Transportation Problem

Objective
 To transport various amounts of a commodity that is initially
stored at various origins to different destinations in such a way
that the total transportation cost is minimum.
 We are dealing in a single homogeneous commodity
 We assume that demand = Supply
Formulation of Transportation Problem
 Suppose a cold drink manufacturing concern has m plants in m
cities. The manufactured product is absorbed by n retail shops in
n different cities. Here the problem is to determine the
transportation schedule that minimizes the transportation cost
from various plants to various retail shops.
 Let
ai > 0 i=1,2,………..,m
be the amount of cold drinks available at ith plant, Oi
bj > 0 j=1,2,………..,n
be the amount of cold drinks required at jth retail shop, Dj
cij for all i,j
Cost of transporting one unit of cold drink from Oi to Dj
xij >=0
Amount of cold drinks to be transported from Oi to Dj
Here the problem is to determine xij.
 Minimize
Σ Xijcij
Subject to
Σ Xij = ai i=1,2,……………,m
Σ Xij = bj j=1,2,…………….,n
Xij >=0
 Feasible solution
A set of non-negative allocations xij>=0 which satisfies the
row and column restrictions.
 Optimal solution
A feasible solution which maximizes or minimizes the value
of the objective function.
Methods of obtaining initial basic feasible
solution
 North-West corner Rule
 Least cost method
 Vogel’s Approximation Method

Method to obtain optimal solution

 Modi method (uv method)
FOR FINDING OPTIMAL SOLUTION
 First we will find Initial Solution (by any of the method )
 Then we will be applying Optimality test using MODI’s
METHOD.
Example
 A firm owns facilities at seven places. It has manufacturing plants at places A,B
and C with daily output of 500,300 and 200 units of an item, respectively. It
has warehouses at places P,Q,R and S with daily minimium requirements of
180,150,350 and 320 units respectively. Per unit shipping charges on different
routes are given below. Determine a transportation schedule so that the cost is
minimized. The cost in the cost-matrix is given in thousand of rupees.

Plants outlets
P Q R S
A 12 10 12 13
B 7 11 8 14
C 6 16 11 7
Example
 A compressed Natural Gas (CNG) company has three plants producing gas and
four outlets. The cost of transporting gas from different production plants to
the outlets, production capacity of each plant and requirement at different
outlets is shown in the following cost-matrix table :
Plants outlets Capacity of
A B C D production

X 4 6 8 6 700
Y 3 5 5 5 400
Z 3 9 6 5 600
Requirement 400 450 350 500 1700

Determine a transportation schedule so that the cost is minimized. The cost in

the cost-matrix is given in thousand of rupees.
Example
 A company has received a contract to supply cement to three new
construction sites located in towns A,B and C. Construction Engineers
have estimated the required amounts of cement which will be needed at
these construction projects:

Project location Weekly requirement

(truckloads)
A 72

B 102
C 41

The company has three cement pits located in towns X,Y and Z.
The Cement required by construction projects can be supplied
in three pits.
Contd….
The amount of cement which can be supplied by each pit is as follows:
Plant X Y Z
Amount 76 82 77
Available
(truckloads)

Delivery cost from each pit to site is given below

Project location
A B C
X 4 8 8

Pit Y 16 24 16

Z 8 16 24

Schedule the shipment from each pit to each project in such a

manner so as to minimize the total Transportation Cost.
Solution:
This is a special case as it is an Unbalanced Problem because
DEMAND SUPPLY

Here we will introduce a dummy row or dummy column with

Zero (0) costs and make the problem a balanced one.

Then proceed as Usual.

  A manufacturer wants to ship 22 loads of his product as
shown below. The matrix gives the kilometres from sources
to supply to the destinations. Shipping costs are Rs. 10 per
load per km. What shipping schedule should be used to
minimize total transportation cost.

D1 D2 D3 D4 D5 Supply
S1 5 8 6 6 3 8
S2 4 7 7 6 5 5
S3 8 4 6 6 4 9
Demand 4 4 5 4 8
EXAMPLE FOR PRACTICE
(DEGENERACY)
Data of demand and supply on sources S1,S2,S3 to destinations
,D1,D2,D3.The transportation costs per unit ,capacities of the
sources and requirements of the destination are given in the
following table :

Destinations Supply
D1 D2 D3
sources S1 8 5 6 120
S2 15 10 12 80
S3 3 9 10 80
Demand 150 80 50

Determine a transportation schedule so that cost is minimised.

Case Of Prohibited Transportation
Problem
 XYZ tobacco company purchases tobacco and stores in
warehouses located in following four cities. The warehouses
supply tobacco to cigarette companies in three cities that have
the following demand:
Warehouse location Cigarette Company
Cities Capacity Name of Demand
(Tonnes) company (Tonnes)
A 90 Bharat 120
B 50 Janta 100
C 80 Red Lamp 110
D 60
 The following railroad shipping costs per tonne (in hundred rupees) have
been determined:
 Because of railroad construction, shipments are temporarily
prohibited from warehouse at city A to Bharat Cigarette
Company.
company
Bharat Janta Red Lamp
Warehouse A 7 10 5
location
B 12 9 4
C 7 3 11
D 9 5 7
 Find the optimum solution for the XYZ tobacco company?
Maximization in transportation
problem
 A company has four factories F1, F2, F3 and F4 manufacturing the
same product. The production and raw material costs differ from
factory to factory and are given in the table. In the first two rows
the transportation costs from the factories to the sales depots S1,
S2, S3 are also given. The last two columns in the table give the
sales price and the total requirement at each depot. The
production capacity of each factory is given in the last row.
Determine the most profitable production and distribution
schedule and the corresponding profit. The deficit production
should be taken to yield zero profit.
 dxc F1 F2 F3 F4 Sales price Requiremen
per unit t

Production 15 18 14 13
cost/unit
RM cost/ unit 10 9 12 9

Transp.cost/u
nit
S1 3 9 5 4 34 80

S2 1 7 4 5 32 120

S3 5 8 3 6 31 150

Supply 10 150 50 100

Maximization in transportation
problem
 ABC Enterprises is having three plants manufacturing dry-cells,
located at different locations. Production cost differs from plant to
plant. There are five sales offices of the company located in
different regions of the country. The sales prices can differ from
region to region. The shipping cost from plant to each sales office
and other data are given by following table :
 Production Information:

Plant Maximum Capacity (in Production cost

Number no. of units) per unit
1 150 20
2 200 22
3 125 18

 Find the most profitable distribution schedule to the company

 Shipping cost (Rs.)
Plant Sales Office
Number A B C D E
1 1 1 5 9 4
2 9 7 8 3 6
3 4 5 3 2 7
 Demand and Selling Prices

A B C D E
Demand 80 100 75 45 125
(units)
SP (Rs. ) 30 32 31 34 29
Maximization in transportation
problem
 A leading firm has three auditors. Each auditor can work up to 160 hrs during the next
month, during which time three projects must be completed. Project 1 will take 130
hrs, project 2 will take 140 hrs, and project 3 will take 160 hrs. The amount per hr that
can be billed for assigning each auditor to each project is given in the following table:

Auditor Project
1 2 3
1 1200 1500 1900
2 1400 1300 1200
3 1600 1400 1500

 Formulate this as a TP and find the optimal solution. Also find out the maximum total
billings during the next month.
Tutorial slides
Example
 The Great Indian Corporation is a major producer of soft drinks. It has
four warehouses, one each located in Agra, Bhubaneshwar, Chennai and
Kolkata. It also has 4 factories located at New Delhi, Jamshedpur,
Bangalore and Asansol. The data of warehouse demand, factory supplies
and transportation costs(Rs.) are given in the below tables:
Data of demand and supply

Supply in Cases Demand in Cases

Factory In numbers Warehouse In numbers
New Delhi 200 Agra 210
Jamshedpur 150 Chennai 200
Bangalore 120 Bhubaneshwar 300
Asansol 350 Kolkata 110
Total Supply 820 Total Demand 820
 Agra Chennai bhubaneshwar Kolkata

New Delhi 0.40 1.75 1.50 0.50

Jamshedpur 0.90 1.00 1.75 1.25

Bangalore 1.40 0.75 0.95 1.00

Asansol 1.00 1.50 1.40 1.10

The management is interested in scheduling the distribution of soft

drinks from various plants to warehouses so as to minimize the
transportation costs.Find the intial solution of the transportation
problem by all the three methods.
Example
 A manufacturer of washing machines is in the process of locating regional warehouses in four
geographical locations in South India to serve the markets. The markets are geographically and
organisationally split into five segments. Based on the forecasting estimates by the marketing
department, it has been found that the average monthly demand for the washing machine is
2000, 1500, 1200, 2800 and 2500 in each of the market segments. Based on this forecast and
other costs including the fixed and variable costs of setting up warehouses, it has been decided
to build four warehouses with a capacity to handle monthly requirements to the extent of
2900, 2300, 3700 and 1100 units, respectively. Due to the geographical spread of the
warehouses and the markets, the transportation cost per unit is different between these pairs
of warehouses and market segments. The table below has the cost of transporting one unit.
Identify the cost effective way of serving the markets from these warehouses.
 Market 1 Market 2 Market 3 Market 4 Market 5

Warehouse 100 70 50 30 40
A

Warehouse 30 95 40 125 50
B

Warehouse 75 20 65 40 30
C

Warehouse 20 40 95 85 80
D
Example
The warehouses has altogether a surplus of 35 units of a given commodity
as follows:
W1 = 14 W2 =16 W3 = 5 units
The four stores together needs 35 units of the commodity as follows:
S1=6 S2=10 S3=15 S4=2
The cost of shipping of one unit of commodity from warehouse i to store j
are as follows:
Schedule the transport to minimize the transportation cost.

S1 S2 S3 S4
W1 6 4 1 5

W2 8 9 2 7

W3 4 3 6 2
 Example
solve the following transportation
problem to minimize the cost :

D1 D2 D3 D4 Supply
O1 19 30 50 10 7
O2 70 30 40 60 9
O3 40 8 70 20 18
Demand 5 8 7 14 34
 Example
solve the following transportation
problem to minimize the cost

D1 D2 D3 Supply
O1 13 15 16 17
O2 7 11 2 12

O3 10 20 9 16
Deman 14 8 23 45
d