Transportation Problem

3.1 TRANSPORTATION PROBLEM

The transportation problem deals with the transportation of a single product from several sources (origins or supply) to several sinks (destinations or demand). 3.2 IMPORTANT ELEMENTS: 3.21 ORIGIN The origin of a transportation problem is the location from which shipment are dispatched. 3.22 DESTINATION The destination of a transportation problem is the location to which shipments are transported. 3.23 UNIT TRANSPORTATION COST It is the cost of transporting one unit of the consignment (incoming/livraison) from an origin to a destination. Note: The transportation problem indicates the amount of consignment to be transported from various origins to different destinations so that the total transportation cost is minimized without violating the availability constraints (Supply) and the requirement constraints (Demand). In other words, demand and supply must be satisfied. Example A manager has four factories (origins) and four warehouses (destinations). The quantities of goods available in each factory (supply), the requirements of goods in each warehouse (demand) and the cost of transportation of a product from each factory to each warehouse are given. His objective is to ascertain the quantity to be transported from various factories to different warehouses in such a way that the total transportation cost is minimized.

3.24 GENERAL TRANSPORTATION PROBLEM Minimize (total cost) m n Z = ! ! Cij Xij i=1 j = 1 Availability n ! Xij = ai j=1 m ! Xij = bj i=1 Xij " 0 i = 1, 2,,m

Requirement

j = 1, 2, .,n

Non Negativity Restrictions for all i and j Where Cij = cost of transporting one unit of commodity from origin i to destination j. Xij = quantity transported from origin i to destination j. ai = quantity of commodity available at origin i [supply]. bj = quantity of commodity needed at destination j [demand]. M.H.Gendoo | Quantitative Methods 1

Transportation Problem
The problem is to determine the transportation schedule so as to minimize the total transportation cost satisfying supply and demand conditions.
Origin Oi O1 D1 C11 X11 Occupied Cell or Allocated Cell D2 Dn -----------C12 C1n X12 ----------X1n Availability ai a1

O2 : : : : Om Requirement bj Remarks:

C21 X21 : : : : Cm1 Xm 1 b1

C22 X22 : : : : Cm2 Xm 2 b2 -----------: : : : ----------------------

C2n X2 n : : : : Cmn Xm n bn

a2 : : : : am m n ! ai = ! bj i=1 j=1

m n Here ! ai = ! bj (total capacity/supply = total requirement/demand). i=1 j=1

3.25 FEASIBLE SOLUTION When the total capacity equals total requirement, the problem is called balanced transportation problem otherwise it is known as unbalanced transportation problem. The allocated cells in the transportation table having positive allocation are called occupied cells and empty cells are known as non occupied cells. 3.26 BASIC FEASIBLE SOLUTION The number of positive allocation (values of basic or decision variables) at any stage of feasible solution must be equal to the number (Rows + Columns 1)/ (m + n 1), that is, number of independent constraints equation, satisfying all the conditions. When the number of positive allocations at any stage of the feasible solution is less than the required number (m + n 1), the solution is said to be degenerate solution, otherwise nondegenerate solution. 3.3 METHODS FOR FINDING INITIAL BASIC FEASIBLE SOLUTION: 1) North West Corner Method 2) Matrix Minima Method (Least Cost Method) 3) Vogels Approximation Method (VAM)

M.H.Gendoo | Quantitative Methods 2

Transportation Problem
3.31 NORTH WEST CORNER METHOD Procedure: Step 1 first check whether it is a balanced problem or NOT. Step 2 select the North West (upper left hand) Corner Cell for a shipment. Step 3 make as large a shipment as possible in the North West Corner or Cell. This operation will completely exhaust either the supply available at one source or the demand at one destination. Step 4 adjust the supply and demand values. If all supply and demand values are exhausted then stop, otherwise move one cell to the right or one cell down depending on the supply and demand values, go to step 3. Step 5 check the number of positive allocation, that is, (m + n 1) [number of occupied cells]. Illustration 1: W1 F1 11 W2 13 W3 17 W4 14 Supply (ai) 250 300

F2 F3 Demand (bi)

16

18

14

10

21 200

24 225

13 275

10 250

400

Check m n ! ai = ! bj = 950 [balanced problem] i=1 j=1 Solution 1: W1 F1 11 200 W2 13 175 F2 F3 21 Demand 200 24 225 13 275 16 18 14 150 10 250 50 W3 17 125 10 250 400 W4 14 Supply 250 300

Check (m + n 1) = 3 + 4 1 = 6 occupied cells. The transportation cost, Min Z = 200 x 11 + 50 x 13 + 175 x 18 + 125 x 14 + 150 x 13 + 250 x 10 = 12,200.

M.H.Gendoo | Quantitative Methods 3

Transportation Problem
3.32 MATRIX MINIMA METHOD (LEAST COST) Procedure:

Step 1 first check whether it is a balanced problem or NOT. Step 2 determine the smallest cost matrix of the transportation table. Step 3 if xij = ai , cross off the ith row of the transportation table and decrease bj by ai . Go to step 3. If xij = bj , cross off the jth column of the transportation table and decrease ai by bj . Go to step 4. If xij = ai = bj , cross off either the ith row or the jth column but not both. Step 4 repeats steps 2 and 3 for the resulting reduced transportation table until all the requirements ! ai = ! bj are satisfied. Whenever the minimum cost is not unique, make an arbitrary choice among the minima.
Illustration 3: W1 F1 23 22 F2 F3 Demand (bi) 12 17 17 22 22 28 35 12 25 W2 27 18 20 25 32 41 51 11 W3 16 W4 18 Supply (ai) 30 30 40

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3.33 UNBALANCED TRANSPORTATION PROBLEM An unbalanced transportation problem is one in which the total supply of the factories (origins) and the total demand at distribution centres (destinations) are NOT equal. Supply " Demand, ! ai " ! bj Procedure: Case 1 (S > D): When the total capacity of the origins (supply) exceeds the total requirement of destinations (demand), a dummy destination is introduced in the transportation table which absorbs the excess capacity. The cost of shipping from each origin to this dummy destination is assumed to be zero. The insertion of a dummy destination establishes equality between the total origin capacities and total destination requirements. Case 2 (S < D): When the total capacity of the origins (supply) is less than the total requirement of destinations (demand), a dummy origin is introduced in the transportation table which absorbs the excess demand. The cost of shipping from the dummy origin to each destination is assumed to be zero. The introduction of a dummy origin establishes equality between the total origin capacities and total destination requirements.

M.H.Gendoo | Quantitative Methods 4

Transportation Problem
3.4 IN CASE OF CONTRIBUTION/PROFIT MARIX TABLE [MAXIMIZATION PROBLEM] Procedure: Deriving Loss Matrix by deducting each element from the maximum element in order to use minimization technique. 3.5 IN CASE OF UNBALANCED PROBLEM IN THE PROFIT MATRIX OR MAXIMIZATION PROBLEM Procedure: Supply > demand: Introducing a Dummy Warehouse/Destination with zero profit per unit (as the total demand is less than the total supply) in order to make the problem balanced one. Demand > Supply: Introducing a Dummy Origin/Factory with zero profit per unit (as the total demand is greater than the total supply) in order to make the problem balanced one.

3.6 VOGELS APPROXIMATION METHOD (VAM) Procedure: Step 1 check whether it is balanced or Not. Step 2 calculate penalties by taking differences between the minimum and next to minimum unit transportation costs in each row and column. Step 3 circle the largest Row Difference or column difference. In the event of tie, choose either. Step 4 allocate as much as possible in the lowest cost cell of the row (or column) having a circled row (or column) Difference. Step 5 in case the allocation is made fully to a row (or Column), ignore that row (or column) for further consideration, by crossing it. Step 6 revise the differences again and cross out the earlier figures. Go to step 3. Step 7 continue the procedure until all rows and columns have been crossed out, that is, distribution is complete. 3.7 FINDING OPTIMAL SOLUTION (UV OR MODI METHODS) Step 1: Find the initial basic feasible solution by using any of the three methods Step 2: Check the number of occupied cells. If these are less than m + n 1, there exists degeneracy, a very small quantity > or 0 is allocated in an occupied cell so as to get m + n 1 number of occupied cells. In a minimization transportation problem it is better to allocate # to unoccupied cells that have lowest transportation costs. The quantity # is considered to be so small that if it is transferred to an occupied cell it does not change the quantity of allocation. Step 3: For each occupied cell in the current solution, solve the system of equations ui + vj = Cij starting initially with some ui = 0 or vj = 0 and entering successively the values of ui and vj in the transportation table margins. Step 4: Compute the net evaluations Zij Cij = ui + vj Cij for all unoccupied basic cells and enter them in the upper right corners of the corresponding cells. Step 5: Examine the sign of each Zij Cij. If all Zij Cij 0, then the current basic feasible solution is an optimum one. If at least one Zij Cij > 0, select the unoccupied cell, having the largest positive net evaluation to enter the basis. Step 6: Let the unoccupied cell (r, s) enter the basis. Allocate an unknown quantity, say $, to the cell (r, s). Identify a loop that starts and ends at the cell (r, s) and connects some of the basic cells. The value of $ can be easily seen from the allocations made in the cell of the loop.

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Transportation Problem
Assign and + signs alternately to the cells of the loop, starting with a + sign for the entering cells. Then $ = minimum of the allocations made in the cells having a sign. Add this value of $ to all cells having + sign and subtract the same from the cells having a sign. In short, add and subtract $ interchangeably, to and from the transition (basic) cells of the loop, in such a way that the rim requirements remain satisfied. Return to step 3 and repeat the process until an optimum basic feasible solution has been obtained.

Step 7:

Note: It is advisable to use VAM for finding an Initial Basic Feasible Solution to a transportation problem.

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