Production and Operation Management

Session no : 04

TRANSPORTATION MODEL
Problem Definition and Data

A dairy farm has three plants located throughout the state. Daily milk
production at each plant is as follows: P1 20
P2 28
P3 17

Each day the firm must fulfill the needs of its three warehouses. Milk
requirement at each warehouse is as follows: W1 21
W2 25
W3 19
Cost of shipping one unit of milk from each plant to each warehouse is given in the following table in
rupees:
W1 W2 W3
7 6 9
P1

5 7 3
P2

4 5 8
P3

Find the shipment from each milk plant to each warehouse so that the total cost of shipment is
minimum.

Minimize Z = 7 X11+ 6 X12+ 9 X13+ 5 X21+ 7 X22+ 3 X23+ 4 X31+ 5 X32+ 8 X33

Subject to:
W1 W2 W3 SUPPLY
X11+ X12+ X13 = 20
7 6 9
P1 20 X21+ X22+ X23 = 28

5 7 3 X31+ X32+ X33 = 17

P2 28
X11 + X21 +X31 = 21
4 5 8 X12 + X22 + X32 = 25
P3 17
X13 + X23 + X33 =19
DEMAND 21 25 19 65 And non-negativity constraint
 DESTINATIONS
W1 W2 …….. Wn SUPPLY
C11 C12 C 1n
P1 S1
X11 X12 …….. X1n
C21 C22 C 2n
SOURCES

P2 S2
X21 X22 …….. X2n
…… …….. ……… …….. ……… ……..
C31 C32 Cmn
Pm ……… Sm
Xm1 Xm2 Xmn
DEMAND D1 D2 ……… Dn

Si : number of units being supplied by source i

Dj : number of units being received by destination j
Cij : cost per unit distributed from source i to destination j
Xij : amount distributed from source i to destination j

Min Z =

Subject to:

and Xij ≥0 ,for all i and j

  Simplex algorithm can be used to solve the above problem

 However as a large number of variables are involved, computations required will be much
more.

 The following points may be noted in a transportation model:

 All supply and demand constraints are of equality type

 They are expressed in terms of only one kind of unit

 Each variable occurs only once in the supply constraints and only once in the
demand constraints

 Each variable in the constraints has unit coefficient only.

ASSUMPTIONS IN THE TRANSPORTAION MODEL

 Total quantity of item available at different sources is equal to the total requirement at
different destinations.

 Item can be conveniently transported from all sources to destinations.

 The unit transportation cost of the item from all sources to destinations is known

 The unit transportation cost on a given route is directly proportional to the number of units
shipped on that route.

 The objective is to minimize the total transportation cost for the organization as a whole and
not for the individual supply and distribution centers.

INITIAL FEASIBLE SOLUTION

 North West Corner Method

 Least Cost Cell Method

 Vogel’s Approximation Method

 OPTIMAL SOLUTION

 Stepping Stone Method

 Modified Distribution Method (MODI)

 1) NORTH WEST CORNER METHOD

 Start in the upper left-hand cell (or North West corner) of the table and allocate units to
shipping routes as follows:

a) Exhaust the supply (factory capacity) of each row before moving down to the next
row

b) Exhaust the (warehouse) requirements of each column before moving to the next
column

c) Check to ensure that all supplies and demands are met

W1 W2 W3 SUPPLY

7 6 9
P1 20
20
5 7 3
P2 28
1 25 2
4 5 8
P3 17
17
DEMAND 21 25 19 65

Transportation cost = 20*7+1*5+25*7+2*3+17*8 =Rs 462/-

2) LEAST COST CELL METHOD

W1 W2 W3 SUPPLY

7 6 9
P1 20
20
5 7 3
P2 28
4 5 19
4 5 8
P3 17
17
DEMAND 21 25 19 65

Transportation Cost = 20*6+4*5+5*7+19*3+17*4 = Rs 300 /-

 3) VOGELS APPROXIMATION METHOD (VAM)

 For each row and column remaining under consideration, calculate its difference, which is
defined as the arithmetic difference between the smallest and next-to-the-smallest unit cost
Cij still remaining in that row or column.

 In that row or column having the largest difference, select the variable having he smallest
remaining unit cost.

 Use up the remaining supply in its row or the remaining demand in its column (whichever is
smaller).

 Eliminate that row or column. Repeat the procedure.

W1 W2 W3 SUPPLY

7 6 9
P1 20
20 1 1 1
5 7 3
P2 28
9 19 2 2*
4 5 8
P3 17
12 5 1 1 1

DEMAND 21 25 19 65

1 1 5*
1 1
3* 1

DISTRIBUTION CENTERS
SUPPLY
D1 D2 D3 D4

P1 2 3 11 7 6
PLANTS P2 1 0 6 1 1
P3 5 8 15 9 10

DEMAND 7 5 3 2