F1W2, F2W1, F2W2, F3W3) to see
whether the use of any of them would reduce total cost.
If we find such route, then we will allocate as much as

possible to it (iteration 2).
If not, the solution obtained in iteration 1 is optimal

solution. 67
First, let us test cell F1W2 to see if it reduces total costs:
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 –1 6 +1 8 10 150
25 125
F2 7 11 11 175
175
+1 4 –1 5 12
F3 175 100 275
Demand 200 100 300 600\600

WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 –1 6 8 +1 10 150
25 125
F2 +1 7 11 –1 11 175
175
4 5 12
F3 175 100 275
Demand 200 100 300 600\600

WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 –1 6 8 +1 10 150
25 125
F2 7 +1 11 –1 11 175
175
+1 4 –1 5 12
F3 175 100 275
Demand 200 100 300 600\600

Reduced cost for cell F2W2 = 11 – 5 + 4 – 6 + 10 – 11 = $3
70
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 +1 6 8 –1 10 150
25 125
F2 7 11 11 175
175
F3 –1 4 5 +1 12 275
175 100
Demand 200 100 300 600\600

Evaluation of four paths resulted from unoccupied cells ( F1W2,
F2W1, F2W2, F3W3) indicates that no cost reductions;
therefore, the solution obtained in iteration 1 is optimal.
The total minimum cost of iteration 1 is:

F1W1 $6 × 25 tons = $150
F1W3 $10 × 125 tons = $1,250
F2W3 $11 × 175 tons = $1,925
F3W1 $4 × 175 tons = $700
F3W2 $5 × 100 tons = $500
Total Transportation Cost = $4,525
72
CLASS ACTIVITY 02:
Consider the following initial allocation:
Destination
Source Supply
X Y W
A 1 3 5 30
20 10
B 2 5 35 9 50
15
Demand 20 25 35 80
Determine the optimal solution using stepping-stone method.

NBAA A1 Study Text Page. 246 73
 Modified Distribution Method (MODI)
• MODI Method: It is the modified version of the Stepping-
Stone Method.
• HOWEVER,
In the MODI method the individual cell cost changes are
determined without identifying all of the stepping-stone
paths for the empty cells.
THAT IS, mathematical equations replace the

stepping-stone paths. 74
1. Compute and values for each row and column to
each cell that has an allocation (occupied cells) by
applying the formula
where; is the unit transportation cost for cell
2. Compute the cost change for each unoccupied cell

using the formula
where; is the cost change for unoccupied cell

75
3. Allocate as much as possible to the unoccupied cell that
will result in the greatest net decrease in cost (i.e. most
negative ).
 Allocate according to the stepping-stone path for

the selected unoccupied cell
4. Repeat step 1 through 3 until all values are positive or

zero.
76
EXAMPLE 06
Consider the minimum cost method solution obtained in

EXAMPLE 03.
Required:
Find the optimal solution using modified distribution

method.
77
SOLUTION:
The minimum cost method solution is given as;
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 6 8 10 150
25 125
F2 7 11 11 175
175
F3 4 5 12 275
200 75
Demand 200 100 300 600
78
The revised tableau for the initial solution required by MODI
WAREHOUSE
Vj V1 V2 V3 Supply
FACTORY
Ui W1 W2 W3
U 6 8 10
F1 150
1
25 125
U2 7 11 11
F2 175
175
U3 4 5 12
F3 275
200 75
Demand 200 100 300 600
79
Now, we compute the values of and for all occupied cells:
Cell F1W2 C12 = U1 + V2 8 = 0 + V2 V2 = 8
Cell F1W3 C13 = U1 + V3 10 = 0 + V3 V3 = 10
Cell F2W3 C23 = U2 + V3 11 = U2 + 10 U2 = 1
Cell F3W2 C32 = U3 + V2 5 = U3 + 8 U3 = –3
80
The resulted values of and can be substituted into the tableau
as shown below:
WAREHOUSE
Vj V1=7 V2=8 V3=10 Supply
FACTORY
Ui W1 W2 W3
U =0 6 8 10
F1 1
25 125 150
F2 U =1 7 11 11 175
2
175
F3 U3=–3 4 5 12 275
200 75
Demand 200 100 300 600
81
Next, we evaluate all unoccupied cells by computing their cost
changes:
Cell F1W1 K11 = C11 – U1 – V1 = 6 – 0 – 7 = –1
Cell F2W1 K21 = C21 – U2 – V1 = 7 – 1 – 7 = –1
Cell F2W2 K22 = C22 – U2 – V2 = 11 – 1 – 8 = +2
Cell F3W3 K33 = C33 – U3 – V3 = 12 – (–3) – 10 = +5 82

Note that:
After the evaluation of all four unused routes, there is a tie

of a reduction in cost of $1 for cells F1W1 and F2W1.
The tie can broken arbitrarily.
Suppose:
We select cell F1W1 to enter the solution by reallocating

as much as possible.
83
NOTE:
The path for cell F1W1 indicates that, tons of product must be
subtracted at cells F1W2 and F3W1 to meet the requirements
and thus satisfy the model constraints.
THUS,
If we allocate more than 25 tons to cell F1W1, then we must
subtract more than 25 tons from F1W2, which is impossible
because only 25 tons are available.
CONSEQUENTLY,
We have to reallocate only 25 tons to cell F1W1. 84
The solution of first iteration is:
WAREHOUSE
FACTORY
Ui W1 W2 W3
F1 U =0 6 8 10 150
1
25 125
F2 U2=1 7 11 11 175
175
U3=–3 4 5 12
F3 175 100 275
Demand 200 100 300 600
85
We recompute the values of and for all occupied cells:
Cell F1W1 C11 = U1 + V1 6 = 0 + V1 V1 = 6
Cell F1W3 C13 = U1 + V3 10 = 0 + V3 V3 = 10
Cell F2W3 C23 = U2 + V3 11 = U2 + 10 U2 = 1
Cell F3W1 C31 = U3 + V1 4 = U3 + 6 U3 = –2

86
TRANSPORTATION PROLEMS cont…
The recomputed values of and can be substituted into the
tableau as shown below:
WAREHOUSE
FACTORY
Ui W1 W2 W3
F1 U1=0 6 8 10 150
25 125
F2 U2=1 7 11 11 175
175
U =–2 4 5 12
F3 3
175 100 275
Demand 200 100 300 600
87
Next, we reevaluate all unoccupied cells by computing their cost
changes:
Cell F1W2 K12 = C12 – U1 – V2 = 8 – 0 – 7 =1
Cell F2W1 K21 = C21 – U2 – V1 = 7 – 1 – 6 =0
Cell F2W2 K22 = C22 – U2 – V2 = 11 – 1 – 7 =3
Cell F3W3 K33 = C33 – U3 – V3 = 12 – (–2) – 10 = 4 88

The above results indicate that:
The solution is optimal since there is no negative cost changes
(reduced cost) for unoccupied cells.
Therefore, the total minimum transportation cost is:

F1W1 = $6 × 25 tons = $150
F1W3 = $10 × 125 tons = $1,250
F2W3 = $11 × 175 tons = $1,925
F3W1 = $4 × 175 tons = $700
F3W2 = $5 × 100 tons = $500
Total = $4,525 89
SPECIAL CASES OF TRANSPORTATION MODELS
 In here, our discussion we fall on four cases of transportation
models; namely:
 Unbalanced Transportation Models
 Degeneracy in Transportation Models
 Unacceptable Routes
 Maximization Cases
90
Unbalanced Transportation Problems
So far we have considered that the total supply at the origins
or sources is equal to total demand at the destinations.
HOWEVER; for problems involving transporting or shipping

items from several sources to several destinations; the
unbalanced transportation situation is more likely to occur.
 This situation occurs when there is unequal demand and

supply.
• Demand exceeds supply or Supply exceeds demand.
91
 To resolve such situation(s) a dummy row or column with
transportation cost zero (0) is added to the tableau:
• If demand > supply, a dummy row is added to stand for

unsatisfied demand.
• If supply > demand, a dummy column is added to stand

for surplus supply.
92
EXAMPLE 07
Consider the following transportation tableau:
WAREHOUSE
FACTORY Supply
W1 W2 W3
6 8 10
F1 150
F2 7 11 11 175
F3 4 5 12 275
Demand 200 100 350
State if the given transportation tableau is balanced or not. 93

SOLUTION:
The total demand = 650 units while

The total supply = 600 units
Therefore, the given transportation tableau is unbalanced.
HOW TO RESOLVE THE PROBLEM?

Since total demand > total supply, We add dummy row
(factory): 94
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 6 8 10 150
F2 7 11 11 175
4 5 12
F3 275
Dummy Factory 0 0 0 50
Demand 200 100 350 650
95
CLASS ACTIVITY 03
For the resulted transportation tableau obtained in EXAMPLE

06 determine an initial solution using:
1. North-west corner method
2. Minimum cost (Intuitive) method
3. Vogel’s approximation method
96
EXAMPLE 07:
Consider the following transportation tableau
WAREHOUSE
FACTORY Supply
W1 W2 W3
6 8 10
F1 150
F2 7 11 11 175
F3 4 5 12 375
Demand 200 100 300
State if the given transportation tableau is balanced or not. 97

SOLUTION:
The total demand = 600 units while

The total supply = 700 units
Therefore, the given transportation tableau is unbalanced.
HOW TO RESOLVE THE PROBLEM?

Since total supply > total demand, we add dummy column
(warehouse): 98
WAREHOUSE
FACTORY Dummy Supply
W1 W2 W3 Warehouse
F1 6 8 10 0 150
7 11 11 0
F2 175
F3 4 5 12 0 375
Demand 200 100 300 100 700\700
99
CLASS ACTIVITY 04
For the resulted transportation tableau obtained in EXAMPLE

7 develop an initial solution using:
1. North-west corner method
2. Minimum cost (Intuitive) method
3. Vogel’s approximation method
100
CLASS ACTIVITY 05:
Consider the following transportation tableau:
STORE
WAREHOUSE Supply
A B C
18 7 16
1 450
2 9 2 6 250
Demand 200 200 450
Find an initial basic feasible solution using:

(1) North-west corner method (2) Minimum cost (Intuitive)
method (3) Vogel’s approximation method. 101
Degeneracy in Transportation Problems
For any given transportation problem there must be:
(m rows + n columns – 1) occupied cells
That is:
Number of Occupied Cells (N) = m rows + n columns – 1
Otherwise, the given problem is said to be degenerate
To be more specific: Degeneracy occurs if;

N<m+n–1 102
Note that:
At any iteration, a normal transportation problem can
become degenerate.
That is;
It can occur at any of the two stages:
• At the initial solution.
• During the testing of the optimal solution (at any

iteration).
103
In case degenerate tableau occurs, neither stepping-stone
method nor MODI method will work unless the stated
condition (N = m + n – 1) is met.
 That is:
• Not all stepping-stone paths can be established.
• Not all values of Ui and Vj for Cij = Ui + Vj can be

completed in MODI method.
104
To resolve a degenerate problem:
 An unoccupied cell must be artificially treated arbitrarily as
an occupied cell (with an allocation of 0 units or use any
symbol as the artificial allocation).
 The designated value for artificial allocation is so small that

it does not affect the supply and demand constraints.
• In most cases, unoccupied cell which has the minimum
transportation cost is assigned with the artificial
allocation.
• HOWEVER; such adjustments does not guarantee that all

of the stepping-stone paths can be determined. 105
EXAMPLE 08:
Consider the following MCM initial solution
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 6 8 10 150
100 50
F2 7 11 11 250
250
4 5 12
F3 200 200
Demand 200 100 300
106
Since N < m + n – 1 then we have degenerate solution.
N = 4 cells
m+n–1=3+3–1 = 5 cells
Brainstorming Question:
In trying to resolve the given initial solution so that
N=m+n–1
What will happen if you decide to allocate 0 tons to cell

F1W1 or any other unoccupied cell? 107
EXAMPLE 09
Consider the following transportation matrix:
DEALER
DEPOT Supply
1 2 3 4
A 3 3 3 5 100
5 7 5 4
B 70
4 3 2 1
C 90
Demand 90 80 50 40 260
Find the initial solution using minimum cost method. 108

SOLUTION:
Initial basic feasible solution obtained by minimum cost method
is given below:
DEALER
DEPOT Supply
1 2 3 4
A 3 3 3 5 100
90 10
5 7 5 4
B 70 70
C 4 3 2 1 90
50 40
Demand 90 80 50 40 260
109
Since:
N=5<m+n–1=6
It indicates that we are dealing with a degenerate

transportation problem.
Thus, we assign artificial allocation (with 0 units) to the

unoccupied cell C2 arbitrarily since there is a tie with
unoccupied cell A3.
• Note: Both cells consist of minimum cost of 3.

110
The resulted transportation tableau is given below:
DEALER
DEPOT Supply
1 2 3 4
A 3 3 3 5 100
90 10
5 7 5 4
B 70 70
C 4 3 2 1 90
0 50 40
Demand 90 80 50 40 260
111
The stepping-stone method is adopted to find the optimal
solution.
Now, we calculate reduced costs for the unoccupied cells:
A3: 3 – 3 + 3 – 2 = 1
A4: 5 – 3 + 3 – 1 = 4
B1: 5 – 7 + 3 – 3 = –2
B3: 5 – 7 + 3 – 2 = –1
B4: 4 – 7 + 3 – 1 = –1
C1: 4 – 3 + 3 – 3 = 1
Cell B1 has the maximum reduced cost; thus, 70 units will be
allocated to cell B1.
112
The improved solution is given below:
DEALER
DEPOT Supply
1 2 3 4
A 3 3 3 5 100
20 80
5 7 5 4
B 70 70
C 4 3 2 1 90
0 50 40
Demand 90 80 50 40 260
113
Then, reduced costs for the unoccupied cells are recomputed as
follows:
A3: 3 – 3 + 3 – 2 =1
A4: 5 – 3 + 3 – 1 =4
B2: 7 – 3 + 3 – 5 =2
B3: 5 – 2 + 3 – 3 + 3 – 5 =1
B4: 4 – 1 + 3 – 3 + 3 – 5 =1
C1: 4 – 3 + 3 – 3 =1
Since all values of reduced costs are positive, it indicates that the
improved solution is optimal.
114
Therefore, total transportation cost is obtained as follows:
A1 3 × 20 = 60
A2 3 × 80 = 240
B1 5 × 70 = 350
C2 3×0 =0
C3 2 × 50 = 100
C4 1 × 40 = 40
Total = 790
115
CLASS ACTIVITY 06:
A company has three warehouses, A, B and C and four stores
W, X, Y and Z.
The warehouses have a altogether a surplus of 150 units of a

given commodity as follows:
A = 50 B = 60 C = 40
The four stores altogether need also 150 units of the

commodity as follows:
W = 20 X = 70 Y = 50 Z = 10
116
Costs of shipping of one unit of commodity in terms of dollars
from warehouse i to store j are as follows:
Stores
Warehouses
W X Y Z
A 50 150 79 60
B 80 70 90 10
C 15 87 79 81
117
Schedule the transport to minimize the cost of transportation.
Use the North West Corner Method.
Also find out the minimum possible transportation cost for the
given problem. Use the Stepping-stone method.
C. R. Kothari (1992) An Introduction to OR - 3rd Ed
118
Unacceptable/Prohibited Routes
It may occur that one or more transportation routes are
prohibited in such a way that units cannot be transported
from a particular source to a particular destination.
Reasons for such situation:

 Bad weather conditions (e.g.: unexpected floods), Poor
infrastructures, Civil disturbances (like: riots, strikes, etc)
etc.
119
To resolve such situation:
 Unacceptable route is assigned a large cost such as M or ∞

so that it will never receive an allocation.
 THE IDEA IS:

• When the unacceptable route is evaluated, it will always
contain a large positive cost change (reduced cost) of M,
which will keep it from being selected for further
allocation.
120
EXAMPLE 10:
Suppose routes F1W2 and F3W3 are prohibited. Find the initial
solution by using minimum cost method.
WAREHOUSE
FACTORY Supply
W1 W2 W3
12 11 8
F1 190
10 4 14
F2 150
F3 22 10 15 80
Demand 170 110 140
121
SOLUTION:
Resulted initial basic feasible solution obtained by minimum cost
method is:
WAREHOUSE
FACTORY Supply
W1 W2 W3
F1 12 M 8 190
50 140
10 4 14
F2 40 110 150
F3 22 10 M 80
80
Demand 170 110 140
122
Therefore, total transportation cost is obtained as follows:
F1W1 12 × 50 = 600
F1W3 8 × 140 = 1,120
F2W1 10 × 40 = 400
F2W2 4 × 110 = 440
F3W1 22 × 80 = 1,760
Total = 4,320
123
CLASS ACTIVITY 07
Consider the initial solution obtained in EXAMPLE 10.
Required:
Find the optimal solution using the stepping-stone method

and MODI method.
124
Maximization Cases:
GENERALLY, the transportation model is one with
minimization of a cost function.
HOWEVER, the transportation tableau may contain unit

profits and the objective function is to maximize profits.
 To resolve such situation:
• Maximization problem is transformed by first
subtracting all the values of the profit matrix from the
highest profit value in the matrix.
• THEN, the transformed problem (i.e. resulted problem)
is solved in the context of minimization.
125
 FINALLY, both initial solution and optimal solution are
obtained in the usual manner (refer to minimization
problems).
 BUT the value of given objective function is determined with

reference to the figures in the original profit matrix.
• Note that: The original profit matrix is the same as the

original transportation matrix in terms of profit.
126
EXAMPLE 11
Consider the following profit transportation tableau
1 2 3 4 Supply
10 16 4 23
A 180
6 5 8 16
B 480
C 12 1 9 18 280
Demand 160 300 100 380
Maximize the profit using intuitive technique for initial

solution and MODI for the optimal solution. 127
SOLUTION:
Since the given problem is a maximization problem, we have to
convert it into a minimization problem by subtracting each
transportation profit from the maximum profit value in the
matrix.
The maximum profit value in the profit matrix is 23.
Then, each profit in the profit matrix is subtracted from 23.

128
Thus, the resulted minimization transportation tableau is shown
below:
1 2 3 4 Supply
A 13 7 19 0 180
17 18 15 7
B 480
11 22 14 5
C 280
Demand 160 300 100 380
129
The initial basic feasible solution is:
1 2 3 4 Supply
A 13 7 19 0 180
180
17 18 15 7
B 80 300 100 480
C 11 22 14 5 280
80 200
Demand 160 300 100 380
130
After allocations:
We use the original values in the profit matrix with their
respective allocations to compute the total maximum
transportation profit as follows:
A4 23 × 180 = 4,140
B1 6 × 80 = 480
B2 5 × 300 = 1,500
B3 8 × 100 = 800
C1 12 × 80 = 960
C4 18 × 200 = 3,600
Total = 11,480
131
CLASS ACTIVITY 08:
Consider the initial solution obtained in EXAMPLE 11.
Required:
Find the optimal solution using stepping-stone and MODI

methods.
132
CLASS ACTIVITY 09
Consider the following profit matrix:
1 2 3 4 5 Supply
19 21 16 15 15
A 150
9 13 11 19 11
B 200
C 18 19 20 24 14 125
Demand 80 100 75 45 125
Use any methods of your choice to find the initial and

optimal solutions. 133
CONCLUSIVELY,
 The following are the key steps used in solving
transportation problems:
1. Formulate the problem.
2. Setup transportation tableau.

Check if the model is balanced or not.
If not, balance the model then move to step 3

134
4. Check for degeneracy.
 If degeneracy exists, then resolve the degeneracy
then move step 5.
 If not, move to step 5.
5. Test for optimality.

 If it is optimal move to step 6.
 If not, improve the solution until it is optimal then

move to step 6.
6. Calculate the total transportation cost (or profit).

135
CONCLUDING REMARKS
Why TP?
The TP is considered a very useful and powerful tool.
TP is certainly not a panacea for all management and

industrial problems.
136
REVIEW QUESTIONS
1. Consider the following transportation matrix
1 2 3 4 Supply
4 7 7 1
A 100
12 3 8 8
B 200
8 10 16 5
C 150
Demand 80 90 120 160
Determine the initial solution using NWCM, MCM and VAM then
obtain the optimal solution using Stepping-stone method and MODI 137
method.
1 2 3 Supply
3 2 5
A 40
8 1 4
B 60
7 7 6
C 20
Demand 40 50 30
obtain the optimal solution using Stepping-stone method and 138
MODI method.
1 4 Supply
A 5 9 100
4 2
B 100
Demand 80 90
obtain the optimal solution using Stepping-stone method and MODI
method.
139
1 4 Supply
A 3 1 80
4 9
B 80
8 4
C 90
Demand 100 200
obtain the optimal solution using Stepping-stone method and
140
MODI method.
5. The following diagram refers to the transportation problem:
1 4 Supply
A 9 6 75
5 3
B 75
Demand 80 90
a) Use the intuitive technique to develop an initial solution to the

problem.
b) Determine if the initial solution is optimal or not. If the solution
is not optimal develop the optimal solution.
141
6. Use the intuitive method to generate an initial solution, determine
the optimum distribution plan for the following problem and
compute the total cost of that plan. Use the MODI method for cell
evaluation.
A B C D Supply
1 14 21 18 48 48
17 18 25 16
2 56
3 30 16 32 30 32
Demand 41 38 35 20
142
7. Obtain the optimum distribution plan for the following
transportation problem. Develop the initial solution using north-
west corner method and the intuitive method. Use the stepping-
stone method for cell evaluations.
A B C Supply
1 3 4 2 40
5 1 7
2 60
3 8 7 4 50
Demand 30 45 75
143
8. Given the following transportation problem.
A B C D Supply
1 18 12 14 16 40
23 24 27 33
2 80
42 34 31 26
3 130
Demand 90 80 30 50
Develop the initial feasible solution using the intuitive method. Use
the MODI method to evaluate the initial solution . Find the optimal
solution.
144
9. The purchase manager of Akamba Bus Service, Mr. Odhiambo is to
decide on the amounts of fuel to buy from the dealers: BP, Bigbon
and Oilcom.
Three dealers said they can supply to the following during the
coming month: 275,000 litres from BP, 550,000 litres from Bigbon
and 660,000 litres from Oilcom.
The Akamba Bus Service has four depots within the areas of its
operation which have the following demands for fuels; Depot-1:
110,000 litres, Depot-2: 220,000 litres, Depot-3: 330,000 litres and
Depot-4: 440,000 litres.
145
The combined fuel cost (purchase price plus transport charge) per
litre for various dealers to various deports is as shown in the matrix
below (amount in $).
Depot-I Deport-II Depot-III Depot-IV

BP 5.00 5.00 4.50 5.50
Bigbon 4.75 5.00 6.00 6.00
Oilcom 4.25 6.75 5.00 4.50
Required:
(a) Using minimum cost method, prepare a transportation schedule
that will minimize total cost.
(b) What will this minimum total cost be? 146
10. Consider the following table
Shipping Costs per Case
(in Dollars)
Factory Supply Warehouse Demand
To To To To
From E F G H
A 15 E 10 A 25 35 36 60
B 6 F 12 B 55 30 45 38
C 14 G 15 C 40 50 26 65
D 11 H 9 D 60 40 66 27
(a) Find the initial solution using NWCM, MCM, and VAM
(b) Find the optimal solution using stepping-stone method and MODI
method for each of the above three methods. 147
Transportation Models
Any Questions?
CLASS ACTIVITY 11
• Work in groups of about 3
Explain, in brief, the usefulness of transportation

models.
• Feedback to the class (05 minutes)

Operations Research I
ST1202
End of Module 03:

Transportation Problems
Thank you! 150

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Operations Research I

3. Formulating Transportation Models

4. Solving Transportation Models

In other words:

• Note that: The objective is to keep transportation costs at a

2. Destination: It is the location to which shipments are

3. Unit Transportation Cost: It is the cost of transporting

4. Feasible Solution: It is the solution that satisfies the row,

6. Optimal Solution: It is the feasible solution when the total

7. Perturbation Technique: It is a method used for

• A list of the origins and each one’s capacity supply per

• A list of the destinations and each one’s demand per

• The cost of shipping a unit of goods.

• Only a single type of commodity is being shipped from an

• A shipping cost per unit is the same regardless of the

• Supply and demand are all positive integers.

• Total supply is equal to total demand.

xij = number of units shipped from origin i to destination j

cij = cost per unit of shipping from origin i to destination j

si = supply or capacity in units at origin i

2 c21 c22 c2n

Each factory is able to supply the following number of tons on

The transportation cost per ton of product from each factory

The problem is to determine how many tons of product to

Required: Write the given problem in a form of LPM. 16

Let Xij be the number of products transported from ith factory

The objective function is:

Minimize Cost = 6X11 + 8X12 + 10X13 +

Subject to: X11 + X12 + X13 ≤ 150

• Using any of three methods – NWCM, MCM and VAM.

• Using any of two methods – Stepping-Stone Method and

1. After setting up the transportation tableau/matrix.

2. Make initial allocations.

3. State the solution.

2. Select the north west (upper left-hand) corner cell of

3. Adjust the supply and demand numbers in the

4. If the demand for the first cell is satisfied, then move

6. Continue the process until all supply and demand

7. State the initial basic feasible solution.

Consider the given transportation problem in EXAMPLE 01.

Find the initial solution using north west corner method..

The total transportation cost is obtained as follows:

F1 – W1 = $6 × 150 tons = $900

Total Transportation Cost = $5,925 28

• Detailed steps are:

2. Identify the cell having minimum unit transportation

• In case of a tie, select the cell where the

4. Continue the process (repeat step 2 and 3) until all

5. Obtain the initial basic feasible solution.

Consider the given transportation problem in EXAMPLE 01.

Find the initial solution using minimum cost method.

The total transportation cost is obtained as follows:

Total Transportation Cost = $4,550 34

• It is an iterative procedure for computing a basic feasible

• It is the most preferred method.

It facilitates a very good initial solution since it takes

• Detailed steps are:

If there are two or more smallest costs assign the

In case of a tie, choose the row or column with the