Transportation, Assignment and

Transshipment Problems

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Transportation Problem
 Find the best way to fulfill
- the demand of n demand points
- using the capacities of m supply points.
 A variable cost of shipping the product
- from one supply point to a demand point
or a similar constraint should be taken
into consideration.
 A transportation problem is specified by
the supply, the demand, and the shipping
costs in a transportation tableau.

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Formulating Transportation Problems
 Example 1: Powerco has three electric
power plants that supply the electric
needs of four cities.
 The associated supply of each plant and
demand of each city is given in the table.
 The cost of sending 1 million kwh of
electricity from a plant to a city depends
on the distance the electricity must travel.

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Table 1. Shipping costs, Supply, and Demand for
Powerco Example

From To
City 1 City 2 City 3 City 4 Supply
(Million kwh)
Plant 1 $8 $6 $10 $9 35
Plant 2 $9 $12 $13 $7 50
Plant 3 $14 $9 $16 $5 40
Demand 45 20 30 30
(Million kwh)

Transportation Tableau
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 Decision Variable:
Determine how much electricity is sent
from each plant to each city
Xij = Amount of electricity produced at
plant i and sent to city j
 Objective function
To minimize the total cost of shipping from
plants to cities;
Minimize Z = 8X11+6X12+10X13+9X14
+9X21+12X22+13X23+7X24
+14X31+9X32+16X33+5X34

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Supply Constraints

Since each supply point has a limited

production capacity;

X11+X12+X13+X14 ≤ 35
X21+X22+X23+X24 ≤ 50
X31+X32+X33+X34 ≤ 40

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Demand Constraints
Since each demand point needs to
receive sufficient power;
X11+X21+X31 ≥ 45
X12+X22+X32 ≥ 20
X13+X23+X33 ≥ 30
X14+X24+X34 ≥ 30

Sign Constraints
Xij ≥ 0 (i = 1,2,3; j = 1,2,3,4)

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LP Formulation of Powerco’s Problem
Min Z =
8X11+6X12+10X13+9X14+9X21+12X22+13X23+7X24
+14X31+9X32+16X33+5X34

s.t.: X11+X12+X13+X14 ≤ 35 (Supply Constraints)

X21+X22+X23+X24 ≤ 50
X31+X32+X33+X34 ≤ 40
X11+X21+X31 ≥ 45 (Demand Constraints)
X12+X22+X32 ≥ 20
X13+X23+X33 ≥ 30
X14+X24+X34 ≥ 30
Xij ≥ 0 (i= 1,2,3; j= 1,2,3,4)
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General Description of a Transportation Problem

1. A set of m supply points from which a

good is shipped. Supply point i can
supply at most si units.
2. A set of n demand points to which the
good is shipped. Demand point j must
receive at least di units of the shipped
good.
3. Each unit produced at supply point i and
shipped to demand point j incurs a
variable cost of cij.

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 Formulation
Xij = number of units shipped
from supply point i to demand point j
i m j n
min  cijXij
i 1 j 1
j n
s.t. X
j 1
ij  si (i  1,2,..., m)

i m

X
i 1
ij  dj ( j  1,2,..., n)

Xij  0 (i  1,2,..., m; j  1,2,..., n)

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Balanced Transportation Problem
 Total supply equals to total demand
i m j n

s  d
i 1
i
j 1
j

 If total supply exceeds total demand, we can

balance the problem by adding dummy
demand point. Since shipments to the
dummy demand point are not real, they are
assigned a cost of zero.

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Balancing a transportation problem
if total supply is less than total demand
 Ifa transportation problem has a total
supply that is strictly less than total
demand the problem has no feasible
solution.
 There is no doubt that in such a case one
or more of the demand will be left unmet.
 Generally in such situations a penalty cost
is often associated with unmet demand and
as one can guess this time the total penalty
cost is desired to be minimum
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 Finding B F Solution for TP
 Unlike other Linear Programming problems,
a balanced TP with m supply points and n
demand points is easier to solve, although
it has m + n equality constraints.
 The reason for that is, if a set of decision
variables (xij’s) satisfy all but one
constraint, the values for xij’s will satisfy
that remaining constraint automatically.
 There are three basic methods to find BFS
1. Northwest Corner Method
2. Minimum Cost Method
3. Vogel’s Method
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Northwest Corner Method
 To find the BFS by the NWC method:
 Begin in the upper left (northwest) corner of
the transportation tableau and set x11 as
large as possible
 Limitations for setting x11 to a larger
number, will be the demand of demand
point 1 and the supply of supply point 1.
Your x11 value can not be greater than
minimum of this 2 values.

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According to the explanations in the previous
slide we can set x11=3 (meaning demand of
demand point 1 is satisfied by supply point 1).

2
3 5 2 3

3 2

2
X 5 2 3
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After we check the east and south cells, we saw
that we can go east (meaning supply point 1 still
has capacity to fulfill some demand).
3 2 X

2
X 3 2 3

3 2 X

3 3

2
X X 2 3 16
After applying the same procedure, we saw that
we can go south this time (meaning demand
point 2 needs more supply by supply point 2).

3 2 X

3 2 1

2
X X X 3

3 2 X

3 2 1 X

2
X X X 2 17
Finally, we will have the following bfs, which is:
x11=3, x12=2, x22=3, x23=2, x24=1, x34=2

3 2 X

3 2 1 X

2 X
X X X X

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2. Minimum Cost Method
 The Northwest Corner Method dos not utilize
shipping costs. It can yield an initial BFS
easily but the total shipping cost may be
very high.
 The minimum cost method uses shipping
costs in order come up with a BFS that has a
lower cost.
 To begin the minimum cost method, first we
find the decision variable with the smallest
shipping cost (Xij). Then assign Xij its largest
possible value, which is the minimum of si
and dj 19
2. Minimum Cost Method (Cont.)

 After that, as in the Northwest Corner

Method we should cross out row i and
column j and reduce the supply or demand
of the noncrossed-out row or column by the
value of Xij.
 Then we will choose the cell with the
minimum cost of shipping from the cells
that do not lie in a crossed-out row or
column and we will repeat the procedure.

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An example for Minimum Cost Method
Step 1: Select the cell with minimum cost.

2 3 5 6
5

2 1 3 5
10

3 8 4 6
15

12 8 4 6

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Step 2: Cross-out column 2

2 3 5 6
5

2 1 3 5
2
8
3 8 4 6
15

12 X 4 6

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Step 3: Find the new cell with minimum shipping
cost and cross-out row 2

2 3 5 6
5

2 1 3 5
X
2 8
3 8 4 6
15

10 X 4 6

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Step 4: Find the new cell with minimum shipping
cost and cross-out row 1

2 3 5 6
X
5
2 1 3 5
X
2 8
3 8 4 6
15

5 X 4 6

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Step 5: Find the new cell with minimum shipping
cost and cross-out column 1

2 3 5 6
X
5
2 1 3 5
X
2 8
3 8 4 6
10
5
X X 4 6

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Step 6: Find the new cell with minimum shipping
cost and cross-out column 3

2 3 5 6
X
5
2 1 3 5
X
2 8
3 8 4 6
6
5 4
X X X 6

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Step 7: Finally assign 6 to last cell.
The bfs is found as:
X11=5, X21=2, X22=8, X31=5, X33=4 and X34=6

2 3 5 6
X
5
2 1 3 5
X
2 8
3 8 4 6
X
5 4 6
X X X X

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3. Vogel’s Method
 Begin with computing each row and column a
penalty.
 The penalty will be equal to the difference between
the two smallest shipping costs in the row or column.
 Identify the row or column with the largest penalty.
 Find the first basic variable which has the smallest
shipping cost in that row or column.
 Then assign the highest possible value to that
variable, and cross-out the row or column as in the
previous methods.
 Compute new penalties and use the same procedure.

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An example for Vogel’s Method
Step 1: Compute the penalties.

Supply Row Penalty

6 7 8
10 7-6=1

15 80 78
15 78-15=63

Demand 15 5 5

Column Penalty 15-6=9 80-7=73 78-8=70

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Step 2: Identify the largest penalty and assign the
highest possible value to the variable.

Supply Row Penalty

6 7 8
5 8-6=2
5
15 80 78
15 78-15=63

Demand 15 X 5

Column Penalty 15-6=9 _ 78-8=70

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Step 3: Identify the largest penalty and assign the
highest possible value to the variable.

Supply Row Penalty

6 7 8
0 _
5 5
15 80 78
15 _

Demand 15 X X

Column Penalty 15-6=9 _ _

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Step 4: Identify the largest penalty and assign the
highest possible value to the variable.

Supply Row Penalty

6 7 8
X _
0 5 5
15 80 78
15 _

Demand 15 X X

Column Penalty _ _ _

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Step 5: Finally the bfs is found as
X11=0, X12=5, X13=5, and X21=15

Supply Row Penalty

6 7 8
X _
0 5 5
15 80 78
X _
15
Demand X X X

Column Penalty _ _ _

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Summary
 Transportation problem
 Balanced Transportation
 How to find the initial BFS for the
Transportation Simplex Algorithm
 What is to come:
– Transportation Simplex Algorithm
– Assignment Problem
– Transshipment Problem

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