TM 1

Transportation
model
Submitted by: M.Abubakar imtiaz
submitted to: Dr.Farhan javed
Registration no: 2017-CH-404
subject: Engineering economics
University of Engineering and technology Lahore
(Faisalabad campus)
3/5/2020
Table of Contents
Transportation model: .................................................................................................................................. 2
Assumptions in transportation model: ......................................................................................................... 2
How to solve transportation model problems: ............................................................................................ 2
Algorithms: ................................................................................................................................................ 3
Transportation Matrix:.................................................................................................................................. 4
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Transportation model:
The transportation model is a special class of linear programs that deals with shipping a
commodity from sources (e.g., factories) to destinations (e.g., warehouses). The objective is to
determine the shipping schedule that minimizes the total shipping cost while satisfying supply
and demand limits. The application of the transportation model can be extended to other areas
of operation, including inventory control, employment scheduling, and personnel assignment.
Assumptions in transportation model:

1. Total quantity of the item available at different sources is equal to the total requirement
at different destinations.
2. Item can be transported conveniently from all sources to destinations.
3. The unit transportation cost of the item from all sources to destinations is certainly &
precisely known.
4. The transportation cost on given route is directly proportional to the no. of units
shipped on that route.
5. The objective is to minimize the total transportation cost for the organization as a whole
& not for individual supply & distribution center.
Procedure to solve transportation model problems:

It consists of following steps
Step 1:
 Formulate the problem.

Formulate the given problem and set up in a matrix form. Check whether the problem is
a balanced or unbalanced transportation problem. If unbalanced, add dummy source
(row) or dummy destination (column) as required.
Step 2:
 Obtain the initial feasible solution.
The initial feasible solution can be obtained by any of the following three methods:
 Northwest Corner Method (NWC)
 Least Cost Method (LCM)
 Vogel’s Approximation Method (VAM)
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The transportation cost of the initial basic feasible solution through Vogel’s approximation
method, VAM will be the least when compared to the other two methods which gives the value
nearer to the optimal solution or optimal solution itself. Algorithms for all the three methods to
find the initial basic feasible solution are given.
Algorithms:
Algorithm for North-West Corner Method (NWC)
i. Select the North-west (i.e., upper left) corner cell of the table and allocate the
maximum possible units between the supply and demand requirements. During
allocation, the transportation cost is completely discarded (not taken into
consideration).
ii. Delete that row or column which has no values (fully exhausted) for supply or demand.
iii. Now, with the new reduced table, again select the North-west corner cell and allocate
the available values.
iv. Repeat steps (ii) and (iii) until all the supply and demand values are zero.
v. Obtain the initial basic feasible solution.
Algorithm for Least Cost Method (LCM)
i. Select the smallest transportation cost cell available in the entire table and allocate the
supply and demand.
ii. Delete that row/column which has exhausted. The deleted row/column must not be
considered for further allocation.
iii. Again select the smallest cost cell in the existing table and allocate. (Note: In case, if
there are more than one smallest costs, select the cells where maximum allocation can
be made)
iv. Obtain the initial basic feasible solution.
Algorithm for Vogel’s Approximation Method (VAM)
i. Calculate penalties for each row and column by taking the difference between the
smallest cost and next highest cost available in that row/column. If there are two
smallest costs, then the penalty is zero.
ii. Select the row/column, which has the largest penalty and make allocation in the cell
having the least cost in the selected row/column. If two or more equal penalties exist,
select one where a row/column contains minimum unit cost. If there is again a tie,
select one where maximum allocation can be made.
iii. Delete the row/column, which has satisfied the supply and demand.
iv. Repeat steps (i) and (ii) until the entire supply and demands are satisfied.
v. Obtain the initial basic feasible solution.
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Transportation Matrix:
It deals with sources where a supply of some commodity is available and destinations where
the commodity is demanded. The classic statement of the transportation problem uses a matrix
with the rows representing sources and columns representing destinations. The algorithms for
solving the problem are based on this matrix representation. The costs of shipping from sources
to destinations are indicated by the entries in the matrix. If shipment is impossible between a
given source and destination, a large cost of M is entered. This discourages the solution from
using such cells. Supplies and demands are shown along the margins of the matrix. As in the
example, the classic transportation problem has total supply equal to total demand.
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Transportation

Assumptions in transportation model:

Procedure to solve transportation model problems:

 Formulate the problem.

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