Transportation problem

perations research (OR) are concerned with scientifically deciding how to best design and

operate peoplemachine systems, usually under conditions requiring the allocation of scarce
resources . (1Operations Research Society of America).
Operations research tools and has been a decision-making aid in almost all manufacturing
industries and in financial and service organizations. Key problem managers face is how to
allocate scarce resources among various activities or projects. Linear programming, or LP, is a
method of allocating resources in an optimal way. It is one of the most widely used In the term
linear programming, programming refers to mathematical programming.

One of the most important and successful applications of quantitative analysis to solving
business problems has been in the physical distribution of products, commonly referred to as
transportation problems. Basically, the purpose is to minimize the cost of shipping goods from
one location to another so that the needs of each arrival area are met and every shipping location
operates within its capacity. However, quantitative analysis has been used for many problems
other than the physical distribution of goods.
We could set up a transportation problem and solve it using the simplex method as with any LP
problem (see using the Simplex Method to Solve Linear Programming Maximization
However, the special structure of the transportation problem allows us to solve it with a faster,
more economical algorithm than simplex. Problems of this type, containing thousands of
variables and constraints, can be solved in only a few seconds on a computer. In fact, we can
solve a relatively large transportation problem by hand.
There are some requirements for placing an LP problem into the transportation problem
category.

The transportation problem

Linear programming is good at solving problems with zillions of options, and finding the optimal
solution. Could it work for transportation problems? Costs are linear, and shipment quantities are
linear, so maybe so.
Since any transportation problem can be formulated as an LP, we can use the simplex method
to find an optimal solution. Because of the special structure of a transportation LP, the iterations
of the simple method have a very special form. The transportation simplex method is nothing but
the original simplex method, but it streamlines the iterations given this special form.
Introduction
Consider a commodity which is produced at various centers called SOURCES and is demanded
at various other DESTINATIONS. The production capacity of each source (availability) and the
requirement of each destination are known and fixed.
The cost of transporting one unit of the commodity from each source to each destination is also
known. The commodity is to be transported from various sources to different destinations in such
a way that the requirement of each destination is satisfied and at the same time the total cost of
transportation in minimized.
This optimum allocation of the commodity from various sources to different destinations is
called TRANSPORTATION PROBLEM.

Transportation models deals with the transportation of a product manufactured at

different plants or factories (supply origins) to a number of different warehouses (demand
destinations).

The objective to satisfy the destination requirements within the plants capacity
constraints at the minimum transportation cost.

A typical transportation problem contains

Inputs:

Sources with availability

Destinations with requirements

Unit cost of transportation from various sources to destinations

Objective:

To determine schedule of transportation to minimize total transportation cost.

Simple Network Representation

A transportation problem can be stated mathematically as follows:

Let there be m SOURCES and n DESTINATIONS
Let ai : the availability at the ith source
bj : the requirement of the jth destination.
Cij : the cost of transporting one unit of
commodity from the ith source to
the jth destination

xij : the quantity of the commodity

transported from ith source to the jth
destination (i=1, 2, m; j=1,2, ..n)

Source

D1

D2

D3

D4

Availability

S1

C11

C12

C13

C14

a1

S2

C21

C22

C23

C24

a2

S3

C31

C32

C33

C34

a3

Requirement

b1

b2

b3

b4

ai = bj

The problem is to determine the values of xij such that total cost of transportation is
minimized.
We assume that the total quantity available is the same as the total requirement.
i.e. ai = bj

Balanced transportation problems

i1

Unbalanced transportation problems

i1

ai

j1

j 1

Include a dummy source or a dummy destination having a supply d or demand d to

convert it to a balanced transportation problem.

Where d=

b a
j 1

i 1

or

a b
i 1

j 1

respectively.

A solution where the row total of allocations is equal to the availabilities and the column total is
equal to the requirements is called a feasible solution .The solution with m+n-1 allocations is
called a Basic Solution.

Prototype Problem

Holiday shipments of iPods to distribution centers

Production at 3 facilities,
A, supply 200k
B, supply 350k
C, supply 150k

Distribute to 4 centers,
N, demand 60k
S, demand 140k
E, demand 300k
W, demand 200k

Total demand vs. total supply

Holiday shipments of iPods to distribution centers

Production at 3 facilities,
A, supply 200k
B, supply 350k
C, supply 150k

Distribute to 4 centers,
N, demand 60k
S, demand 140k
E, demand 300k
W, demand 200k

Total demand vs. total supply

Prototype Problem
When solving the transportation problem, the number of possible routes should be
m+n-1.

If it is <m+n-1, it is called a degenerate solution.

In such a case evaluation of the solution will not be possible.
In order to evaluate the cells /routes (using the Modi-method or the stepping stone
method) we need to imagine/introduce some used cells/routes carrying / transporting a
very small quantity, say . That cell should be selected at the correct place.

Solution of transportation problems

Two phases:

First phase:

Find an initial feasible solution

2nd phase:

Check for optimality and improve the solution

Find an initial feasible solution

North west corner method

Least cost method

Vogels approximation method

Checking for optimality

a) Stepping stone method
b) Modified distribution (MODI) method.

Steps in Solving the Transportation Problem

How to solve?
1. Define the objective function to be minimized with the constraints imposed on the
problem.
2. Set up a transportation table with m rows representing the sources and n columns
representing the destination
3. Develop an initial feasible solution to the problem by any of these methods
4.

a) The North west corner rule

5. b) Lowest cost entry method

6. c)Vogels approximation method

4. Examine whether the initial solution is feasible or not.( the solution is said to be feasible if the
solution has allocations in ( m+n-1) cells with independent positions.
5. Test wither the solution obtained in the above step is optimum or not using
a) Stepping stone method
b) Modified distribution (MODI) method.
6. If the solution is not optimum, modify the shipping schedule. Repeat the above until an
optimum solution is obtained.

Applications

To minimize shipping costs from factories to warehouses or from warehouses to retails

outlets.

To determine lowest cost location of a new factory, warehouse or sales office.

To determine minimum cost production schedule that satisfies firms demand and
production limitations.

North-West Corner Method

Step1: Select the upper left (north-west) cell of the
transportation matrix and allocate the maximum possible value to X11 which is equal to
min(a1,b1).

Destination
Sourc
e
A
B
C
Dema
nd
vj

16

13

22

17

14

13

19

15

20

23

10

60

140

300

200

Supply
200
350
150
Z = 700

Step2: If allocation made is equal to the supply available at the first source (a1 in first row), then
move vertically down to the cell (2,1).

If allocation made is equal to demand of the first destination (b1 in first column), then
mov

e horizontally to the cell (1,2).

If a1=b1 , then allocate X11= a1 or b1 and move to cell (2,2).

Step3: Continue the process until an allocation is made in the south-east corner cell of the
transportation table.
Advantages; it is simple and reliable. Easy to compute understand and interpret.
Disadvantages: This method does not take into considerations the shipping cost, consequently
the initial solution obtained by this method require improvement.

Problem1: Obtain initial solution in the following transportation problem by using

Northwest corner rule method

Least Cost Method

Step1: Select the cell having lowest unit cost in the entire table and allocate the minimum of
supply or demand values in that cell.

Problem1: Obtain initial solution in the following transportation problem by using LCM
method.

Source

D1

D2

D3

D4

D5 Availability

S1

1100

S2

900

S3
8
4
4
6
6
Requirement 800 400 500 400 600

700

Step2: Then eliminate the row or column in which supply or demand is exhausted. If both the
supply and demand values are same, either of the row or column can be eliminated.
In case, the smallest unit cost is not unique, then select the cell where maximum allocation can
be made.
Step3: Repeat the process with next lowest unit cost and continue until the entire available
supply at various sources and demand at various destinations is satisfied.

Vogels Approximation Method

Step1: Calculate penalty for each row and column by taking the difference between the
two smallest unit costs. For each row and column, calculate its difference:

= (Second smallest cij in row/col) - (Smallest cij in row/col)

This penalty or extra cost has to be paid if one fails to allocate the minimum unit
transportation cost.

Step3: Adjust the supply and demand and eliminate the satisfied row or column.
Eliminate any row/column with no supply / demand left from further steps. If a row and
column are satisfied simultaneously, eliminate both the row and column.

Step4:. Recompute the row and column difference for the reduced transportation table, omitting
rows or columns crossed out in the preceding step.
Step5:
Repeat the process until all the supply sources and demand destinations are satisfied. Repeat
until BFS found.
Repeat the above procedure until the entire supply at factories are exhausted to satisfy
demand at different warehouses.

Problem1: Obtain initial solution in the following transportation problem by using VAM
method

Problem 2: Obtain initial solution in the following transportation problem by using VAM

Algorithm of MODIFIED DISTRIBUTION (MODI) METHOD

Step I: For an initial basic feasible solution with (m+n-1) occupied (basic) cells, calculate ui and
vj values for rows and columns respectively using the relationship C ij = ui + vj for all allocated
cells only. To start with assume any one of the ui or vj to be zero.

Step II: For the unoccupied (non-basic) cells, calculate the cell evaluations or the net evaluations
as ij = Cij (ui + vj).
Step III:
a) If all ij > 0, the current solution is optimal and unique.
b) If any ij = 0, the current solution is optimal, but an alternate solution exists.
c) If any ij < 0, then an improved solution can be obtained; by converting one of the basic cells
to a non basic cells and one of the non basic cells to a basic cell. Go to step IV.
Step IV: Select the cell corresponding to most negative cell evaluation.
This cell is called the entering cell. Identify a closed path or a loop which starts and ends at the
entering cell and connects some basic cells at every corner. It may be noted that right angle turns
in this path are permitted.
Step V: Put a + sign in the entering cell and mark the remaining corners of the loop alternately
with and + signs, with a plus sign at the cell being evaluated.
8.Determine the maximum number of units that should be shipped to this unoccupied cell.
The smallest one with a negative position on the closed path indicates the number of units that
can be shipped to the entering cell.
This quantity is added to all the cells on the path marked with plus sign and subtract from
those cells mark with minus sign.
In this way the unoccupied cell under consideration becomes an occupied cell making one of
the occupied cells as unoccupied cell.
9.Repeat the whole procedure until an optimum solution is attained i.e. ij is positive or zero.
Finally calculate new transportation cost.

Problem 3
Origins

Supply/capacity/a
vailability

D1

D2

D3

D4

O1

30

O2

50

O3

20

Demand/Requiremen
ts

20

40

30

10

Special cases in Transportation

 Unbalanced transportation
Restricted routes
Maximisation

Unbalanced transportation problem

When the total availability is equal to the total requirement the problem (i.e. ai =
bj) is said to be a balanced transportation problem.
If the total availability at different sources is not equal to the total requirement at
different destinations, (i.e. ai bj), the problem is said to be an unbalanced
transportation problem.
Steps to convert an unbalanced problem to a balanced one are
1) If ai > bj i.e. the total availability is greater than the total requirement, a
dummy destination is introduced in the transportation problem with requirement =
ai - bj.
2) The unit cost of transportation from each source to this destination is assumed to
be zero.
3) If ai < bj i.e. the total availability is less than the total requirement, a dummy
source is introduced in the transportation problem with requirement = b j - ai.
The unit cost of transportation from each destination to this source is assumed to
be zero.
After making the necessary modifications in the given problem to convert it to a
balanced problem, it can be solved using any of the methods.
Include a dummy source or a dummy destination having a supply d or
demand d to convert it to a balanced transportation problem.
Where d =
n

j 1

i 1

i 1

j 1

bj ai or ai bj respectively.

Problem
.Holiday shipments of iPods to distribution centers
Production at 3 facilities,
A, supply 200k
B, supply 350k
C, supply 150k
Distribute to 4 centers,
N, demand 160k
S, demand 140k
E, demand 300k
W, demand 200k
Total demand total supply
Obtain initial solution in the following transportation problem by using
VAM method

Source

16

13

22

17

14

13

19

15

20

23

10

200

350

150

Demand

160

140

300

Supply

200

v j ui

Restricted routes
Sometimes in a transpiration problem some routes may not be available.
This could be due to a variety of reasons like unfavorable weather condition
or a strike on particular route etc.
In such a situation there is a restrictions on route available for transportation.
We assign a very large cost represented by M to each of such routes which
are not available.
The effect of adding a large cost element would be that such routes would
automatically be eliminated in the final solutions.
Problem1.The XYZ Tobacco company purchased and stores in warehouses
located in the following four cities
From\ To

C1

C2

C3

10

12

11

Demand

120

100

110

Because of railroad construction, shipments are temporarily prohibited from warehouse at city A
to company C1.i) Find the optimal distribution for XYZ tobacco Company.

Maximisation Problem
A Transpiration Tableau contains unit profits instead of unit costs and the
objective function be the maximization of profits.
To convert maximization problem to minimization all the values of profit
matrix are subtracted from the highest profit value in the matrix
The objective function is determined with reference to the original profit
matrix
If a maximization type of transportation problem is unbalanced then it
should be balanced by introducing necessary dummy row or column before
converting it into maximization problem.
Similarly if such a problem has prohibited route, then the pay of element for
such a route should be submitted by M before proceeding to convert to
maximization type.
Prob.Solve the following transportation problem for maximum profit.
X

Availability

12

18

25

200

10

18

500

14

11

20

300

Demand

180

320

100

400

Thank you
[email protected]

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Module 7.1: Structure of the Transportation Problem

Introduction
Ah finally after 14 weeksmy favorite of all quantitative method applications the
transportation problem. For seventeen years in the Air Force, most of my career was
spent figuring out how to efficiently move troops and their equipment, weapons and
weapon systems, communication equipment, and medical supplies from point A to point
B. Then, when I moved to the Pentagon to finish my career as Chief of Air Force
Transportation Programs, I worked for three years on how to effectively deploy troops
and their equipment, weapons and weapon systems, communication equipment, and
medical suppliers from many ports of embarkation to multiple ports of debarkation.
After I retired from the Air Force and joined the faculty at the University of South Florida,
my initial applied research was working with supply chain managers at Johnson &
Johnson and 3M to figure out how to effectively move J&J medical products and 3M
consumer products through their supply chains. For 3M, this included using quantitative
methods to help decide where intermediate distribution centers should be located,
especially to meet European expansion in the early 1990's.
Whether in military or commercial applications, the transportation problem is that
problem which addresses what origin point should ship to what final destination point
over which route so as to minimize transportation costs while meeting the problem
constraints. The problem constraints are staying within the available supply at the
origins, and meeting customer demand at the destinations.
The problem can become quickly complex by adding intermediate transshipment
points, such as distribution centers, which add constraints such as whatever is shipped

into transshipment points must be shipped out. The transshipment problem is the
subject of Module 7.2 Notes. Complexity is also added by placing capacity constraints
on the routes or the transshipment points.
You will see that the transportation problem is simply another application of linear
programming, but it is such a widespread application that this and other quantitative
texts devote a chapter just to this application. Companies like 3M that have multiple
manufacturing sites, many distribution centers and warehouses, and multiple consumer
demand locations find the transportation problem to be so complex that linear
programming applications are in common use.

Illustration of the General Transportation Problem

Let's start this module with a simplified example of the problem facing logistics staffs at
the Pentagon. How many troops should be deployed from aerial and water ports of
embarkation to aerial and water ports of debarkation so as to minimize total deployment
time. For example, we could use Fort Bragg, North Carolina and Fort Hood, Texas as
aerial ports of embarkation and Adana, Turkey; Dhahran, Saudi Arabia; and Wheelus,
Libya as aerial ports of debarkation. Please understand that this is not an actual
deployment scenario; but rather an example for illustration.
The constraints include "supply" and "demand." Supply constraints are used to ensure
that the number of troops deployed do not exceed the number available at the two ports
of embarkation. Demand constraints are used to ensure that the number of troops
deployed meet the need for troops at the ports of debarkation.
Before continuing, please understand that the two origins could be Detroit and Memphis
automobile production plants. The three destinations could be customers (automobile
dealerships) in Philadelphia, Washington DC and Miami. Instead of moving 20,000
troops, we may be moving 20,000 new cars out of Detroit and Memphis to meet dealer
demand at the three destinations.
The following table presents a picture of this transportation problem. The table includes
the nodes (origins and destinations) and the arcs (deployment or shipping routes).

Table 7.1.1
Origin
(Troops
Available)
Fort Bragg
(14,000)

Destination
(Troops
Needed)
To Ada -->
To Dha -->
To Whl -->

-> 7 Days From FtB Adana

-> 10 Days From FtH (5,000)
-> 8 Days From FtB

Dhahran

Fort Hood
(6,000)

To Ada -->
To Dha -->
To Whl -->

-> 7 Days From FtH

(10,000)

-> 8 Days from FtB

-> 5 Days From FtH

Wheelus
(5,000)

The table shows that 14,000 troops are available for deployment out of Fort Bragg. It
takes 7 days to deploy troops from Fort Bragg to Adana, which has a demand for 5,000
troops. So, one alternative is to deploy 5,000 troops out of Fort Bragg to Adana, leaving
9,000 troops available at Fort Bragg for Dhahran or Wheelus. The "cost" of this move
would be 5,000 troops times 7 days giving 35,000 troop deployment days.
Another way of satisfying the demand at Adana is to deploy 5,000 troops from Fort
Hood. Note it takes 10 days to deploy troops from Fort Hood to Adana, which would
give 5,000 times 10 days or 50,000 troop deployment days. We could continue to try
different combinations of origins and destinations to minimize total troop deployment
days while meeting demand and staying within troop availability constraints. For a small
problem, it would not be too difficult to try all of the combinations of solutions to find the
optimal solution. But if there were many origins, such as 10 or more, and many
destinations, such as 15 or more, the problem would be too cumbersome to work "by
hand."
I should note here that in the parallel automobile example, the 7, 10 and other
deployment day coefficients might be $700, $1000 and other freight charges. The
objective for the commercial application would be to minimize transportation costs while
meeting demand and staying within the available supply constraints.
Linear programming is an excellent quantitative method for application to the
transportation problem. Recall from Module 6, that to formulate a linear program we
need to decide on the decision variables, create the objective function as a linear
equation, and then formulate the constraints as linear equations.
For the transportation problem, the decision variables are:
FtB_Ada = Nbr of troops to deploy from Fort Bragg to Adana
FtB_Dha = Nbr of troops to deploy from Fort Bragg to Dhahran
FtB_Whl = Nbr of troops to deploy from Fort Bragg to Wheelus
FtH_Ada = Nbr of troops to deploy from Fort Hood to Adana
FtH_Dha = Nbr of troops to deploy from Fort Hood to Dhahran
FtH_Whl = Nbr of troops to deploy from Fort Hood to Wheelus
Note that the number of variables for the standard transportation problem is the number
of origins times the number of destinations. For this problem, there are two origins and
three destinations which gives 2 times 3 or 6 decision variables. The decision variables
then represent the units shipped over the deployment or shipping routes. Also note that
I used a code for naming the variables. The text uses X12 to represent the number of

units shipped from origin one to destination 2. I like to use a more descriptive code to
represent the route, and abbreviate names to keep within the 8 character variable name
restrictions of The Management Scientist.
The objective function is to minimize troop deployment days, where days ("costs") are
the coefficients multiplied times the number of troops routing decision variables.
Minimize Z = 7 FtB_Ada + 8 FtB_Dha + 8 FtB_Whl
+10 FtH_Ada + 7 FtH_Dha + 5 FtH_Whl
To show how this equation works, let's compute the deployment days for the solution
FtB_Ada = 5,000; FtB_Dha = 5,000; Fth_Whl = 4,000; Fth_Dha = 5,000 and FtH_Whl =
1,000.
Minimize Z = 7 (5,000) + 8 (5,000) + 8 (4,000) + 7 (5,000)
+ 5 (1,000) = 147,000 troop deployment days
This is a feasible solution but we do not know if it is optimal until we try all combinations
(or finish the constraint set and let the computer software run the combinations). Now
for the constraints which include staying within the available supply at each origin node.
Fort Bragg Supply: FtB_Ada + FtB_Dha + FtB_Whl < 14,000
Fort Hood Supply: FtH_Ada + FtH_Dha + FtH_Whl < 6,000
The constraints also include meeting the customer demand:
Adana Demand: FtB_Ada + FtH_Ada = 5,000
Dhahran Demand: FtB_Dha + FtH_Dha = 10,000
Wheelus Demand: FtB_Whl + FbH_Whl = 5,000
Note that I made the demand constraints strict equalities, but allowed for slack in the
supply constraints. This general formulation works as long as supply = demand or
supply is greater than demand. If supply is greater than demand, the slack constraint
will indicate which origin should have the excess supply. I will talk about how to handle
the special case of demand being greater than supply after we look at the solution.