Transportation

problem

Transportation problem concern how to route goods

When there are several supply locations and several demand destinations,
minimizing the costs.

The transportation matrix

Classification

Methods of solving
the transportation
problem

Balanced transportation problem Supply Demand ( need to add

a dummy supply or demand in order to balance the problem)
Unbalanced transportation problem Supply = Demand
Linear programming technique
1. Graphical solution method
2. Simple method
Transportation solution method
1. Initial solution
2. Optimal solution

Initial solution

North west corner method

Least cost method
Vogals approximation method

Optimal solution

Stepping stone method

Modified distribution ( MODI)

How to solve the

transportation
problem

1.
2.
3.
4.
5.
6.
7.

Set up the problem in matrix form

Identify whether the problem is a balanced or an unbalanced one
Obtain initial basic feasible solution
Test the solution for optimality
If yes, Stop
If no, determine new optimal solution
Go to step 3

North west corner

method

Select the north west ( upper left hand) corner cell of the table and
allocate as many as possible units equal to the available supply and
demand requirements.
Adjust the supply and demand numbers in the respective rows and
columns allocation
If the supply for the first row is exhausted then move down to the
first cell in the second row
If the demand for the first column is satisfied then move
horizontally to the next cell in the second column
If for any cell supply equals demand then the next allocation can
be made in cell either in the next row or column
Continue the procedure until the total availability is fully allocated
to the cell as required.

Example NWCM
destination
1
1
source

2
3
demand

200

20

10

3 supply

10

15

X
X9

12

X
X25

300
30
100

200

400

400

18

400

200
300
500
1000

In blue color the numbers denoted are the transportation cost per unit
Starting from the upper left corner of the table
Supply is 200 demand is 200
Therefore allocate many units as possible equal to the supply and demand
(cell 1,1)
Supply for the first row is exhausted therefore move to the first cell of the
next row (2,1)(3,1)( demand for the first row has been met by the first
column therefore move to the second column horizontally)
Supply is 300 demand is 400
Allocate the available supply amount to the cell (2,2)
Move down to the next cell of the same column
Supply is 500 remaining demand is 100
Allocate 100 units to the cell (3,2)
The demand for the column has been satisfied
Move to the next cell horizontally (3,3)
Supply (remaining) is 400 demand is 400
Allocate the remaining units to that cell
Check whether the demand and supply cell balances to the respective total
of supply and demand.

Solution

from

to
1
2
3
3

1
2
2
3

unit
quantity cost
200
300
100
400

20
12
30
18

total transportation
cost

total
cost
4000
3600
3000
7200
17800

The total transportation cost according to NWCM is 17800

The other initial solutions must be followed to find out the optimal
method.