2.

TRANSPORTATION MODEL

Transportation algorithm is a special procedure used to solve linear programing problems in

which efficient transportation routes are to be determined at minimum aggregate
transportation cost.

Flow chart of Transportation model:

Methods to find IBFS:

1. North West Corner method: In this method, north west cell is occupied first by allotting
minimum of supply and demand whichever is satisfied early. Now that particular row or
column will be cancelled and other cells are considered for allotment. This process
continues till all supply is exhausted and all demands are met.
2. Least Cost Method: In this method, cell with least unit cost will be allotted minimum of
supply and demand whichever is satisfied early. Now that particular row or column will
be cancelled and other cells are considered for allotment. From the remaining cells, again
 look for least cost cell and continue the same procedure till all supply is exhausted and all
demands are met.
3. Vogel’s approximation method: In this method, difference of two least cost cells for each
row and column are calculated. These values are called penalty. The row or column with
highest penalty value is considered. The least cost cell in that particular row or column
will be made the occupied cell.

MODI method is easier and more efficient for testing optimality of a transportation solution.
Stepping stone method would be very time consuming and intricate exercise when large
number of sources and destinations are involved.

Formulation of LPP:

Let ai = quantity of product available at origin ‘i’

bj= quantity of product required at destination ‘j’
cij = cost of transporting one unit of product from source ‘i’ to destination ‘j’
xij = quantity transported from origin ‘i’ to destination ‘j’
Transportation Table:
Following are the characteristics of a transportation table.
1. ai’s and bj’s are supply and demand constraints
2. objective is minimum aggregate transportation cost
 Transportation cost is calculated by multiplying various Xij’s with corresponding Cij’s and
then adding them all.
3. Aggregate supply at sources should be equal to aggregate demand at destinations.
4. The cells containing positive Xij values are called occupied cells/ filled cells and those Xij
variables are called basic variables.
5. Remaining Xij variables are regarded to be non-basic .Hence they would be zero and these
cells are called empty cells.

1. A firm owns facilities at six places. It has manufacturing plants at places A, B and C with
daily production of 50, 40, 60 units respectively. At point D, E and F it has three
warehouses with daily demands of 20, 95 and 35 units respectively. Per unit shipping
costs are given in the following table. If the firm wants to minimize its total travelling
cost, how should it route its products?

Solution:
Step 1: To obtain initial basic feasible solution (IBFS) using North West Corner method
Solution is feasible since there are m+n-1 occupied cells i.e. 5.
The aggregate transportation cost is,

Step 2: To Test for optimality using MODI method

The important steps to be followed while using the MODI method are:
i. Adding a column ‘ui’ to the right hand side and a row ‘vj’ at the bottom of the table
ii. Assign any value arbitrarily to a row/column variable ui / vj. Generally, zero is assigned
to 1st row, say u1=0.
iii. Consider every occupied cell in the 1st row individually and assign the column value vj,
such that sum of row and column values is equal to unit cost value in the occupied cell.
That is, Ui + Vj = Cij
Where ui  row value of ith row
vj column value of jth column
Cij cost of cell in the ith row and jth column
iv. Calculate the opportunity cost(ij) for each empty cell
ij = Ui + Vj  Cij
For the empty cells, if
all ij < 0, solution is optimal and unique
any ij > 0, solution is non-optimal
any ij = 0 (in optimal table), solution is optimal but not unique.
v. Now form the loop and reallocate the units and improve the solution.
When a closed loop is to be traced, start with empty cell which is to be evaluated with
maximum positive opportunity cost. Moving in the clockwise direction, draw an arrow
from this cell to an occupied cell in some row or column. Then move vertically/
horizontally to another occupied cell and draw an arrow. Follow the same procedure to
other occupied cells before returning to original empty cells.
While moving from one occupied cell to another,
a) Move only horizontally/ vertically, but not diagonally
b) Step over empty/ occupied cell if required, without changing them
 c) A closed loop would always have right angled turns with corners only on the occupied
cells.

vi) Sign convention to corners of the loop

After the loop is traced, place positive and negative signs alternatively in the cells on each
turn of loop beginning with positive sign in empty cell. An important restriction is that
there must be exactly one cell with a positive sign and one cell with a negative sign in
every row or column in which a loop takes a turn.

vii) Shifting of units

The number of units to be shifted to empty cell with highest positive opportunity cost
would be equal to the least of values of the cells on the closed loop involving a minus sign.
 in table 2

The optimal solution is Rs. 555.

Other methods of finding initial basic feasible solution are shown below.

Least cost method:

Special cases in transportation method:

1. Unbalanced transportation problems

When aggregate supply is not equal to aggregate demand it leads to unbalanced
transportation problems. Balancing must be done before they are solved. When aggregate
supply exceeds the aggregate demand, a dummy column is added with a demand equal to the
amount of excess supply and transportation cost equal to zero and vice versa. When penalty
cost is given, that should be considered not zero in case of demand exceeding suppy.

2. Prohibited routes
In the given transportation problems, some route(s) may not be available. To handle such
situations a very large cost ‘M’ is assigned to such routes. The effect is that such routes
would automatically eliminated in the final solution.

3. Multiple optimal solutions

In the optimal table, if opportunity cost (ij) of an empty cell is equal to zero it leads to
multiple optimal solutions
4. Degeneracy
When number of occupied cells in the solution of transportation matrix is less than (m+n1),
solution is degenerate. It can happen in two ways. First, when initial feasible solution is
obtained and secondly, when two or more cells are vacated simultaneously in the process of
transferring unit along the closed path.

To overcome the problem, assign ‘’ to an independent empty cell preferably with minimum
unit cost. An independent cell is the one (originating) from which a closed loop cannot be
traced.

Although ‘’ is theoretically non-zero, various operations can be carried out in the following
manner.
k+  = k; k-  = k; k*  = 0;

0 +  = ; -  = 0; +  = 

2.

It is known that currently nothing can be sent from warehouse1 to market A and warehouse3
to market C. Solve the problem and determine the least cost transportation schedule. Is the
optimal solution obtained is unique? If not, what is or are the other optimal solutions?
Solution:
3. Determine the optimal solution to the problem given below. Obtain initial solution by
VAM.

Solution:

Optimal solution is same as initial solution = Rs. 700 due to degeneracy.