TRANSPORTATION PROBLEMS http://www.scribd.com/doc/39223215/Transportation-Operation-Research Introduction: A Transportation problem is Supply and Demand problem.

There are some supply centres e. g. plants. And there are some demand centres e. g. warehouses or distribution centres. Supply at each plant is given. Demand at each warehouse is given. And unit cost of transportation from each Supply centre to each Demand centre is given. The solution of a Transportation problem is a two step process.

Step 1: To find Initial Feasible Solution (IFS). For this we can use any method, say Vogels Approximation method (VAM), Least Cost method (LCM) or North West Corner Rule (NWCR). But VAM is supposed to be the best method, because it gives IFS which is very near to the Optimal (Final) solution.

Step 2: From the IFS, to find the Optimal solution. The IFS may or may not be Optimal. If the IFS is not Optimal, then it can be improved to give a better result. This process of Testing & Improving the IFS is called Modified Distribution Method (MODI).

For IFS, there are many methods, but for Optimal solution there is only one method MODI.

Note: Sometimes, in examination problem, IFS is already given (some solution is given). And you are asked, whether it is an Optimal solution. In that case, do not find a new IFS by VAM or any other method. Directly apply MODI method. First, test the given solution. If it is Optimal, OK. If not Optimal, improve it and find actual Optimal solution.

Concepts:

1. The Transportation problem can be Balanced or Unbalanced problem. A Balanced problem means total supply is equal to total demand, e. g. if total supply is 400 units and total demand is 400 units then it is balanced. Where as, an Unbalanced problem means total supply is not equal to total demand. E. g. if total supply is 400 units and total demand is 350 units, it is not balanced. Then first we need to balance the problem by taking a Dummy. (imaginary quantity). Hence, a Dummy will come on Demand side. Dummy quantity will be 50 (400 350 = 50).

2. Dummy: A Dummy is an imaginary quantity. The purpose of Dummy is to balance the problem. Since the Dummy is imaginary, all unit costs (or unit profits) for Dummy are always zero. Dummy can come as Supply or Demand, depending on problem. If Supply is less, Dummy will come in Supply side. If Demand is less, Dummy will come in Demand side.

3. The Transportation problem can be of Minimization type or Maximization type. A Minimization Transportation problem involves cost data. The objective of solution is to minimize the total cost. A Maximization Transportation problem involves sales, revenue or profit data. The objective of solution is maximization of total profit. We need to first convert the Maximization problem in Minimization problem. This conversion is called Regret matrix. From the original profit values, we find out the highest profit value. From this highest profit, we subtract all profit values. The resulting matrix is Regret matrix. Then we solve it as a normal transportation problem.

Note:
1. But for calculating the final schedule, you must multiply quantity by original profit value.

And not by Regret value.

2. In case of Unbalanced Maximization problem, first take Dummy. Dummy profit = 0.

Then convert in Regret matrix. Now, if highest profit in the problem is 21, then Regret for Dummy = 21 0 = 21.

4. Prohibited or Restricted problem: A Prohibited problem is the one in which there are one or more restrictions. E. g. say from Plant A it is not possible to transport any quantity to Warehouse Y. This is a prohibited problem Then we assign a very high or infinite cost (represented by M) to Plant A Warehouse Y and proceed with solution. Throughout the solution steps, M does not change. Since M is infinity, no quantity or allocation is possible in M. Even in case of Maximization problem, if there is Restriction, we take profit as M. When we convert to Regret matrix, M remains as M.

Steps 1. Take Dummy (if required) for balancing the problem & then convert in Regret matrix (if required) if it is a Maximization problem. 2. If there is any Restriction or Prohibition, convert it in M. 3. Find IFS. If the method for IFS is specified in question, use only that method. But if any method is not specified, VAM is preferable. (It will reduce your work when you test for Optimality using MODI). 4. After finding IFS, MODI begins. Find U & V values from allocations. 5. Then for empty cells, find Opportunity costs (Delta ). If any Delta is/are Positive, solution is not optimal. But if all Delta are Negative or zero, solution is optimal. 6. If any Delta is Positive, start a loop from maximum Positive delta. E. g. if there are two Positive delta (5 and 2), then start loop from 5. Not from 2. 7. Then write next table. Again find new U, V, and Delta. Repeat from Step no. 5.

Solved Example Transportation Problem

How to Solve Transportation Problem | Introduction to Transportation Problem |

Mathematical Transportation Problem | Solved Example Transportation Problem Homework Help Related Questions Comments

EXAMPLE FOR SOLUTION OF TRANSPORTATION PROBLEM

An organization has four destinations and three sources for supply of goods. The transportation cost per unit is given below. The entire availability is 700 units which exceeds the cumulative demand of 600 units. Decide the optimal transportation scheme for this case.

Solution

Step 1:

Check for balance of supply and demand

S Supply = 250 + 200 + 250 = 700 units

S Demand = 100 + 150 + 250 + 100 = 600 units

Decision Rule

(i)

If S Supply = S Demand

then go to next step.

(ii)

Else; if S Supply > S Demand

then, add a dummy destination with zero transportation cost.

(iii)

Or else; if S supply < S Demand

then, add a dummy source with zero transportation cost.

Since, in this problem

S supply > S Demand

Hence; add a dummy destination (say D5) with zero transportation cost and balance demand which is difference in supply and demand (= 100 units).

The initial transportation matrix is now formulated with transportation cost in the small box of each route. Note that each cell of the transportation matrix represents a potential route.

Introducing dummy column for balancing the supply and demand

Step 2:

(i)

Decide the nature of problem : Minimization of transportation-cost

(ii)

Make initial assignment

Initial assignment may be done by using any of the following approaches :

(i)

Least-cost method

(ii)

North-West corner method

(iii)

Vogel's approximation method

We would demonstrate all the three methods.

(i) Initial Solution by Least Cost method

Select the lowest transportation (or shipping) cost cell (or route) in the initial matrix. For example: it is route S1D5, S2D5 and S3D5 in our problem with zero shipping cost.

Allocate the minimum of remaining balance of supply (in last column) and demand (in last row).

Let us select S1D5 route. One can also select other route (S2D5 or S3D5) in case of tie. For S1D5, available supply is 250 and available demand is 100 units. The lower is 100 units. Hence, allocate 100 units-through this route (i.e, S1D5).

With this allocation, entire demand of route S1D5 is consumed but supply of corresponding source, S1, is still (250-100) or 150 units left. This is marked in last column of supply. The entire demand of destination, D5, is consumed. We get the following matrix (Fig. 12.6) by crossing out the consumed destination (D5):

Now, we leave the consumed routes (i.e., column D5) and work for allocation of other routes.

Next, least cost route is S1D1, with 13 per unit of shipping cost. For this route, the demand is 100 units and remaining supply is 150 units. We allocate minimum of the two, i.e., 100 units in this route. With this destination, D1 is consumed but source S1 is still left with (150-100) = 50 units of supply. So, now leave the destination D1 and we get the following matrix.

With 100 units allocation in route S1D5

Assignment for destination D1 and D5 consumed

Now, we work on remaining matrix, which excludes first column (D1) and last column (D5). Next assignment is due in the least cost route, which is route S2D4. For this route, we can allocate 100 units which is lesser of the corresponding demand (100 units) and (200 units). By this allocation in route S2D4, the demand of destination D4 is consumed. So, this column is now crossed out.

Assignment with destination D1, D4 and D5 consumed

Now, we work on the remaining matrix which excludes, column, D1, D4 and D5. Next assignment is due in the least cost route of the remaining routes. Note that we have two potential routes: S1D2 and S2D3. Both have 16 units of transportation cost. In case of any tie (such as this), we select any of the routes. Let us select route, S1D2, and allocate 50 units (minimum of demand of 150 and supply of remaining 50 units). With this, all supply of source S1 is consumed. Therefore, cross out row of S1. We get the following matrix:

Destination D1, D4 and D5 source S1 are consumed

Now, remaining allocation is done in route S2D3 (as 100 units). With this source, S2 is consumed. Next allocation of 100 units is done in route S3D2 and 150 units in route S3D3. Final initial assignment is as follows:

Total cost in this assignment is (13 100 + 16 50 + 100 0 + 16 100 + 15 100 + 17 150) or Rs. 9450.

Initial assignment by least cost method

Step 3:

Count the number of filled (or allocated) routes.

Decision rule

(i)

If filled route = (m + n 1) then go for optimality check (i.e. step 5).

(ii) If filled route < (m + n 1) then the solution is degenerate. Hence, remove degeneracy and go to step 4.

Here, m = number of destinations, including dummy column, if any

n = number of source, including dummy, row, if any

For our problem (m + n- l) = 5 + 3-1 = 7.

The number of filled route is equal to 7. Hence, problem is not degenerate. Therefore, proceed to step 5.

Initial Assignment by North-West Corner Method (an alternative to least cost method)

This approach is also for making initial assignment, as we have done in the least cost method. Therefore, this approach should not be applied if initial assignment has already been made by any other method. In the North-West Corner (NWC) method, we start with the top-left (cornermost) route, which is S:DrIrrespective of cost, allocation is made in this route for the minimum of supply or demand. In our case, demand for this route is 100 and supply is 250. Therefore, allocate 100 units in this route. With this, column corresponding to D1 is consumed.

Now, work on the remaining matrix, which excludes column Dr Again, select the top-left route. Now, it is cell S1D2. Allocate in the same way. Thus, 150 units are allocated in this route. Note that, with this, both D2 and S, are consumed.

Remaining matrix excludes S1, D1 and D2. Hence, allocation in the top-left cell is due in route S2D3. Here, 200 units may be allocated and S2 is now consumed.

Remaining allocations are done in S2D3, S3D4 and S3D5 in sequential order. We get the initial solution by north-west corner method as follows (Fig. 12.11):

Initial assignment by North-West corner method

For this assignment, the total cost is (13 100 + 16 150 + 16 100 + 0 100) or Rs. 9350.

Step 3: Check for degeneracy

(m + n 1) = 5 + 3 1 = 7

Number of filled cells = 6, which is one less than (m + n 1). Hence, go to step 4 for removing degeneracy.

Step 4: In case of degeneracy, allocate a very-very small quality, (which is zero for all calculation purposes), in the least cost of un-filled cells. In the above figures of North-West corner method allocation, the least cost un-filled cells are S1D5 and S2D5. Let us select S1D5 and allocate in this. We get the following allocation after removing degeneracy.

Initial assignment by North-West corner method after removing degeneracy

Initial Assignment by Vogels Approximation Method (VAM)

This is the third alternative method for doing initial assignment of a transportation problem.

In this method, we calculate the difference between the two least-cost routes for each row and column. The difference is called as penalty cost for not using the least-cost route.

First calculation of Penalty cost in VAM

Highest of all calculated penalty costs is for S3 and (S2). Therefore, allocation is to made in row of source S3. The route (or cell), which one must select, should be the lowest cost of this row. This route S3D5. Hence, first allocation is as follows.

First calculation in Vogels method

Now, with the first allocation, destination D5 is consumed. We exclude this column and work on the remaining matrix for calculating the penalty cost. We get the following matrix.

Now for this, source S1 has highest penalty cost. For this row, the least cost route is S1D1. Hence, next assignment is due in this route:

Second calculation of Penalty cost in VAM

Second allocation in Vogels method

After second allocation, since destination D1 is consumed, we leave this column and proceed for calculation of next penalty cost. Allocation is done in route S1D2. Since there is tie between all routes, we break the tie by arbitrarily selecting any route (S1D2 in this case.)

Third calculation of Penalty cost

Third allocation in Vogels method

Fourth calculation of Penalty cost in VAM

Fourth allocation in Vogels method

With the fourth allocation, column D4 is consumed. In the only left column D3, the allocations of 100 units and 150 units are done in route S2D3 and S4D3 respectively. Thus, we get the following allocations in the Vogels approximation method.

Final allocation through Vogels method

The initial cost for this allocation is (13 100 + 16 150 + 16 100 + 15 100 + 17 150 + 0 100) or equal to Rs. 9350:

Step 3:

Check for degeneracy

(m + n 1) = 7

Number of filled cell = 6, which is one less than (m + n + 1). Hence, go to step 4 for removing the degeneracy.

Step 4: We allocate in the least-cost un-filled cell. This cell is route S1D5 or S2D5. Let us select route S1D5. Thus, we get following matrix after removing degeneracy.

Final allocation after removing degeneracy in Vogels method

Optimization of Initial Assignment

The initial feasible assignment is done by using least-cost method or North-West corner method or Vogel's approximation method. However, none of these methods guarantees optimal solution. Hence, next step is to check the optimality of the initial solution.

Step 5: Check the optimality of the initial solution

For this, we have to calculate the opportunity cost of un-occupied routes.

First, we start with any row (or column). Let us select row 1, i.e., source S1; For this row, let us define row value, u1 = 0. Now consider all filled routes of this row. For these routes, calculate column values v. using following equation:

u1 + v1 = Cij (For any filled route)

where

u1 = row value

vj = column value

Cij = unit cost of assigned route

Once first set of column values (vj is known, locate other routes of filled cells in these columns. Calculate next of ui (or vj values using above equation. In this way, for all rows and columns, ui and vj values are determined for a non- degenerate initial solution.

Step 6:

Check the optimality

Calculate the opportunity of non-allocated orunfilled routes. For this, use the following equation:

Opportunity unassigned route = ui + vj Cij

where

ui = row value

vj = column value

Cij = unit cost of unassigned route

If the opportunity cost is negative for all unassigned routes, the initial solution is optimal. If in case any of the opportunity costs is positive, then go to next step.

Step 7: Make a loop of horizontal and vertical lines which joins some filled routes with the unfilled route, which has a positive opportunity cost. Note that all the corner points of the loop are either filled cells or positive opportunity cost un-assigned cells.

Now, transfer the minimal of all allocations at the filled cells to the positive opportunity cost cell. or this, successive corner points from unfilled cell are subtracted with this value. Corresponding addition is done at alternate cells. In this way, the row and column addition of demand and supply is maintained. We show the algorithm with our previous problem.

Let us consider the initial allocation of least-cost method (Fig. 12.10) :

For this, we start with row, S1and take u1 = 0. Now S1DpS1D2,and S1D5are filled cells. Hence, for filled cells; (vj = Cij ui).

v1 = 13 0 = 13

v2 = 16 0 = 16

v5 = 0 0 = 0

Calculation for ui and vj in least cost initial assignment

Now, cell S3D2 is taken, as this has a vj value. For this cell u3 = 17 16 = 1

Now, cell S3D3 is selected, as this has a ui value. For this cell v3 = 17 1 = 16

Now, cell S2D3 is selected, as it has a vj value. For this cell u2 = 16 16 = 0

Now, cell S2D4 is selected, as it has a ui value. For this cell v4 = 15 0 = 0

Thus, all ui and vj are known.

Step 6: Calculate opportunity cost of un-assigned routes.

Unassigned route S1D3 S1D4 S2D1 S2D2

Opportunity cost (ui + vj Cij) 0 + 16 19 = 3 0 + 15 17 = 2 0 + 13 17 = 4 0 + 16 19 = 3

S2D5 S3D1 S3D4 S3D5

0+00=0 1 + 13 15 = 2 1 + 15 16 = 0 1 + 0 0 = +1

Since route S3D5 has positive opportunity cost, the solution is non-optimal; hence, we go to next step and make a loop as follows.

Closed loop for cell S3D5

The revised allocation involves 100 units transfer from cells S1D5 and S3D2 to cells S3D5 and S1D2.

Thus, revised allocation is as follows:

Revised allocation in least-cost assignment

Since above solution is degenerate now, we allocate to the least-cost un-filled cell S1D5. Fresh calculation of ui and vj is also done in the similar way as explained in Step 5.

For this assignment, the opportunity cost of unassigned cells is as follows.

Now, since un-allocated routes have negative (or zero) opportunity cost, the present assignment is the optimal one. Thus, optimal allocation of route is given in Figure.

Note that total cost is less than the initial assignment cost of least-cost method (= Rs. 9450).

Similarly, optimality of North-West corner method solution is done.

Unassigned route S1D3 S1D4 S2D1 S2D2 S2D5

Opportunity cost (ui + vj Cij) 0 + 17 19 = 2 0 + 16 17 = 1 1 + 13 17 = 5 1 + 16 19 = 4 1 + 0 0 = 1

S3D1 S3D2 S3D4

0 + 13 15 = 0 0 + 16 17 = 1 0 + 16 16 = 0

Opportunity cost

Route S1D1 S1D2 S2D3 S2D4 S3D3 S3D5

Unit 100 150 100 100 150 100

Cost in this route 13 100 = 1300 16 150 = 2400 16 100 = 1600 15 100 = 1500 17 150 = 2550 0 100 = 0 Total cost = Rs.9350

Optimal allocation in different routes

Calculation of ui and vj for N-W corner methods initial solutions

Opportunity cost of above assignment is as follows:

Since all opportunity costs are negative or zero, the initial assignment is optimal one with total cost of Rs. 9350.

The optimal assignment of routes is 100 units is S1D1, 150 units in S1D2, 200 units in S2D3, 50 units in S3D3, 100 units in S3D4.

Similarly, the optimality of Vogels methods initial solution is done.

Opportunity cost of above N-W corner assignment is as follows

Unassigned route S1D3 S1D4 S2D1 S2D2 S2D4 S2D5 S3D1 S3D2

Opportunity cost (ui + vj Cij) 0 + 17 19 = 2 0 + 16 17 = 1 1 + 13 17 = 5 1 + 16 19 = 4 1 + 16 15 = 0 1 + 0 0 = 1 0 + 13 15 = 2 0 + 16 17 = 1

Calculation of ui and vj for Vogel methods initial solutions

Opportunity cost of above assignment is as follows:

Unassigned route S1D3 S1D4 S2D1 S2D2 S2D5 S3D1 S3D2 S3D4

Opportunity cost (ui + vj Cij) 0 + 17 19 = 2 0 + 16 17 = 1 1 + 13 17 = 5 1 + 16 19 = 4 1 + 0 0 = 1 0 + 13 15 = 2 0 + 16 17 = 1 0 + 16 16 = 0

Since all opportunity costs are negative or zero, the initial assignment of Vogels solution is optimal with total cost of Rs. 9350.

The optimal assignment of routes is 100 units in S1D2, 100 units in S2D3, 100 units in S2D4, and 150 units in S3D3. Note that this solution is different from North-West corner solution but total cost is same and minimum.

The transportation problem solution approach

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Operations Research/Transportation and Assignment Problem

The Transportation and Assignment problems deal with assigning sources and jobs to destinations and machines. We will discuss the transportation problem first.

Suppose a company has m factories where it manufactures its product and n outlets from where the product is sold. Transporting the product from a factory to an outlet costs some money which depends on several factors and varies for each choice of factory and outlet. The total amount of the product a particular factory makes is fixed and so is the total amount a particular outlet can store. The problem is to decide how much of the product should be supplied from each factory to each outlet so that the total cost is minimum. Let us consider an example. Suppose an auto company has three plants in cities A, B and C and two major distribution centers in D and E. The capacities of the three plants during the next quarter are 1000, 1500 and 1200 cars. The quarterly demands of the two distribution centers are 2300 and 1400 cars. The transportation costs (which depend on the mileage, transport company etc) between the plants and the distribution centers is as follows: Cost Table Plant A Plant B Plant C Dist Center D Dist Center E 80 215 100 108 102 68

Which plant should supply how many cars to which outlet so that the total cost is minimum? The problem can be formulated as a LP model: Let be the amount of cars to be shipped from source i to destination j. Then our objective is

to minimize the total cost which is . The constraints are the ones imposed by the amount of cars to be transported from each plant and the amount each center can absorb. The whole model is: Minimize z = subject to, ; ; ;

; ; and integer, i = 1,2,3, j = 1,2. The problem can now be solved using the simplex method. A convenient procedure is discussed in the next section.