Transportation

Modeling

Date : 08 June 2024

Time: 9:00 – 12:00 p.m. Using MS Excel
Prof : Rolando A. Austria
Contact Info: and POM-QM
E-mail:rolando.austria@pcu.edu.ph
Mobile#: +639209113581 V5.3
 Outline
◆ Transportation Modeling
◆ Developing an Initial Solution
◆ The Northwest-Corner Rule
◆ The Intuitive Lowest-Cost Method
◆ Vogel’s Approximation Method
◆ Special Issues in Modeling
◆ Demand Not Equal to Supply
◆ Demonstration using Excel and
POM
 Learning Objectives
When you complete this module you
should be able to:
1. Develop an initial solution to a
transportation models with the
northwest-corner and intuitive
lowest-cost methods
2. Solve a problem with the Vogel’s
Approximation method
3. Balance a transportation problem
 Transportation Modeling
◆ An interactive procedure that finds
the least costly means of moving
products from a series of sources
to a series of destinations
◆ Can be used to
help resolve
distribution
and location
decisions
 Transportation Modeling
◆ A special class of linear
programming
◆ Need to know
1. The origin points and the capacity
or supply per period at each
2. The destination points and the
demand per period at each
3. The cost of shipping one unit from
each origin to each destination
 Transportation example
• The following example was used to demonstrate
the formulation of the transportation model.
• Bath tubes are produced in plants in three
different cities—Des Moines , Evansville , and
Fort Lauder , tube is shipped to the distributers
in railroad , . Each plant is able to supply the
following number of units , Des Moines 100 units,
Evansville 300 units and Fort Lauder 300
units
• tubes will shipped to the distributers in three
cities Albuquerque , Boston, and Cleveland ,the
distribution requires the following unites ;
Albuquerque 300 units , Boston 200 units and
Cleveland 200 units
 Shipping cost per unit
To
From Albuquerque Boston Cleveland
Des Moines $5 $4 $3
Evansville $8 $4 $3
Fort Lauder $9 $7 $5

Table TM.1
 Transportation Problem
Boston
Cleveland (200 units
(200 units required)
Des Moines required)
(100 units
capacity)

Albuquerque
(300 units
required) Evansville
(300 units
capacity)

Fort Lauder
(300 units
capacity)
Figure TM.1
 Transportation Matrix
Figure TM.2
To Factory Des Moines
Albuquerque Boston Cleveland capacity capacity
From constraint
$5 $4 $3
Des Moines 100
Cell
representing
$8 $4 $3 a possible
Evansville 300 source-to-
destination
$9 $7 $5 shipping
Fort Lauder 300 assignment
(Evansville
to Cleveland)
Warehouse
requirement 300 200 200 700

Cost of shipping 1 unit from Fort Cleveland Total demand

Lauder factory to Boston warehouse warehouse demand and total supply
• Check the equality of the total supply & demand (if not, then
we need for dummy solution )
• how many ship of unit should be transported from each
demand to each distribution center can be expressed as
(Xij)
• i ……..for demand and j …….for distribution center
 Step 2
Establish the initial feasible
solution

❑ The Northwest corner rule

❑ Least Cost Method
❑ Vogel’s Approximation Model
 Northwest-Corner Rule
◆ Start in the upper left-hand cell (or
northwest corner) of the table and allocate
units to shipping routes as follows:
1. Exhaust the supply (factory capacity) of each
row before moving down to the next row
2. Exhaust the (warehouse) requirements of
each column before moving to the next
column
3. Check to ensure that all supplies and
demands are met
 Northwest-Corner Rule
Algorithm
The steps of the northwest corner method are
summarized here:
• 1. Allocate as much as possible to the cell in the
upper left-hand corner, subject to the supply and
demand constraints.
• 2. Allocate as much as possible to the next
adjacent feasible cell.
• 3. Repeat step 1,2 until all units all supply and
demand have been satisfied
 Northwest-Corner Rule
1. Assign 100 tubs from Des Moines to Albuquerque
(exhausting Des Moines’s supply)
2. Assign 200 tubs from Evansville to Albuquerque
(exhausting Albuquerque’s demand)
3. Assign 100 tubs from Evansville to Boston
(exhausting Evansville’s supply)
4. Assign 100 tubs from Fort Lauder to Boston
(exhausting Boston’s demand)
5. Assign 200 tubs from Fort Lauderdale to
Cleveland (exhausting Cleveland’s demand and
Fort Lauder’s supply)
 Northwest-Corner Rule
To (A) (B) (C) Factory
From Albuquerque Boston Cleveland capacity
$5 $4 $3
(D) Des Moines 100 100

$8 $4 $3
(E) Evansville 200 100 300

$9 $7 $5
(F) Fort Lauder 100 200 300

Warehouse
requirement 300 200 200 700

Means that the firm is shipping 100

Figure TM.3 bathtubs from Fort Lauder to Boston
 Northwest-Corner Rule
Computed Shipping Cost
Route
From To Tubs Shipped Cost per Unit Total Cost
D A 100 $5 $ 500
E A 200 8 1,600
E B 100 4 400
F B 100 7 700
F C 200 5 $1,000
Total: $4,200

This is a feasible solution

but not necessarily the
Table TM.2 lowest cost alternative (not
the optimal solution)
 Second Method
The Lowest-Cost Method
1. Evaluate the transportation cost and
select the square with the lowest cost
(in case a Tie make an arbitrary selection ).
2. Depending upon the supply & demand
condition , allocate the maximum
possible units to lowest cost square.
3. Delete the satisfied allocated row or
the column (or both).
4. Repeat steps 1 and 3 until all units
have been allocated.
 The Lowest-Cost Method
To (A) (B) (C) Factory
From Albuquerque Boston Cleveland capacity
$5 $4 $3
(D) Des Moines 100 100

$8 $4 $3
(E) Evansville 300

$9 $7 $5
(F) Fort Lauder 300

Warehouse
requirement 300 200 200 700

Figure TM.4
 The Lowest-Cost Method
To (A) (B) (C) Factory
From Albuquerque Boston Cleveland capacity
$5 $4 $3
(D) Des Moines 100 100

$8 $4 $3
(E) Evansville 100 300

$9 $7 $5
(F) Fort Lauderdale 300

Warehouse
requirement 300 200 200 700

Figure TM.4
The Lowest-Cost Method
To (A) (B) (C) Factory
From Albuquerque Boston Cleveland capacity
$5 $4 $3
(D) Des Moines 100 100

$8 $4 $3
(E) Evansville 200 100 300

$9 $7 $5
(F) Fort Lauderdale 300

Warehouse
requirement 300 200 200 700

Figure TM.4
The Lowest-Cost Method
To (A) (B) (C) Factory
From Albuquerque Boston Cleveland capacity
$5 $4 $3
(D) Des Moines 100 100

$8 $4 $3
(E) Evansville 200 100 300

$9 $7 $5
(F) Fort Lauderdale 300 300

Warehouse
requirement 300 200 200 700

Figure TM.4
 The Lowest-Cost Method
To (A) (B) (C) Factory
From Albuquerque Boston Cleveland capacity
$5 $4 $3
(D) Des Moines 100 100

$8 $4 $3
(E) Evansville 200 100 300

$9 $7 $5
(F) Fort Lauderdale 300 300

Warehouse
requirement 300 200 200 700

Total Cost = $3(100) + $3(100) + $4(200) + $9(300)

= $4,100
Figure TM.4
 The Lowest-Cost Method
To (A) (B) (C) Factory
From Albuquerque Boston Cleveland capacity

This is a feasible $5
solution, $4 $3
(D) Des Moines 100 100
and an improvement over
the previous solution, but $8 $4 $3
necessarily the lowest 200
(E) Evansville
not 100 300

cost alternative $9 $7 $5
(F) Fort Lauderdale 300 300

Warehouse
requirement 300 200 200 700

Total Cost = $3(100) + $3(100) + $4(200) + $9(300)

= $4,100
Figure TM.4
 The Lowest-Cost Method
Computed Shipping Cost
Route
From To Tubs Shipped Cost per Unit Total Cost
D C 100 $3 $ 300
E C 200 3 600
E B 200 4 800
F A 300 9 2700

Total: $4,100

This is a feasible solution

but not necessarily the
Table TM.2 lowest cost alternative (not
the optimal solution)
Special Issues in Modeling

◆ Demand not equal to supply

◆ Called an unbalanced problem
◆ Common situation in the real world
◆ Resolved by introducing dummy
sources or dummy destinations as
necessary with cost coefficients of
zero
 Special Issues in Modeling
Total Cost = 250($5) + 50($8) + 200($4) + 50($3) + 150($5) + 150(0)
= $3,350
To (A) (B) (C) Factory
Dummy capacity
From Albuquerque Boston Cleveland

$5 $4 $3 0
(D) Des Moines 250 250

$8 $4 $3 0
(E) Evansville 50 200 50 300

$9 $7 $5 0
(F) Fort Lauderdale 150 150 300

Warehouse
requirement 300 200 200 150 850

New
Figure TM.9 Des Moines
capacity
 Vogel’s Approximation
Method
• Step 1: Identify the two lowest costs in each row and column of
the given cost matrix and then write the absolute row and
column difference. These differences are called penalties.
• Step 2: Identify the row or column with the maximum penalty
and assign the corresponding cell’s min(supply, demand). If
two or more columns or rows have the same maximum
penalty, then we can choose one among them as per our
convenience.
• Step 3: If the assignment in the previous satisfies the supply at
the origin, delete the corresponding row. If it satisfies the
demand at that destination, delete the corresponding column.
• Step 4: Stop the procedure if supply at each origin is 0, i.e.,
every supply is exhausted, and demand at each destination is
0, i.e., every demand is satisfying. If not, repeat the above steps,
i.e., from step 1.

Vogel’s Approximation Method Steps

Example Problem
Compute for Absolute
Difference
 Find max penalty and find
the cell with the least cost

Allocate the minimum among the supply of the respective row and
the demand of the respective column
Next batch of absolute
difference
Next max penalty and next
cell with least cost
Next batch of absolute
difference
Next max penalty and next
cell with least cost
Next batch of absolute
difference
Next max penalty and next
cell with least cost
Remaining column and cell
with least cost
 The only remaining cell

© 2011 Pearson Education

 Computed Cost using
Vogel’s Approximation
Method

Total Cost = 1(300) + 2(250) + 3(50) + 3(250) + 2(200) + 5(150)

= 2,850
 Computer Software for
Transportation
Examples of computer software with
transportation capabilities
❖ Fleetable
❖ LogistaaS
❖ Ramco Logistics
❖ Route4Me
❖ Dynamics TMS
❖ Transplace TMS
Have
❖ POM Software Library
Transportation modules
 Transportation
Modeling

Date : 08 June 2024

Time: 9:00 – 12:00 p.m. Using MS Excel
Prof : Rolando A. Austria
Contact Info: and POM-QM
E-mail:rolando.austria@pcu.edu.ph
Mobile#: +639209113581 V5.3