Transportation Models

An Application of Linear Programming

Lec-06

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Nature of the problem

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This Lecture discusses:

Developing a optimum transportation model.

Which includes
How to reduce or optimize the cost of transportation?
How to develop transportation cost matrix?
How to create a balance between supply and demand location?
Where to produce less?
Where to meet the demand first to reduce cost?

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Factory Capacity & Warehouse Demand

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Summary Matrix

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The Cost Matrix

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The LP Formulation

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How It Works:

Step 1: Finding Initial Basic Feasible Solution

Step 2: Checking for Optimality
Step 3: Finding Optimal Solution

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Solution of Transportation Model

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Northwest Corner Method

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5 10

5 15 5

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Least-Cost Method

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 15 0

15 10

5 5

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Vogel Approximation Method (VAM)

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 10
5

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 11-2=9
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 Lec-07
Optimality Test/ Checking for optimality:
Optimality test can be performed if Initial Basic Feasible Solutions are

i) m+n-1 numbers
ii) The location of them are independent*

*Independent location meaning:

Their value can’t be increased or decreased without changing their
a) location or
b) violating the row and column restrictions.

For independent position of an initial basic variables-

it will not form a closed path i.e. from a position, it is impossible return
back to that position with horizontal and vertical movement on the allocated
cell without reversal of movement

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 To (A) (B) (C) Factory
From Albuquerque Boston Cleveland capacity
5 4 ? 3
(D) Des Moines 100 100

8 4 3
(E) Evansville 100 200 ? 300

9 7 5
(F) Fort Lauderdale 100 ? 200 300

Warehouse
requirement 300 200 200 700

5 5
5 5 5 5
Closed loop 5 5
Closed loop
5 5 Closed loop
5 5
5 5

Independent position checking 20

Methods for optimality test
1. Modified Distribution Method (MODI method)
2. Stepping Stone Method

Modified Distribution (MODI) Method

The MODI method is a more efficient procedure of evaluating the unoccupied cells. The
modified transportation table of the initial solution is shown below
General Steps
1. Determine the initial basic feasible solution by using any method.
2. Determine the value of dual variable ui , vj by using cij = ui + vj for occupied cell .
Associate a number, ui, with each row and vj with each column.
3. Compute opportunity cost for unoccupied cell by dij = cij – (ui + vj).
4. Check the sign for each opportunity cost. If the opportunity cost for each unoccupied
cell is positive or zero then the solution is optimum. If the solution is not optimum
then an optimum solution needed to be found out.

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Steps for solving a problem:
Optimality test of the following IBFS
A B C D

S1 2 3 11 7
1 5
1 0 6 1
S2 1
5 8 15 9
S3 6 3 1

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Step 1: Write the cost matrix only for allocated cell
A B C D

vj v1 v2 v3 v4
ui
u1 2 3
S1

u2 1
S2

S3 u3 5 15 9

Step2: Find ui and vj so that ui +vj = cij for occupied cell

U1+V1 = 2 ; U2+V4=1; U3+V1=5; U1+V2=3; U3+V3=15; U3+V4=9

Now Consider any of U1 or V1=0 and solve for other values,
If U1=0, then we get
U2=5, U3=3, V1=2; V2=3, V3=12; and V4=6

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Step3: Write cell values (ui +vj ) for empty cell

A B C D

vj V1 =2 v2=3 v3=12 v4=6

ui
u1 =0 0+12= 12 0+6= 6
S1

u2 =-5 -5+2= -3 -5+3= -2 -5+12= 7

S2

S3 u3 =3 3+3= 6

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Step4: Find Cell evaluation of empty cell by Deducting cell
values from original costs
A B C D

vj V1 =2 v2=3 v3=12 v4=6

ui
u1 =0 11-12= - 1 7-6= 1
S1

u2 =-5 1-(-3)= 4 0-(-2)= 2 6-7= -1

S2

S3 u3 =3 8-6= 2

This is called cell evaluation matrix

( opportunity cost for each cell)

(If any cell value is negative then the solution is not optimal)
So this Initial solution is not Optimal and need improvement
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 Finding an Optimal Solution
1. Select the unoccupied cell with largest negative opportunity cost and
draw a close loop with allocated cells in all other corners.
2. Assign alternative positive and negative sign at corner points of the
closed loop
(start from unoccupied cell will be with positive sign)
3. Determine the maximum possible number of units that should be
allocated to this unoccupied cell (Look for the lowest allocated
value in corner cells). This should be added to cells with positive
sign and subtracted from negative sign
4. Now check for optimality again and repeat this procedure till an
optimal solution is obtained

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 Step 1: A B C D

vj V1 =2 v2=3 v3=12 v4=6

ui
u1 =0 -1 1
S1

u2 =-5 4 2 -1
S2

S3 u3 =3 2

Here largest negative opportunity cost exist in two cells,

cell S1C and S2C with opportunity cost -1,
Any one these two can be chosen.
Suppose, Cell S1C have been chosen as identified cell for
optimality.

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Step 2: A B C D

S1
1 - 5 +
S2 1
S3 6 +
3- 1

i) Write down the initial feasible table,

ii) Put a tick mark on identified cell and set alternate +,-,+,- values in
corner starting with + sign in identified cell.
iii) Draw a closed loop with allocated value in each corner
iv) Find the lowest allocation in the negative cell, and then add that valu
in identified cell
v) Here, 1 is the lowest value among 3 &1 which were in (-) ve corners, 1
will be added in identified cell thus the adjustment will be made
according to sign from each cell.
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Step 3:
A B C D

S1 1-1=0 0+1=1
- 5 +

S2 1
6+1=7 3-1=2
S3
+ -
1

Find the new allocation and check for the optimality and repeat the steps
A B C D

S1 5 1

S2
1

S3 7 2 1
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 Stepping-Stone Method
Cell index can be found out by adding single unit to any empty cell and
adjustment in the closed loop.

To (A) (B) (C) Factory

From Albuquerque Boston Cleveland capacity
Rs5 Rs4 Start Rs3
(D) Des Moines 100 100
- +
Rs8 Rs4 Rs3
(E) Evansville 200 100 300
+ -
Rs9 Rs7 Rs5
(F) Fort Lauderdale 100 200 300
+ -
Warehouse
requirement 300 200 200 700

Des Moines-Cleveland index

Figure C.6 = Rs3 - Rs5 + Rs8 - Rs4 + Rs7 - Rs5 = Rs4
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 Stepping-Stone Method
To (A) (B) (C) Factory
From Albuquerque Boston Cleveland capacity
Rs5 Rs4 Rs3
(D) Des Moines 100 100

Rs8 Rs4 Rs3

(E) Evansville 200 100 300
Evansville-Cleveland index
Rs9 = Rs3 Rs7
- Rs4 + Rs7 - Rs5 = Rs1
(F) Fort Lauderdale 100 200 300
(Closed path = EC - EB + FB - FC)
Warehouse Fort Lauderdale-Albuquerque index
requirement 300 200 200 700
= Rs9- Rs7 + Rs4 - Rs8 = -Rs1
(Closed path = FA - FB + EB - EA)

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 Stepping-Stone Method
1. If an improvement is possible, choose the
route (unused square) with the largest
negative improvement index
2. On the closed path for that route, select the
smallest number found in the squares
containing minus signs
3. Add this number to all squares on the closed
path with plus signs and subtract it from all
squares with a minus sign

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 Stepping-Stone Method
To (A) (B) (C) Factory
From Albuquerque Boston Cleveland capacity
Rs5 Rs4 Rs3
(D) Des Moines 100 100

Rs8 Rs4 Rs3

(E) Evansville 200 100 300
- +
Rs9 Rs7 Rs5
(F) Fort Lauderdale 100 200 300
+ -
Warehouse
requirement 300 200 200 700
1. Add 100 units on route FA
2. Subtract 100 from routes FB
3. Add 100 to route EB
4. Subtract 100 from route EA
Figure C.7
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 Stepping-Stone Method
To (A) (B) (C) Factory
From Albuquerque Boston Cleveland capacity
Rs5 Rs4 Rs3
(D) Des Moines 100 100

Rs8 Rs4 Rs3

(E) Evansville 100 200 300

Rs9 Rs7 Rs5

(F) Fort Lauderdale 100 200 300

Warehouse
requirement 300 200 200 700

Total Cost = Rs5(100) + Rs8(100) + Rs4(200) + Rs9(100) + Rs5(200)

= Rs4,000
Figure C.8
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Special Cases in Transportation Problem

I. Multiple Optimal Solutions

II. Unbalanced Transportation Problems-
Will be discussed within this course
III. Degeneracy in Transportation Problem
IV. Maximization In Transport Problems

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