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Transportation
EXAMPLE FOR SOLUTION OF TRANSPORTATION PROBLEM
An organization has four destinations and three sources for supply of goods. Thetransportation cost per unit is given below. The entire availability is 700 units which exceeds
the cumulative demand of 600 units. Decide the optimal transportation scheme for this
case.
Solution
Step 1: Check for balance of supply and demand
S Supply = 250 + 200 + 250 = 700 u nits
S Demand = 100 + 150 + 250 + 100 = 600 units
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Decision Rule
(i) If S Supply = S Demand
then go to next step.
(ii) Else; if S Supply > S Demand
then, add a dummy destination with zero transportation cost.
(iii) Or else; if S supply < S Demand
then, add a dummy source with zero transportation cost.
Since, in this problem
S supply > S Demand
Hence; add a dummy destination (say D 5) with zero transportation cost and balance
demand which is difference in supply and demand (= 100 units).
The initial transportation matrix is now formulated with transportation cost in the small box
of each route. Note that each cell of the transportation matrix represents a potential route.
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(i) Initial Solution by Least Cost method
Select the lowest transportation (or shipping) cost cell (or route) in the initial matrix. For
example: it is route S1D5, S2D5 and S3D5 in our problem with zero shipping cost.
Allocate the minimum of remaining balance of supply (in last col umn) and demand (in last
row).
Let us select S1D5 route. One can also select other route (S 2D5 or S3D5) in case of tie. For
S1D5, available supply is 250 and available demand is 100 units. The lower is 100 units.
Hence, allocate 100 units-through this route (i.e, S1D5).
With this allocation, entire demand of route S 1D5 is consumed but supply of
corresponding source, S1, is still (250-100) or 150 units left. This is marked in last column of
supply. The entire demand ofdestination, D5, is consumed. We get the following matrix (Fig.
12.6) by crossing out the consumeddestination (D5):
Now, we leave the consumed routes (i.e., column D 5) and work for allocation of other
routes.
Next, least cost route is S 1D1, with 13 per unit of shipping cost. For this rou te, the demand is
100 units and remaining supply is 150 units. We allocate minimum of the two, i.e., 100 units
in this route. With this destination, D 1 is consumed but source S1 is still left with (150-100) =
50 units of supply. So, now leave the destination D1 and we get the following matrix.
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With 100 units allocation in route S 1D5
Assignment for destination D1 and D5 consumed
Now, we work on remaining matrix, which excludes first column (D 1) and last column (D 5).
Next assignment is due in the least cost route, which is route S 2D4. For this route, we can
allocate 100 units which is lesser of the corresponding demand (100 units) and (200 units).
By this allocation in route S2D4, the demand of destination D 4 is consumed. So, this column
is now crossed out.
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Assignment with destination D1, D4 and D5 consumed
Now, we work on the remaining matrix which excludes, column, D 1, D4 and D5. Next
assignment is due in the least cost route of the remaining routes. Note that we have two
potential routes: S1D2 and S2D3. Both have 16 units of transportation cost. In case of any tie
(such as this), we select any of the routes. Let us select route, S 1D2, and allocate 50 units
(minimum of demand of 150 and supply of remaining 50 units). With t his, all supply of
source S1 is consumed. Therefore, cross out row of S 1. We get the following matrix:
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Destination D1, D4 and D5 source S1 are consumed
Now, remaining allocation is done in route S 2D3 (as 100 units). With this source, S 2 is
consumed. Next allocation of 100 units is done in route S 3D2 and 150 units in route S 3D3.
Final initial assignment is as follows:
Total cost in this assignment is (13 100 + 16 5 0 + 100 0 + 16 100 + 15 100 + 17
150) or Rs. 9450.
Initial assignment by least cost method
Step 3: Count the number of filled (or allocated) routes.
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Decision rule
(i) If filled route = (m + n 1) then go for optimality check (i.e. step 5).
(ii) If filled route < (m + n 1) then the solution is degenerate. Hence, remove
degeneracy and go to step 4.
Here, m = number of destinations, including dummy column, if any
n = number of source, including dummy, row, if any
For our problem (m + n - l) = 5 + 3-1 = 7.
The number of filled route is equal to 7. Hence, problem is not degenerate. Therefore,
proceed to step 5.
Optimization of Initial Assignment
The initial feasible assignment is done by using least -cost method or North-West corner
method or Vogel's approximation method. However, none of these methods guarantees
optimal solution. Hence, next step is to check the opti mality of the initial solution.
Step 5: Check the optimality of the initial solution
For this, we have to calculate the opportunity cost of un -occupied routes.
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First, we start with any row (or column). Let us select row 1, i.e., source S 1; For this row, let
us define row value, u 1 = 0. Now consider all filled routes of this row. For these routes,
calculate column values v. using following equation:
u1 + v1 = Cij (For any filled route)
where u1 = row value
vj = column value
Cij = unit cost of assigned route
Once first set of column values (vj is known, locate other routes of filled cells in these
columns. Calculate next of u i (or vj values using above equation. In this way, for all rows and
columns, u i and vjvalues are determined for a non- degenerate initial solution.
Step 6: Check the optimality
Calculate the opportunity of non-allocated orunfilled routes. For this, use the following
equation:
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Opportunity unassigned route = u i + vj Cij
where ui = row value
vj = column value
Cij = unit cost of unassigned route
If the opportunity cost is negative for all unassigned routes, the initial solution is optimal. If
in case any of the opportunity costs is positive, then go to next step.
Step 7: Make a loop of horizontal and vertical lines which joins some filled routes with
the unfilled route, which has a positive opportunit y cost. Note that all the corner points of
the loop are either filled cells or positive opportunity cost un -assigned cells.
Now, transfer the minimal of all allocations at the filled cells to the positive opportunity cost
cell. orthis, successive corner points from unfilled cell are subtracted with this value.
Corresponding addition is done at alternate cells. In this way, the row and column addition
of demand and supply is maintained. We show the algorithm with our previous problem.
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Let us consider the initial allocation of least-cost method (Fig. 12.10) :
For this, we start with row, S1and take u1 = 0. Now S1DpS1D2,and S1D5are filled cells. Hence,for filled cells; (v j = Cij ui).
v1 = 13 0 = 13
v2 = 16 0 = 16
v5 = 0 0 = 0
Calculation for u i and vj in least cost initial assignment
Now, cell S3D2 is taken, as this has a v j value. For this cell u3 = 17 16 = 1
Now, cell S3D3 is selected, as this has a ui value. For this cell v3 = 17 1 = 16
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Now, cell S2D3 is selected, as it has a v j value. For this cell u2 = 16 16 = 0
Now, cell S2D4 is selected, as it has a u i value. For this cell v4 = 15 0 = 0
Thus, all u i and vj are known.
Step 6: Calculate opportunity cost of un -assigned routes.
Unassigned route Opportunity cost (u i + vj Cij)
S1D3
S1D4
S2D1
S2D2
S2D5
S3D1
S3D4
S3D5
0 + 16 19 = 3
0 + 15 17 = 2
0 + 13 17 = 4
0 + 16 19 = 3
0 + 0 0 = 0
1 + 13 15 = 2
1 + 15 16 = 0
1 + 0 0 = +1
Since route S3D5 has positive opportunity cost, the solution is non -optimal; hence, we go to
next step and make a loop as follows.
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Closed loop for cell S3D5
The revised allocation involves 100 units transfer from cells S 1D5 and S3D2 to cells S3D5 and
S1D2.
Thus, revised allocation is as follows:
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Revised allocation in least-cost assignment
Since above solution is degenerate now, we allocate to the least-cost un-filled cell S1D5.
Fresh calculation of u i and v j is also done in the similar way as explained in Step 5.
For this assignment, the opportunity cost of unassigned cells is as follows.
Now, since un-allocated routes have negative (or zero) opportunity cost, the present
assignment is the optimal one. Thus, optimal allocation of route is given in Figure.
Note that total cost is less than the initial assignment cost of least -cost method (= Rs. 9450).
Similarly, optimality of North-West corner method solution is done.
Unassigned route Opportunity cost (u i + vj Cij)
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S1D3
S1D4
S2D1
S2D2
S2D5
S3D1
S3D2
S3D4
0 + 17 19 = 2
0 + 16 17 = 1
1 + 13 17 = 5
1 + 16 19 = 4
1 + 0 0 = 1
0 + 13 15 = 0
0 + 16 17 = 1
0 + 16 16 = 0
Opportunity cost
Route Unit Cost in this route
S1D1
S1D
2
S2D3
S2D4
S3D3
S3D5
100
150
100
100
150
100
13 100 = 1300
16 150 = 2400
16 100 = 1600
15 100 = 1500
17 150 = 2550
0 100 = 0
Total cost = Rs.9350
Optimal allocation in different routes