AIBS

AIBS MBA-IB, MIB 201

OPERATIONS RESEARCH REMICA AGGARWAL

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Transportation Problem

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Description
A transportation problem basically deals with the problem, which aims to find the best way to fulfill the demand of n demand points using the capacities of m supply points. While trying to find the best way, generally a variable cost of shipping the product from one supply point to a demand point or a similar constraint should be taken into consideration.
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Formulating Transportation Problems

Example 1: Powerco has three electric power plants that supply the electric needs of four cities. The associated supply of each plant and demand of each city is given in the table 1. The cost of sending 1 million kwh of electricity from a plant to a city depends on the distance the electricity must travel.
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Transportation tableau
A transportation problem is specified by the supply, the demand, and the shipping costs. So the relevant data can be summarized in a transportation tableau. The transportation tableau implicitly expresses the supply and demand constraints and the shipping cost between each demand and supply point.
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Table 1. Shipping costs, Supply, and Demand for Powerco Example

From
City 1

To City 2 City 3 City 4

Supply (Million kwh)

Plant 1
Plant 2

$8
$9

$6
$12

$10
$13

$9
$7

35

50

Plant 3 Demand
(Million kwh)

$14 45

$9 20

$16 30

$5 30

40

Transportation Tableau
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Solution
1. Decision Variable: Since we have to determine how much electricity is sent from each plant to each city; Xij = Amount of electricity produced at plant i and sent to city j

X14 = Amount of electricity produced at plant 1 and sent to city 4

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2. Objective function
Since we want to minimize the total cost of shipping from plants to cities; Minimize Z = 8X11+6X12+10X13+9X14 +9X21+12X22+13X23+7X24 +14X31+9X32+16X33+5X34

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3. Supply Constraints

Since each supply point has a limited production capacity; X11+X12+X13+X14 <= 35 X21+X22+X23+X24 <= 50 X31+X32+X33+X34 <= 40

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4. Demand Constraints
Each demand point has a demand ; X11+X21+X31 >= 45 X12+X22+X32 >= 20 X13+X23+X33 >= 30 X14+X24+X34 >= 30
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5. Sign Constraints

Since a negative amount of electricity can not be shipped all Xijs must be non negative; Xij >= 0 (i= 1,2,3; j= 1,2,3,4)
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LP Formulation of Powercos Problem

Min Z = 8X11+6X12+10X13+9X14+9X21+12X22+13X23+7X24 +14X31+9X32+16X33+5X34 S.T.: X11+X12+X13+X14 <= 35 (Supply Constraints) X21+X22+X23+X24 <= 50 X31+X32+X33+X34 <= 40 X11+X21+X31 >= 45 (Demand Constraints) X12+X22+X32 >= 20 X13+X23+X33 >= 30 X14+X24+X34 >= 30 Xij >= 0 (i= 1,2,3; j= 1,2,3,4)
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General Description of a Transportation Problem

1. A set of m supply points from which a good is shipped. Supply point i can supply at most si units. 2. A set of n demand points to which the good is shipped. Demand point j must receive at least di units of the shipped good. 3. Each unit produced at supply point i and shipped to demand point j incurs a variable cost of cij.
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Xij = number of units shipped from supply point i to demand point j i m j n min cijXij
i 1 j 1

s.t. Xij si (i 1,2,...,m)

j 1

j n

X
i 1

i m

ij

dj ( j 1,2,...,n)

Xij 0(i 1,2,...,m; j 1,2,...,n)

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Balanced Transportation Problem

If Total supply equals to total demand, the problem is said to be a balanced transportation problem: j n i m

s d
i i 1 j 1

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Balancing a TP if total supply exceeds total demand

If total supply exceeds total demand, we can balance the problem by adding dummy demand point. Since shipments to the dummy demand point are not real, they are assigned a cost of zero.

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Balancing a transportation problem if total supply is less than total demand

If a transportation problem has a total supply that is strictly less than total demand the problem has no feasible solution. There is no doubt that in such a case one or more of the demand will be left unmet. we can balance the problem by adding dummy supply point. Since shipments to the dummy supply point are not real, they are assigned a cost of zero.

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ANOTHER EXAMPLE
MG Auto has three plants in Los Angeles, Detroit and New Orleans, and two major distribution centers in Denver and Miami. The capacities of the three plants during the next quarter are 1000, 1500, 1200 cars.The quarterly demand at the two distribution centers are 2300 and 1400 cars.

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The transportation cost per car on the different routes, rounded to the closest dollar are calculated as given below:

Los Angeles Detroit New Orleans

Formulate the LP model.

Denver $80 $100 $102

Miami $215 $108 $68

Let xij be defined as the no. of cars shipped from ith source to jth destination.
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Min Z = 80x11 + 215x12 + 100x21 + 108x22 + 102x31 + 68x32 st x11 + x12 <= 1000 x21 + x22 <= 1500 x31 + x32 <= 1200 x11 + x21 + x31 x12 + x22 >= 2300 +x32 >= 1400

xij 0, i = 1,2,3; j = 1,2.

In the above LP model, there are mn = 32 = 6 decision variables,xij and m+ n = 5 constraints, where m are the no. of rows and n are the number of columns.

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Transportation Table D1 O1 O2 c11

x11

D2 c12
x12

Dn c1n
x1n

a1 Availability a2 am

c21

x21

c22

x22

c2n

x2n

cm1

xm1

cm2

xm2

cmn

xmn
21

Om

b1

b2

bn Requirement

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Finding Basic Feasible Solution for TP

There are (m+n) constraints and mn variables. Because of necc and suff conditions of feasibility, any feasible solution satisfying m + n 1 of m + n constraints equations will automatically satisfy the last constraint. A feasible solution to a TP can have at most m + n 1 strictly positive components. Algorithm of TP Formulate the problem and set up in the matrix form. Obtain an initial basic feasible solution. Test the initial solution for optimality. Update the solution.

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Methods to find the BFS for a balanced TP

There are three basic methods:

1. Northwest Corner Method

2. Minimum Cost Method 3. Vogels Method
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1. Northwest Corner Method

To find the bfs by the NWC method: First of all check whether there exists a feasible solution by checking whether total demand = total supply. Select the north-west (upper left ) corner of the transportation tableau & allocate as much as possible so that either the capacity of the first row is exhausted or the requirement of the first column is satisfied. i.e x11= min ( a1, b1) Now if b1>a1 move down & make second allocation of the of magnitude x21= min(a2 , b1-x11) If b1<a1 then move across and make second allocation of magnitude x12=min(a1-x11, b2) If b1=a1 , then there is a tie and one can move any ways. Move further until all rim requirements are satisfied .
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According to the explanations in the previous AIBS slide we can set x11=3 (meaning demand of demand point 1 is satisfied by supply point 1).
5 6 2 3 3 5 2 3 2 6 2 X 5 2 3
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After we check the east and south cells, we saw that we can go east (meaning supply point 1 still has capacity to fulfill some demand).
3 2 X 6 2 X
3

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3
2 3

3
X 3 2

3
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After applying the same procedure, we saw that we can go south this time (meaning demand point 2 needs more supply by supply point 2).
3 2 3 2 X 1 2 X 3 X 2 3 2 1 X 3 X X 2 X X X 2
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Finally, we will have the following bfs, which is: x11=3, x12=2, x22=3, x23=2, x24=1, x34=2

2 3 2 1 2

X X X

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SHORTCOMINGS OF NWC METHOD The Northwest Corner Method does not utilize shipping costs. It can yield an initial bfs easily but the total shipping cost may be very high. The minimum cost method uses shipping costs in order come up with a bfs that has a lower cost.
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2. Minimum Cost Method

To begin the minimum cost method, first we find the decision variable with the smallest shipping cost (Xij). Then assign Xij its largest possible value, which is the minimum of si and dj. After that, as in the Northwest Corner Method we should cross out row i and column j and reduce the supply or demand of the noncrossed-out row or column by the value of Xij. Then we will choose the cell with the minimum cost of shipping from the cells that do not lie in a crossed-out row or column and we will repeat the procedure.
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An example for Minimum Cost Method Step 1: Select the cell with minimum cost.
2 3 5 6 5 2 1 3 5 10 3 8 4 6

15

12

6
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Step 2: Cross-out column 2

2 3 5 6 5 2 8 3 8 4 6 15 1 3 5 2

12

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Step 3: Find the new cell with minimum shipping cost and cross-out row 2
2 3 5 6 5 2 2 3 8 8 4 6 15 1 3 5 X

10

6
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Step 4: Find the new cell with minimum shipping cost and cross-out row 1
2 5 2 2 3 8 8 4 6 15 1 3 5 X 3 5 6 X

6
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Step 5: Find the new cell with minimum shipping cost and cross-out column 1
2 5 2 2 3 5 X X 4 6
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6 X

1 8 8

5 X

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Step 6: Find the new cell with minimum shipping cost and cross-out column 3

2 5 2 2 3 5 X X 8

6 X

5 X

8 4 X

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Step 7: Finally assign 6 to last cell. The bfs is found as: X11=5, X21=2, X22=8, X31=5, X33=4 and X34=6
2 5 2 2 3 5 X X 8 8 4 X 4 6 X
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6 X

5 X 6

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3. Vogels Method
1. 2. Begin with computing each row and column a penalty. The penalty will be equal to the difference between the two smallest shipping costs in the row or column. Identify the row or column with the largest penalty. Find the first basic variable which has the smallest shipping cost in that row or column. Then assign the highest possible value to that variable, and cross-out the row or column as in the previous methods. Compute new penalties and use the same procedure.
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3. 4.

5.

6.

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An example for Vogels Method Step 1: Compute the penalties.

Supply 6 7 8 10 15 80 78 7-6=1 Row Penalty

15

78-15=63

Demand Column Penalty

15 15-6=9

5 80-7=73

5 78-8=70

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Step 2: Identify the largest penalty and assign the highest possible value to the variable.
Supply 6 5 15 80 78 15 78-15=63 7 8 5 8-6=2 Row Penalty

Demand Column Penalty

15 15-6=9

X _

5 78-8=70

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Step 3: Identify the largest penalty and assign the highest possible value to the variable.
Supply 6 5 15 80 7 5 78 15 _ 8 0 _ Row Penalty

Demand Column Penalty

15 15-6=9

X _

X _

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Step 4: Identify the largest penalty and assign the highest possible value to the variable.
Supply 6 0 15 5 80 7 5 78 15 _ 8 X _ Row Penalty

Demand Column Penalty

15 _

X _

X _

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Step 5: Finally the bfs is found as X11=0, X12=5, X13=5, and X21=15
Supply 6 0 15 15 Demand Column Penalty X _ X _ X _
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Row Penalty _

7 5 80 5

8 X 78

EXAMPLE
TRANSPORTATION PROBLEM S1 S2 S3 10 12 4 2 7 14 20 9 16 11 20 18

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15 25 10

5 15 Demand

15

15

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Other examples
North DWest2 corner Rule D D3 D4 1
S1 10 S2 S3 15 5 10 25 12 7 9 20 5 15 5 10 4 14 16 18 10 5 15 Demand 15 15 2 20 11

The starting basic solution is x11 = 5, x12 = 10, x22 = 5, x23 = 15, x24 = 5, x34 = 10. The associated cost of the schedule is Z = 10 5 + 2 10 + 7 5 + 9 15 + 20 5 + 18 10 = 520. 45

Supply

Least Cost Method

D1 D2 D3 D4 0

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S1 10
S2 12

S3 4
5

2 15 20 11 0 15 7 9 15 2010 25 14 16 18
5

Supply

10

The starting basic solution is x12 = 15, x14 = 0, x23 = 15, x24 = 10, x31 = 5, x34 = 5. The associated cost of the schedule is Z = 2 15 + 11 0 + 9 15 + 20 10 + 46 4 5 + 18 5 = 475.

5 15 Demand

15

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Vogel Approximation Method(VAM)

D1 D2 D3 D4

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S1 10 S2 12

2 7

15 0

20 9 16
15

11
15

15 8 9
10 25 2 2 11

Supply

20

S3 4 5 14
5 15

18 5 10
15

10 2 2

6 5 7 7 Demand7 7 2 The starting basic solution is x12 = 15, x22 = 0, x23 = 15, x24 = 10, x31 = 5, x34 = 5.
The associated cost of the schedule is Z = 2 15 + 7 0 + 9 15 + 20 10 + 47 4 5 + 18 5 = 475.

Test the initial solution for optimality

Step 1 :Construct the transportation table entering the origin capacities ai, the destination requirement bj and the costs cij. Step 2 :Determine the initial BFS by using any of the discussed methods.

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Step 3 : For all the occupied (basic) variables xij solve the system of equations ui + vj = cij, starting with some ui = 0 and entering successively the values ui and vj on the transportation table. Step 4 : Compute the net evaluations cij zij = cij (ui + vj) for all the nonbasic cells and enter them in the corresponding cells. Step 5 : Examine the sign of each cij zij . If all cij zij >=0 then the current bfs is optimal . Otherwise select the unoccupied cell having the smallest negative net evaluation to enters the basic. Allocate an unknown quantity

to this cell .

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D1

D2

D3

D4

5- 5

10

10+

10

20

(16)

11

(-4)

15 u1 = 0
u2 = 5

Supply

2
3

12

15 5 25 (-3) 5- 5 u3 = 3 4 (-9) 14 (9) 16 (9) 10- 10 18

20 5+

10 5 v1=10 15 v2=2
v15 3=4 v15 4=15 u2 + v4 = 20
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Basic variables satisfy the equations ui + vj = cij u1 + v1 = 10 u1 + v2 = 2 u2 + v2 = 7 u2 + v3 = 9

u3 + v4 = 18

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Step 6 : Allocate a quantity to that cell and alternately subtract and add to and from the transition cells of the loop in such a way that the rim requirements remain satisfied. Step 7 : Assign a max value to in such a way that the value of one basic variable becomes zero and other basic variable remains non negative. The basic cell whose allocation has been reduced to zero , leaves the basis. The new values of the variable will remain nonnegative if x11 = 5 - 0 x22 = 5 - 0 x34 = 10 - 0 The maximum value of can be 5. Step 8: return to step 3 and repeat the procedure until an optimum basic feasible solution is obtained.
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10

(9) 15- 15 (6) 0+ 0

20

(16)

11

(-4)

15 u1 = 0
u2 = 5
u3 = 3

Supply

2
3

12

15 10- 10 25

20

4 5 14 (9) 16(9) 18 5 10 5 v1=1

15=2 15 v =15 15 v2 v3=4 4 Demand Because each unit shipped through route (3,1) reduces the shipping cost
by 9(=c13 - u3+ v1), the total cost associated with the schedule is 9* 5 =45 less than the previous schedule. Thus the new cost is Z = 475.
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3 5 10

10

(13) (10) 5

20

(16) 15

11

10

15 u1 = 0

The starting basic solution is x12 = 5, x14 = 10, x22 = 10, x23 = 15, x31 = 5, x34 = 5. The associated cost of the schedule is Z = 435
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Supply

2
3

12
4

7
14

20

(4)

25
10

u2 = 5
u3 = 7

(5) 16 (5) 18 5

5 15 15 15 v1=-3 v2=2 v3=4 v4=11 Demand

Unbalanced Transportation Problem

When Supply(availability) Requirement(demand)

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a b
i 1 i j1

Two Possibilities:
(1) Supply is less than the demand. Add a fictitious source with availability

b a
j1 j i 1

Assign zero cost of transportation from this source to any destination. Solve as usual TP.
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(2) Availability(Supply) is more than the demand. m

Add a fictitious destination with requirement
i 1 i

a b
j1

Assign zero cost of transportation from each source to that destination. Solve as usual TP.

Prohibited Routes.
If there is a restriction on the routes available for transportation , we assign a very large cost element M to each of such routes which are not available.
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Consider the following TP D1 D2 D3 D4 D5 5 8 6 6 3 7 7 6 5

S1

800 500

S2 4

a
i 1
5

2200

S3 8
400

4
400

4
800

900

b
j1

2500

500 400

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S1 S2 S3

D1 5 4 400 8

D2 8 7 4 400
0

D3 6 7 6 200
0
300

D4 6 6 100 6 300
0
v4=5

D5 3 800 800 5 500 4 0 900

0
v5=3

u1 = 0 u2 = 1 u3 = 1

SF 0

300 u4 = -5

400 400 500 400 800

v1=3 v2=3 v3=5
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Maximization Problem
To solve a transportation problem where the objective is to maximize the total value or profit. All the values of the profit matrix are subtracted from the highest profit value in the matrix. After that the optimal solution is obtained as for the minimization problems. Finally the value of the objective function is determined with reference to the original profit matrix. If a maximization type of TP is unbalanced, then a dummy source or destination is introduced first and then it is converted into a minimization TP.
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Solve the following TP for maximizing profit.

Per Unit Profit(Rs)

X Y Z
A 180

Market A B C 12 18 6 8 7 10 14 3 11
B 320 C 100 D 400

D 25 18 20

Availability at warehouses:

X : 200
Y :500 Z :300

Demand in the markets(in units):

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X Y Z

A B C D 13 7 200 19(20) 0 (17) (4) (10) 17 18 100 15 (5) 7 400 11 22 14 5

180 20 100

200 500 300

u1 = 0

u2 = 11
u3 = 15

(-6)

v3= -1 v4=-4 v2=7 The optimal solution is: x12 = 200, x22 = 120, x23 = 100, x24 = 280, x31 = 180, x34 = 120. Z = 15,400 59

v1 = -4

180 320

100 400

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Unique vs Multiple Solutions: A transportation problem is optimal when all cij zij are greater than , or equal to zero. If all nonbasic cells are strictly positive, then it is unique.

If some cell has cij zij = 0 for a nonbasic cell, then multiple solutions exist i.e there exist a transportation pattern other than the one obtained which can satisfy all the rim requirements for the same cost.
Trace a closed loop beginning with the cell having cij zij = 0 and get the revised solution in the same way as a solution is improved.
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