Operations Research Neha Tikoo, Lovely Professional University

Notes Unit 5: Transportation Problem

CONTENTS

Objectives

Introduction

5.1 Modeling of Transportation Problem

5.1.1 Mathematical Representation

5.1.2 Network Representation of Transportation Model

5.1.3 General Representation of Transportation Model

5.2 Use of Linear Programming to Solve Transportation Problem

5.3 Minimizing Case

5.4 Maximization Transportation Problem

5.5 Balanced Transportation Problem

5.6 Unbalanced Transportation Problem

5.6.1 Demand Less than Supply

5.6.2 Demand Greater than Supply

5.7 Initial Feasible Solution

5.7.1 Algorithm for North-West Corner Method (NWC)

5.7.2 Algorithm for Row and Column Minima Method or Least Cost Method
(LCM)

5.7.3 Algorithm for Vogel’s Approximation Method (VAM)

5.8 Degeneracy in Transportation Problems

5.9 Summary

5.10 Keywords

5.11 Review Questions

5.12 Further Readings

Objectives

After studying this unit, you will be able to:

 Understand the meaning of operations research

 Know about the history of operations research

 Discuss the scope and application of operations research

 Explain the various types of models used in operations research

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Introduction Notes

Transportation problem is a particular class of linear programming, which is associated with

day-to-day activities in our real life and mainly deals with logistics. It helps in solving problems
on distribution and transportation of resources from one place to another. The goods are
transported from a set of sources (e.g., factory) to a set of destinations (e.g., warehouse) to meet
the specific requirements. In other words, transportation problems deal with the transportation
of a product manufactured at different plants (supply origins) to a number of different warehouses
(demand destinations). The objective is to satisfy the demand at destinations from the supply
constraints at the minimum transportation cost possible. To achieve this objective, we must
know the quantity of available supplies and the quantities demanded. In addition, we must also
know the location, to find the cost of transporting one unit of commodity from the place of
origin to the destination. The model is useful for making strategic decisions involved in selecting
optimum transportation routes so as to allocate the production of various plants to several
warehouses or distribution centers.

The transportation model can also be used in making location decisions. The model helps in
locating a new facility, a manufacturing plant or an office when two or more number of locations
is under consideration. The total transportation cost, distribution cost or shipping cost and
production costs are to be minimized by applying the model.

5.1 Modeling of Transportation Problem

A transportation problem can be expressed in two ways.

1. Mathematical representation

2. Network representation

Obviously the method used for solving the problems is the formulation of transportation problem
through mathematical methods. But for understanding of the readers, network representation is
equally important.

Let us understand each of them one by one.

5.1.1 Mathematical Representation

The transportation problem applies to situations where a single commodity is to be transported

from various sources of supply (origins) to various demands (destinations).

Let there be m sources of supply S1, S2, .…..............S m having ai ( i = 1, 2,......m) units of supplies
respectively to be transported among n destinations D 1 , D 2 ………D n with b j
( j = 1,2…..n) units of requirements respectively. Let C ij be the cost for shipping one unit of the
commodity from source i, to destination j for each route. If x ij represents the units shipped per
route from source i, to destination j, then the problem is to determine the transportation schedule
which minimizes the total transportation cost of satisfying supply and demand conditions.

The transportation problem can be stated mathematically as a linear programming problem as

below:

Minimize Z=  
 
cijxij

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Notes Subject to constraints,


= ai, i = 1,2,…..m (supply constraints)


= bj, j = 1,2,…..m (demand constraints)

and xij ³ 0 for all i = 1,2,…..m and,

j = 1,2,…..m

5.1.2 Network Representation of Transportation Model

The transportation model is represented by a network diagram in Figure 3.1

Figure 5.1: Network Representation of Transportation Model

Factory Source Destination Ware house

c11 : x11
S1 1 1 D1

Supply Demand
2 2 D2
S2

Sm m Dn
cmn : xmn n

where,

m be the number of sources,

n be the number of destinations,

Sm be the supply at source m,

Dn be the demand at destination n,

cmn be the cost of transportation from source m to destination n, and

xmn be the number of units to be shipped from source m to destination n.

The objective is to minimize the total transportation cost by determining the unknowns x mn, i.e.,
the number of units to be shipped from the sources and the destinations while satisfying all the
supply and demand requirements.

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5.1.3 General Representation of Transportation Model Notes

The Transportation problem can also be represented in a tabular form as shown in Table 5.1

Let cij be the cost of transporting a unit of the product from ith origin to jth destination.

ai be the quantity of the commodity available at source i,

bj be the quantity of the commodity needed at destination j, and

xij be the quantity transported from ith source to jth destination

Table 5.1: Tabular Representation of Transportation Model

To Supply
D1 D2  D3
From a1
S1 C11 C12  C1n a1
X11 X12
C21 C22
S2  C2n a2
X21 X22
. .
.  . .
. .
.  . .
. .
. . .

Cm1 Cm2
Sm  Cmn am
xm1 xm2
m n
bj
b1 b2  bn a  b i j
Demand i 1 j 1





If the total supply is equal to total demand, then the given transportation problem is a balanced
one.

5.2 Use of Linear Programming to Solve Transportation Problem

The network diagram shown in Figure 5.2 represents the transportation model of GM Textiles
units located at Chennai, Coimbatore and Madurai. GM Textiles produces ready-made garments
at these locations with capacities 6000, 5000 and 4000 units per week at Chennai, Coimbatore and
Madurai respectively. The textile unit distributes its ready-made garments through four of its
wholesale distributors situated at four locations Bangalore, Hyderabad, Cochin and Goa. The
weekly demand of the distributors are 5000, 4000, 2000 and 4000 units for Bangalore, Hyderabad,
Cochin and Goa respectively.

The cost of transportation per unit varies between different supply points and destination points.
The transportation costs are given in the network diagram.

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Notes Figure 5.2: Network Model of Transportation Problem

Factory Warehouse
Source Destination
6000
5 5000
Chennai Bangalore
1 1
6

9
7

7
Supply Coimbatore Hyderabad Demand
5000 2 8 2 4000
2
4

Cochin
6 3 3 2000
5

4000 Madurai
3
3
Goa
Transportation cost 4 4000

The management of GM Textiles would like to determine the number of units to be shipped
from each textile unit to satisfy the demand of each wholesale distributor. The supply, demand
and transportation cost are as follows:

Table 5.2 (a): Production Capacities

Supply Textile Unit Weekly Production (Units)

1 Chennai 6000
2 Coimbatore 5000
3 Madurai 4000

Table 5.2 (b): Demand Requirements

Destination Wholesale Distributor Weekly Demand (Units)

1 Bangalore 5000
2 Hyderabad 4000
3 Cochin 2000
4 Goa 4000

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Notes
Table 5.2 (c): Transportation Cost per Unit

Supply Destination
Bangalore Hyderabad Cochin Goa
Chennai 5 6 9 7
Coimbatore 7 8 2 4
Madurai 6 3 5 3

A linear programming model can be used to solve the transportation problem.

Let,

X11 be number of units shipped from source1 (Chennai) to destination 1 (Bangalore).

X12 be number of units shipped from source1 (Chennai) to destination 2 (Hyderabad).

X13 number of units shipped from source 1 (Chennai) to destination 3 (Cochin).

X14 number of units shipped from source 1 (Chennai) to destination 4 (Goa).

and so on.

Xij = number of units shipped from source i to destination j, where i = 1,2,……..m and,

j = 1,2,………n.

5.3 Minimizing Case

Objective Function

The objective is to minimize the total transportation cost. Using the cost data table, the following
equation can be arrived at:

 Transportation cost for units shipped from Chennai = 5x 11+6x12+9x13+7x14

 Transportation cost for units shipped from Coimbatore = 7x 21+8x22+2x23+4x24

 Transportation cost for units shipped from Madurai = 6x 31+3x32+5x33+3x34

Combining the transportation cost for all the units shipped from each supply point with the
objective to minimize the transportation cost, the objective function will be,

Minimize Z = 5x11+6x12+9x13+7x14+7x21+8x22+2x23+4x24+6x31+3x32+5x33+3x34

Constraints: In transportation problems, there are supply constraints for each source, and demand
constraints for each destination.

Supply constraints:

For Chennai, x 11+ x12+ x13+ x14  6000

For Coimbatore, x21+ x22+ x23+ x24  5000

For Madurai, x 31+ x32+ x33+ x34  4000

Demand constraints:

For B’lore, x 11+ x21+ x31 = 5000

For Hyderabad, x 12 + x22 + x32 = 4000

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Notes For Cochin, x13 + x23 + x33 = 2000

For Goa, x14 + x24 + x34 = 4000

The linear programming model for GM Textiles will be write in the next line. Minimize
Z = 5x11 + 6x12 + 9x13 + 7x14 + 7x21 + 8x22 + 2x23 + 4x24 + 6x31 + 3x32 + 5x33 + 3x34

Subject to constraints,

X11+x12+x13+x14  6000 (i)

X21+x22+x23+x24  5000 (ii)

X31+x32+x33+x34  4000 (iii)

X11+x21+x31 = 5000 (iv)

X12+x22+x32 = 4000 (v)

X13+x23+x33 = 2000 (vi)

X14+x24+x34 = 4000 (vii)

Where, xij  0 for i = 1, 2, 3 and j = 1, 2, 3, 4.

Example: Consider the following transportation problem (Table 3.3) and develop a
linear programming (LP) model.

Table 5.3: Transportation Problem

Destination
Source
1 2 3 Supply
1 15 20 30 350
2 10 9 15 200
3 14 12 18 400
Demand 250 400 300

Solution:
Let xij be the number of units to be transported from the source i to the destination j, where i = 1,
2, 3,…m and j = 1, 2, 3,…n.

The linear programming model is

Minimize Z = 15x11+20x12+30x13+10x21+9x22+15x23+14x31+12x32+18x33

Subject to constraints,

x11+x12+x13  350 (i)

x21+x22+x23  200 (ii)

x31+x32+x33  400 (iii)

x11+x12+x31 = 250 (iv)

x12+x22+x32 = 400 (v)

x13+x23+x33 = 300 (vi)

xij  0 for all i and j.

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In the above LP problem, there are m x n = 3 x 3 = 9 decision variables and Notes

m + n = 3 + 3 = 6 constraints.

5.4 Maximization Transportation Problem

In this type of problem, the objective is to maximize the total profit or return. In this case,
convert the maximization problem into minimization by subtracting all the unit cost from the
highest unit cost given in the table and solve.

Example: A manufacturing company has four plants situated at different locations, all
producing the same product. The manufacturing cost varies at each plant due to internal and
external factors. The size of each plant varies, and hence the production capacities also vary. The
cost and capacities at different locations are given in the following table:

Table 5.4: Cost and Capacity of Different Plants

Particulars Plant
A B C D
Production cost per unit (Rs.) 18 17 15 12
Capacity 150 250 100 70

The company has five warehouses. The demands at these warehouses and the transportation
costs per unit are given in the Table 5.5 below. The selling price per unit is ` 30.

Table 5.5: Transportation Problem

Warehouse Transportation cost (Rs) — Unit-wise Demand

A B C D
1 6 9 5 3 100
2 8 10 7 7 200
3 2 6 3 8 120
4 11 6 2 9 80
5 3 4 8 10 70

1. Formulate the problem to maximize profits.

2. Find the total profit.

Solution:

1. The objective is to maximize the profits. Formulation of transportation problem as profit

matrix table is shown in Table 5.6. The profit values are arrived as follows.

Profit = Selling Price –Production cost –Transportation cost

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Notes Table 5.6: Profit Matrix

Destination
A B C D Demand
1 6 4 10 15 100
2 4 3 8 11 200
3 10 7 12 10 120
4 1 7 13 9 80
5 9 9 7 8 70
Supply 150 250 100 70 570

Converting the profit matrix to an equivalent loss matrix by subtracting all the profit
values in Table 5.6 from the highest value 13. Subtracting all the values from 13, the loss
matrix obtained is shown in the Table 5.7.

Table 5.7: Loss Matrix

Destination
A B C D Demand
1 9 11 5 0 100
2 11 12 7 4 200
3 5 8 3 5 120
4 14 8 2 6 80
5 6 6 8 7 70
Supply 150 250 100 70 570

2. To determine the initial solution using TORA

Input Screen:
Table 5.8 (a): TORA, Input Screen for TP Max Problem

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Output Screen: Notes

Table 5.8 (b): TORA Output Screen (Vogel’s Method)

The first iteration itself is optimal, hence optimality is reached.

3. To find the total cost:

The total maximization profit associated with the solution is

Total Profit = (6 × 10) + (4 × 20) + (10 × 120) + (3 × 180) + (9 × 70) + (10 × 20)
+ (13 × 80) + (15 × 70)

= 60 + 80 + 1200 + 540 + 630 + 200 + 1040 + 1050

= ` 4800.00

5.5 Balanced Transportation Problem

When the total supplies of all the sources are equal to the total demand of all destinations, the
problem is a balanced transportation problem.

Total supply = Total demand





The problem given in Example 3.1 represents a balanced transportation problem.

5.6 Unbalanced Transportation Problem

When the total supply of all the sources is not equal to the total demand of all destinations, the
problem is an unbalanced transportation problem.

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Notes Total supply  Total demand

  



5.6.1 Demand Less than Supply

In real-life, supply and demand requirements will rarely be equal. This is because of variation
in production from the supplier end, and variations in forecast from the customer end. Supply
variations may be because of shortage of raw materials, labour problems, improper planning
and scheduling. Demand variations may be because of change in customer preference, change in
prices and introduction of new products by competitors. These unbalanced problems can be
easily solved by introducing dummy sources and dummy destinations. If the total supply is
greater than the total demand, a dummy destination (dummy column) with demand equal to
the supply surplus is added. If the total demand is greater than the total supply, a dummy source
(dummy row) with supply equal to the demand surplus is added. The unit transportation cost
for the dummy column and dummy row are assigned zero values, because no shipment is
actually made in case of a dummy source and dummy destination.

Example:
Check whether the given transportation problem shown in Table 5.9 is a balanced one. If not,
convert the unbalanced problem into a balanced transportation problem.

Table 5.9: Transportation Model with Supply exceeding Demand

Destination
Source Supply
1 2 3
1 25 45 10 200
2 30 65 15 100
3 15 40 55 400
Demand 200 100 300

Solution:

For the given problem, the total supply is not equal to the total demand.

  



since,



 
 


The given problem is an unbalanced transportation problem. To convert the unbalanced

transportation problem into a balanced problem, add a dummy destination (dummy column).

i.e., the demand of the dummy destination is equal to,

 
 


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Thus, a dummy destination is added to the table, with a demand of 100 units. The modified table Notes
is shown in Table 5.10 which has been converted into a balanced transportation table. The unit
costs of transportation of dummy destinations are assigned as zero.

Table 5.10: Dummy Destination Added

Destination
Source Supply
1 2 3 4
1 25 45 10 0 200
2 30 65 15 0 100
3 15 40 55 0 400
Demand 200 100 300 100 700/700

Similarly,

If 



then include a dummy source to supply the excess demand.

5.6.2 Demand Greater than Supply

Example: Convert the transportation problem shown in Table 3.6 into a balanced
problem.

Table 5.11: Demand Exceeding Supply

Destination
Source Supply
1 2 3 4
1 10 16 9 12 200
2 12 12 13 5 300
3 14 8 13 4 300
Demand 100 200 450 250 1000/800

Solution:

The given problem is, 





  and 




The given problem is an unbalanced one. To convert it into a balanced transportation problem,
include a dummy source (dummy row) as shown in Table 5.12

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Notes Table 5.12: Balanced TP Model

Source Destination
1 2 3 4 Supply
1 10 16 9 12 200
2 12 12 13 5 300
3 14 8 13 4 300
4 0 0 0 0 200
Demand 100 200 450 250 1000/1000

5.7 Initial Feasible Solution

Step 1: Formulate the Problem

Formulate the given problem and set up in a matrix form. Check whether the problem is a
balanced or unbalanced transportation problem. If unbalanced, add dummy source (row) or
dummy destination (column) as required.

Step 2: Obtain the Initial Feasible Solution

The initial feasible solution can be obtained by any of the following three methods.

1. Northwest Corner Method (NWC)

2. Row and Column Minima Method (RCMM)

3. Vogel’s Approximation Method (VAM)

The transportation cost of the initial basic feasible solution through Vogel’s approximation
method, VAM will be the least when compared to the other two methods which gives the value
nearer to the optimal solution or optimal solution itself. Algorithms for all the three methods to
find the initial basic feasible solution are given.

5.7.1 Algorithm for North-West Corner Method (NWC)

1. Select the North-west (i.e., upper left) corner cell of the table and allocate the maximum
possible units between the supply and demand requirements. During allocation, the
transportation cost is completely discarded (not taken into consideration).

2. Delete that row or column which has no values (fully exhausted) for supply or demand.

3. Now, with the new reduced table, again select the North-west corner cell and allocate the
available values.

4. Repeat steps (2) and (3) until all the supply and demand values are zero.

5. Obtain the initial basic feasible solution.

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Notes
Example: Find out the initial feasible solution for transportation cost involved in the
problem shown through Table 5.13.

Table 5.13

Retail shops
Factories 1 2 3 4 Supply
1 3 5 7 6 50
2 2 5 8 2 75
3 3 6 9 2 25
Demand 20 20 50 60

Solution:

Table 5.14

Retail shops
Factories 1 2 3 4 Supply
1 3 20 5 20 7 10 6 50
2 2 5 8 40 2 35 75
3 3 6 9 2 25 25
Demand 20 20 50 60

As under the process of NWC method, we allocate x 11 = 20. Now demand for the first column is
satisfied, therefore, eliminate that column.
Proceeding in this way, we observe that
x12 = 20, x13 = 10, x23 = 40, x24 = 35, x34 = 25.
Delete the row if supply is exhausted.
Delete the column if demand is satisfied.
Here, number of retail shops (n) = 4, and
Number of factories (m) = 3
Number of basic variables = m + n – 1 = 3 + 4 – 1 = 6.
Initial basic feasible solution:
20 × 3 + 20 × 5 + 10 × 7 + 40 × 8 + 35 × 2 + 25 × 2 = 670

5.7.2 Algorithm for Row and Column Minima Method or Least Cost
Method (LCM)
1. Select the smallest transportation cost cell available in the entire table and allocate the
supply and demand.
2. Delete that row/column which has exhausted. The deleted row/column must not be
considered for further allocation.
3. Again select the smallest cost cell in the existing table and allocate. (Note: In case, if there
are more than one smallest costs, select the cells where maximum allocation can be made)
4. Obtain the initial basic feasible solution.

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Notes
Example: Solve example 5 by least cost method.
Solution:

To make our understanding better, let us go through the Table 5.15.

Table 5.15

Retail shops
Factories 1 2 3 4 Supply
1 3 5 7 6 50
2 2 5 8 2 75
3 3 6 9 2 25
Demand 20 20 50 60

Applying the least cost method-

Table 5.16

Retail shops
Factories 1 2 3 4 Supply
1 3 5 20 7 30 6 50
2 2 20 5 8 2 55 75
3 3 6 9 20 2 5 25
Demand 20 20 50 60

We observe that c21 = 2, which is the minimum transportation cost. So, x 21 = 20.
Proceeding in this way, we observe that x 24 = 55, x34 = 5, x12 = 20, x13 = 30, x33 = 20.
Number of basic variables = m + n –1 = 3 + 4 – 1 = 6.
The initial basic feasible solution:
= 20 × 2 + 55 × 2 + 5 × 2 + 20 × 5 + 30 × 7 + 20 × 9
= 650.

5.7.3 Algorithm for Vogel’s Approximation Method (VAM)

1. Calculate penalties for each row and column by taking the difference between the smallest
cost and next highest cost available in that row/column. If there are two smallest costs,
then the penalty is zero.

2. Select the row/column, which has the largest penalty and make allocation in the cell
having the least cost in the selected row/column. If two or more equal penalties exist,
select one where a row/column contains minimum unit cost. If there is again a tie, select
one where maximum allocation can be made.

3. Delete the row/column, which has satisfied the supply and demand.

4. Repeat steps (1) and (2) until the entire supply and demands are satisfied.

5. Obtain the initial basic feasible solution.

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Notes
!
Caution The initial solution obtained by any of the three methods must satisfy the following
conditions.

1. The solution must be feasible, i.e., the supply and demand constraints must be
satisfied (also known as rim conditions).

2. The number of positive allocations, N must be equal to m + n – 1, where m is the

number of rows and n is the number of columns.

Example: Find the initial feasible solution of the transportation problem illustrated
through Table 5.17

Table 5.17

Destination
Origin 1 2 3 4 Supply
1 20 22 17 4 120
2 24 37 9 7 75
3 34 37 20 15 25
Demand 60 40 30 110 240

Solution:

Solving the problem through Vogel's Approximation Method, we get the Table 5.18

Table 5.18

Destination
Origin 1 2 3 4 Supply Penalty
1 20 2240 17 4 120 80 13
2 24 37 9 7 70 2
3 32 37 20 15 50 5
Demand 60 40 30 110 240
Penalty 4 15 8 3

The highest penalty occurs in the second column. The minimum c ij in this column is c12 (i.e., 22).
Hence, x12 = 40 and the second column is eliminated.

Now again calculate the penalty.

Table 5.19

Origin 1 2 3 4 Supply Penalty

1 20 22 40 17 480 120 13
2 24 37 9 7 70 2
3 32 37 20 15 50 5
Demand 60 40 30 110 240
Penalty 4 8 3

The highest penalty occurs in the first row. The minimum cij in this row is c 14 (i.e., 4). So x 14 = 80
and the first row is eliminated.

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Notes Final table:

Now assuming that you can calculate the values yourself, we reach the final table as in
Table 5.20

Table 5.20

The initial basic feasible solution:

= 22 × 40 + 4 × 80 + 24 × 10 + 9 × 30 + 7 × 30 + 32 × 50

= 3520

Self Assessment

State true or false:

1. Transportation problem applies to situations where a set of commodities is to be transported

from source to another.

2. The cost of transportation per unit varies between different supply points,

3. In transportation problems, there are supply constraints for each destination.

4. The most important objective of a transportation problem is to maximize the cost of

shipping.

5. The transportation problem is an extension of transshipment problem.

6. There may be routes that are unavailable to transport units from one source to one or
more destinations.

7. In transshipment problem, each node makes supplies to the other.

8. Degeneracy is the condition when the number of filled cells is less than the number of
rows plus the number of columns minus one.

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5.8 Degeneracy in Transportation Problems Notes

Degeneracy involves two steps:

1. Check for degeneracy: The solution that satisfies the above said conditions N = m + n – 1 is
a non-degenerate basic feasible solution otherwise, it is a degenerate solution. Degeneracy
may occur either at the initial stage or at subsequent iterations.
If number of allocations, N = m + n – 1, then degeneracy does not exist, one has to go to the
next step.

If number of allocations, N = m + n – 1, then degeneracy does exist, and has to be resolved

before going to the next step.
2. Resolving Degeneracy: To resolve degeneracy at the initial solution, allocate a small positive
quantity e to one or more unoccupied cell that have lowest transportation costs, so as to
make m + n – 1 allocations (i.e., to satisfy the condition N = m + n – 1). The cell chosen for
allocating e must be of an independent position. In other words, the allocation of e should
avoid a closed loop and should not have a path.

The following Table 5.21 shows independent allocations.

Table 5.21: Independent Allocations

* *
* * * *
* * *

The following Tables 5.22 (a), (b) and (c) show non-independent allocations.

Table 5.22: (a) Independent Allocations, (b) and (c)

* *
* *
* * * *

(a) (b)

* * * *
*
* *
* *
(c)

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Notes Self Assessment

Fill in the blanks:

9. Degeneracy involves ………………steps.

10. To resolve degeneracy at the initial solution, allocate a small positive quantity e to one or
more unoccupied cell that have ………………..transportation costs.

11. …………………..may occur either at the initial stage or at subsequent iterations.


Case Study South India Soaps Ltd.
The South India Soaps Ltd. (SISOL) operated 3 factories from which it shipped soaps to
regional warehouses. In 2007, the demand for soaps was 24,000 tonnes distributed as
follows:

Region Demand in 000’ tones

Cochin 5
Nellore 4
Salem 4
Madurai 11
24

One-shift production capacity in each of the 3 factories was as follows:

Region Demand in 000’ tones

Chennai 12
Coimbatore 7
Bangalore 7
26

Estimated transport costs (in hundred rupees per 000’ tones) are given below:

Factory Regional warehouses

Cochin Nellore Salem Madurai
Chennai 95 105 80 15
Coimbatore 115 180 40 30
Bangalore 155 180 95 70
SISOL followed a policy of decentralization under which each of the four regional
warehouses was under the direct supervision of a regional sales manager and he was
responsible for the profitability of operation under his control.

Over a period of time, this procedure lead to increasing friction in the organization. There
were questions whether this procedure achieved the objectives of minimizing transport
costs; also there was no coordination. For instance in 2005, the sales manager of Madurai
& Nellore placed their orders with the Chennai factory which did not have the capacity to
meet all demands. This led to inefficient and duplicate orders, friction etc. The final pattern
that emerged in 2005 was as follows:

Contd...

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Notes
Cochin Nellore Salem Madurai
Chennai 0 1 2 9
Coimbatore 3 0 0 2
Bangalore 2 3 2 0

The general manager of SISOL called meeting of the executives at the central office. Some
executives proposed that all orders should be routed through the central office which
would determine the optimal programme. Others protested that this would seriously
conflict with the firm's philosophy of decentralization.

Question:

You have been hired as a consultant by the general manager. Prepare a minimum cost
distribution schedule for SISOL. Compare this schedule with the present schedule of 2005;
which is better?

5.9 Summary

 A transportation problem basically deals with that problem which aims to find the best
way to fulfill the demand of various demand sources using the capacities of various
supply points.

 Although the formation can be used to represent more general assignment and scheduling
problems as well as transportation and distribution problems, it gets its name from its
application to problems involving transporting products from several sources to several
destinations.

 The two common objectives of such problems are either to minimize the cost of shipping
commodity to various destinations or to maximize the profit of shipping it various
destinations.

 Transportation problems are often used in, surprise, transportation planning. But it should
always be remembered that the transportation problem is only a special topic of the linear
programming problems.

5.10 Keywords

Balanced Transportation Problem: when the total supplies of all the sources are equal to the
total demand of all destinations.

Basic Feasible Solution: A feasible solution to an 'm' origin and 'n; destination is said to be basic,
if the number of positive allocations are (m+n+1).

Degeneracy: When the number of filled cells is less than the number of rows plus the number of
columns minus one.

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Notes 5.11 Review Questions

1. Find the initial basic feasible solution for the transportation problem given in following
table.

To
From Available
A B C
I 50 30 220 1
II 90 45 170 3
III 250 200 50 4
Requirement 4 2 2

2. Obtain an optimal solution for the transportation problem by MODI method given in this
table:

Destination

D1 D2 D3 D4 Supply

S1 19 30 50 10 7

Source S2 70 30 40 60 9

S3 40 8 70 20 18

Demand 5 8 7 14

3. Solve the transportation problem

Destination
1 2 3 Supply

1 3 5 7 10

Source 2 11 8 9 8

3 13 3 9 5

Demand 5 9 11 23
25

4. Develop a network representation of the transportation problem for a company that

manufactures products at three plants and ships them to three warehouses. The plant
capacities and warehouse demands are shown in the following table:

The transportations cost per unit (in `) is given in matrix.

Plant Warehouse Plant Capacity (no. of units)

W1 W2 W3
P1 22 18 26 350
P2 12 12 10 450
P3 14 20 10 200
Warehouse demand 250 450 300
(no. of units)

5. Determine whether a dummy source or a dummy destination is required to balance the

model given.

(a) Supply a1 = 15, a2 = 5, a3 = 4, a4 = 6

Demand b1 = 4, b2 = 15, b3 = 6, b4 = 10

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 Unit 5: Transportation Problem

(b) Supply a1 = 27, a2 = 13, a3 = 10 Notes

Demand b1 = 30, b2 = 10, b3 = 6, b4 = 10

(c) Supply a1 = 2, a2 = 3, a3 = 5

Demand b1 = 3, b2 = 2, b3 = 2, b4 = 2, b5 = 1.

6. A state has three power plants with generating capacities of 30, 40 and 25 million KWH
that supply electricity to three cities located in the same state. The demand requirements
(maximum) of the three cities are 35, 40 and 20 million KWH. The distribution cost (` in
thousand) per million unit for the three cities are given in the table below:

City
1 2 3
1 60 75 45
Plant
2 35 35 40
3 55 50 45

(a) Formulate the problem as a transportation model.

(b) Determine an economical distribution plan.

(c) If the demand is estimated to increase by 15%, what is your revised plan?

(d) If the transmission loss of 5% is considered, determine the optimal plan.

7. Find the initial transportation cost for the transportation matrix given using North-West
corner method, Least cost method and Vogel’s Approximation method.

Destination
1 2 3 4 Supply

A 5 6 7 8 25

Source B 7 5 4 2 75

C 6 1 3 2 15

Demand 50 30 20 15

8. The Sharp Manufacturing Company produces three types of monoblock pumps for
domestic use. Five machines are used for manufacturing the pumps. The production rate
varies for each machine and also the unit product cost. Daily demand and machine
availability are given below.
Demand Information

Product

A B C

Demand (units) 2000 15000 700

Machine Availability Details

Machine capacity (units)

1 2 3 4 5
Available 700 1000 1500 1200 800

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Notes Unit Product Cost

Product
Machine A B C
1 150 80 75
2 120 95 60
3 112 100 60
4 121 95 50
5 125 75 50

Determine the minimum production schedule for the products and machines.

9. A company has plants at locations A, B and C with the daily capacity to produce chemicals
to a maximum of 3000 kg, 1000 kg and 2000 kg respectively. The cost of production (per kg)
are ` 800, ` 900 and ` 7.50 respectively. Customer’s requirement of chemicals per day is as
follows:

Customer Chemical Required Price offered

1 2000 200
2 1000 215
3 2500 225
4 1000 200

Transportation cost (in rupees) per kg from plant locations to customer’s place is given in
table.

Customer

1 2 3 4

A 5 7 10 12

Plant B 7 3 4 2

C 4 6 3 9

Find the transportation schedule that minimizes the total transportation cost.

10. A transportation model has four supplies and five destinations. The following table shows
the cost of shipping one unit from a particular supply to a particular destination.

Source Destination Supply

1 2 3 4 5
1 13 6 9 6 10 13
2 8 2 7 7 9 15
3 2 12 5 8 7 13
Demand 10 15 7 10 2

The following feasible transportation pattern is proposed:

x11 = 10, x12 = 3, x22 = 9, x23 = 6, x33 = 9, x34 = 4, x44 = 9, x45 = 5.

Test whether these allocations involve least transportation cost. If not, determine the
optimal solution.

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11. A company has four factories situated in four different locations in the state and four Notes
company showrooms in four other locations outside the state. The per unit sale price,
transportation cost and cost of production is given in table below, along with weekly
requirement.

Cost of production
Factory Showrooms
(`)
1 2 3 4
A 9 4 5 3 12
B 4 4 4 4 17
C 4 6 5 6 19
D 8 7 7 4 17

Factory Weekly Capacity (units) Weekly demand (units)

A 15 10
B 20 14
C 25 20
D 20 22
Determine the weekly distribution schedule to maximize the sales profits.

12. A computer manufacturer has decided to launch an advertising campaign on television,

magazines and radio. It is estimated that maximum exposure for these media will be 70,
50, and 40 million respectively. According to a market survey, it was found that the
minimum desired exposures within age groups 15-20, 21-25, 26-30, 31-35 and above 35 are
10, 20, 25, 35 and 55 million respectively. The table below gives the estimated cost in paise
per exposure for each of the media. Determine an advertising plan to minimize the cost.

Media Age Groups

15-20 21-25 26-30 31-35 above 35
TV 14 9 11 11 12
Radio 11 7 6 7 8
Magazine 9 10 7 10 8

Solve the problem and find the optimal solution, i.e., maximum coverage at minimum
cost.

13. A garment manufacturer has 4 units I, II, III, and IV, the production from which are
received by 4 direct customers. The weekly production of each manufacturing unit is 1200
units and all the units are of the same capacity. The company supplies the entire production
from one unit to one supplier. Since the customers are situated at different locations, the
transportation cost per unit varies. The unit cost of transportation is given in the table. As
per the company’s policy, the supply from unit B is restricted to customer 2 and 4, and
from unit D to customer 1 and 3. Solve the problem to cope with the supply and demand
constraints.

Manufacturing unit 1 2 3 4
A 4 6 8 3
B 4 – 5 –
C 6 5 5 9
D – 7 – 6

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Notes 14. A company dealing in home appliances has a sales force of 20 men who operate from three
distribution centers. The sales manager feels that 5 salesmen are needed to distribute
product line I, 6 to distribute product line II, 5 for product line III and 4 to distribute
product line IV. The cost (in `) per day of assigning salesmen from each of the offices are
as follows:

Product Line
I II III IV
A 10 12 13 9
Source B 9 11 12 13
C 7 8 9 10

Currently, 8 salesmen are available at center A, 5 at center B and 7 at center C. How many
salesmen should be assigned from each center to sell each product line, in order to minimize
the cost? Is the solution unique?

15. Solve the following degenerate transportation problem:

Destination
I II III Supply
A 7 3 4 2
Source B 2 1 3 3
C 3 4 6 5
Demand 4 1 5

Answers: Self Assessment

1. False 2. False

3. False 4. False

5. False 6. True

7. False 8. True

9. Two 10. Lowest

11. Degeneracy

5.12 Further Readings

Books G Dantzig, Linear Programming and Extensions, Princeton University Press.

G Dantzig, M N Thapa, Linear Programming 2: Theory and Extensions, Princeton
University Press.

Robert J. Vanderbei, Linear Programming: Foundations and Extensions, Princeton

University Press.

S Jaisanker, Quantitative Techniques for Management, Excel Books.

Online links www.adbook.net

www.mathresources.com

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