Operational Research (OR)

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 1. The Transportation Model

The aim of the transportation model application is to minimize the transportation

costs that will be paid by an organization to its lowest level.
The transportation model is applied in 2 main steps as follows:
U U

step (1) step (2)

Preparing the initial (primary) Examination of the initial (primary)
transportation table using one of two transportation table optimality and
methods (according to requirement): preparing the second transportation
table (if possible) according to:

1. The North West method 1. The modified distribution method

2. The lowest cost method (the cheapest cell method)

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 Step (1): Preparing the initial (primary) transportation table

The initial (primary) transportation table will be prepared by of one of two methods
(according to requirement); in general the initial (primary) transportation table
consists of number of rows and number of columns as follows:

Rows: represent factories (plants) that the product will be transported from.
Columns: represent points of sales or warehouses that the product will be
transported to.
A Cell: represents the intersection point of each row and column, as in each
cell there is a small box where unit transportation cost from each factory to each
point of sales will be written down (given).
In each cell u have to put the amount that will be transported from each factory
to each point of sales (required).

Initial (primary) transportation table is as shown below:

Points of sales (warehouses)

Factories
Supply
W X Y Z

Transportation
A cost 600
Cell

B 800

C 1000

Demand 500 700 600 600 2400

Remarks:
U

Number of factories (plants) could not be equal to number of points of sales

(warehouses):
3 factories 4 points of sales

But total supply should be equal to total demand:

Total Supply 2400 units = Total Demand 2400 units

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Example (1):
ACU Company produces a certain product in 3 factories (A, B and C); this product is
transported to 4 points of sales (warehouses) (W, X, Y and Z). The following tables
present the supply, demand and transportation cost per unit (in dollars):

Factories Supply Warehouses Demand

A 600 W 400
B 800 X 500
C 1000 Y 600
Z 900

Transportation cost from each factory to each warehouse (in dollars):

W X Y Z

A 2 4 5 3
B 3 5 4 6
C 4 2 8 7

Required:
U

1. Prepare the initial (primary) transportation table using the North West method.
2. Calculate the total transportation costs according to this table.

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 Sol.

1. The initial (primary) transportation table using the North West method:

Points of sales (warehouses) Supply

Factories
W X Y Z
2 4 5 3
A 400 600
starting point
200
3 5 4 6
B 800
300 500
4 2 8 7
C 100 900 1000
remainder remainder

Demand 400 500 600 900 2400

2. Total transportation costs according to the initial table

= (4002) + (2004) + (3005) + (5004) + (1008) + (9007)
= $12200

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Example (2):
ACU Company produces a certain product in 3 factories (A, B and C); this product is
transported to 3 points of sales (warehouses) (X, Y and Z). The following tables present
the supply, demand and transportation cost per unit (in dollars):

Factories Supply Warehouses Demand

A 600 X 1200
B 1000 Y 800
C 1400 Z 1000

Transportation cost from each factory to each warehouse (in dollars):

X Y Z

A 5 6 8
B 4 7 7
C 6 8 6

Required:
U

1. Prepare the initial (primary) transportation table using the North West method.
2. Calculate the total transportation costs according to this table.

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 Sol.

1. The initial (primary) transportation table using the North West method:

Points of sales (warehouses)

Factories Supply
X Y Z
5 6 8
A 600 600
Starting point

4 7 7
B 1000
600 400
6 8 6
C 400 1000 1400
remainder remainder

Demand 1200 800 1000 3000

2. Total transportation costs according to the initial table

= (6005) + (6004) + (4007) + (4008) + (10006)
= $17400

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Example (3):
ACU Company produces a certain product in 3 factories (A, B and C); this product is
transported to 3 points of sales (warehouses) (X, Y and Z). The following tables present
the supply, demand and transportation cost per unit (in dollars):

Factories Supply Warehouses Demand

A 400 X 600
B 500 Y 750
C 800 Z 350

Transportation cost from each factory to each warehouse (in dollars):

X Y Z

A 25 30 30
B 45 40 60
C 10 70 90

Required:
U

1. Prepare the initial (primary) transportation table using the North West method.
2. Calculate the total transportation costs according to this table.

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 Sol.

1. The initial (primary) transportation table using the North West method:

Points of sales (warehouses)

Factories Supply
X Y Z
25 30 30
A 400 400
Starting point

45 40 60
B 500
200 300
10 70 90
C 450 350 800
remainder remainder

Demand 600 750 350 1700

2. Total transportation costs according to the initial table

= (40025) + (20045) + (30040) + (45070) + (35090)
= $94000