Transportation Model / Problems

1. A company has three factories F1, F2 and F3 that are feeding zones – North, South, East, West and
Central whose monthly demands are 20, 30, 25, 25 and 20 thousand units respectively. The cost of
transporting one unit from each factory to each destination (zone) is given below

Factory Zones
North South East West Central
F1 5 4 7 10 12
F2 13 10 7 5 6
F3 12 9 8 7 10

If the factories capacities are 40, 30 and 50 thousand units respectively, find the basic feasible (initial)
solutions by using (a) North West corner (b) Least cost and (c) Vogel’s approximation method.

2. A company has factories at F1, F2 and F3 which supply to warehouses W1, W2, W3. Weekly factory
capacities are 200, 160 and 90 units respectively. Weekly warehouse requirements are 180, 120 and
150 units respectively. Unit shipping costs (in Rs) are as follows

Factory Warehouse
W1 W2 W3
F1 16 20 12
F2 14 8 18
F3 26 24 16

Determine the optimal distribution for this company to minimize total shipping cost.

3. Stronghold Construction company is interested in taking loans from banks for some of its projects P, Q,
R, S and T. The rates of interest and the lending capacity differ from bank to bank. All these projects
are to be completed. The relevant details are provided in the following table. As a consultant advise the
company as to how it should take the loans so that the total interest payable is least. Are there more
than one optimum solution? If so, indicate them.

Bank Interest rate in % for project Max Credit in (Rs.'000)

P Q R S T
Private Bank 20 18 18 17 17 Any amount
Nationalised Bank 16 16 16 15 16 400
Co-operative Bank 15 15 15 13 14 250
Amount Reqd in Rs.'000 200 150 200 125 75

4. A leading auditing firm has three auditors. Each auditor can work up to 160 hours during the next
month, during which three projects must be completed. Project 1 will take 130 hours, project 2 will take
140 hours and project 3 will take 160 hours. The amount per hour that can be billed for assigning each
auditor for each project is as follows
Auditor Project
1 2 3
1 20 18 18
2 16 16 16
3 15 15 15
Formulate this as a transportation problem and find the optimum solution. Also find out the maximum
total billing during the next month.

5. A distributor has three warehouses P, Q and R which receive supplies from plants A, B, C and D. The
quantities supplied from the plants, requirements of the warehouses and the unit cost of transportation
are given in the matrix below. Determine the optimal cost of distribution.

Factory Warehouse
P Q R Supply
A 20 70 40 50
B 30 30 10 80
C 50 40 70 70
D 10 60 20 140
Demand 70 90 180

6. Obtain an optimal solution to the transportation problem given below.

Factory Outlet
O1 O2 O3 O4 Supply
F1 19 30 50 10 7
F2 70 30 40 60 9
F3 40 8 70 20 18
Requirement of Outlet 5 8 7 14

7. A personnel manager of a manufacturing company is in the process of filling 175 jobs in six different
entry-level skills due to the establishment of a third shift by the company. Union wage scales and
requirements for the skills are shown in the table below.

Entry Level Skill A B C D E F

Wage Scale (Rs. PM) 1000 1100 1200 1300 1400 1500
No Required 25 29 31 40 33 17

Two hundred and thirty applicants for the jobs have been tested and their aptitudes and skills for the
jobs in question have been matched against company standards and evaluated. The applicants have
been grouped into four categories. Their abilities, grouping and values (Rs. PM) of each category are
shown in the table below.

Category A B C D E F Applican
ts
I 1000 1100 1500 1400 1400 1450 54
II 1200 1250 1200 1350 1400 1400 57
III 1000 1100 1200 1400 1500 1600 45
IV 1500 1500 1600 1400 1400 1500 74
 How many applicants of each category should the personnel manager hire and for which jobs?

8. ABC Limited has three production shops supplying a product to five warehouses. The cost of
production varies from shop to shop and the cost of transportation from a shop to a warehouse also
varies. Each shop has a specific production capacity and each warehouse has a certain amount of
requirement. The cost of transportation is given below.

I II III IV V Supply
A 6 4 4 7 5 100
B 5 6 7 4 8 125
C 3 4 6 3 4 175
Demand 60 80 85 105 70

The cost of manufacturing the product at different shops is

Shop A B C
Variable Cost (Rs) 14 16 15

Find the optimum quantity to be supplied from each shop to different warehouses at a minimum
total cost.

9. XYZ has provided the following data and is seeking your advice on optimum investment strategy.

Investment made at the Net return data (in paise) of selected invetsments Available
beginning of the year Amount
(Lacs)
P Q R S
1 95 80 70 60 70
2 75 65 60 50 40
3 70 45 50 40 90
4 60 40 40 30 30
Maximum Investment (Lac) 40 50 60 60

P, Q, R and S represent the selected investments. The company has decided to have a four year
investment plan. The policy of the company is that amount invested in any year will remain so until
the end of the fourth year. The values (paise) in the table represents the net on investment of one
rupee till the end of the planning horizon. (For eg a rupee invested in P at the beginning of year 1 will
grow to Re 1.95 at the end of the fourth year).
Using the above data determine an optimum investment strategy.