UNIT III

Transportation problem
Introduction

Transportation problem is a particular class of linear programming, which is associated with

day-to-day activities in our real life and mainly deals with logistics. It helps in solving problems on
distribution and transportation of resources from one place to another. The goods are transported
from a set of sources (e.g., factory) to a set of destinations (e.g., warehouse) to meet the specific
requirements. In other words, transportation problems deal with the transportation of a product
manufactured at different plants (supply origins) to a number of different warehouses (demand
destinations). The objective is to satisfy the demand at destinations from the supply constraints at
the minimum transportation cost possible. To achieve this objective, we must know the quantity of
available supplies and the quantities demanded. In addition, we must also know the location, to find
the cost of transporting one unit of commodity from the place of origin to the destination. The model
is useful for making strategic decisions involved in selecting optimum transportation routes so as to
allocate the production of various plants to several warehouses or distribution centers.

Basic structure of transportation problem:

Mathematical formulation of Transportation problem

cij = cost per unit distributed from source i to destination j

xij = the number of units to be distributed from source i to destination j
ai= supply from source i;
bj = demand at destination j;
Types of Transportation problems:
Balanced: When both supplies and demands are equal then the problem is said to be a balanced
transportation problem.
i.e.,
m n

Σ ai = Σ bj . Such problems are called balanced transportation problems.

i =1 j=1

Unbalanced: When the supply and demand are not equal then it is said to be an unbalanced
transportation problem. In this type of problem, either a dummy row or a dummy column is added
according to the requirement to make it a balanced problem. Then it can be solved similar to the
balanced problemIn many real life situations, however, the total availability may not be equal to the
total demand. i.e.,
m n

Σ ai ≠ Σ bj ; such problems are called unbalanced transportation problems.

i =1 j=1

In these problems either some available resources will remain unused or some requirements will
remain unfilled.
Since a feasible solution exists only for a balanced problem, it is necessary that the total
availability be made equal to the total demand. If total capacity or availability is more than the
demand and if there are no costs associated with the failure to use the excess capacity, we add a
dummy (fictitious) destination to take up the excess capacity and the costs of shipping to this
destination are set equal to zero. The zero cost cells are treated the same way as real cost cells and
the problem is solved as a balanced problem. If there is, however, a cost associated with unused
capacity (e.g., maintenance cost) and it is linear, it too can be easily treated.
In case the total demand is more than the availability, we add a dummy origin (source) to “fill” the
balance requirement and the shipping costs are again set to equal to zero. However, in real life, the
cost of unfilled demand is seldom zero since it may involve lost sales, lesser profits, and possibility
of losing the customer or even business or the use of a more costly substitute. Solution of the problem
under such situations may be more involved.
Feasible solution: A feasible solution to a transportation problem is a set of non-negative
allocations, xij that satisfies the rim (row and column) restrictions.
Basic feasible solution: A feasible solution to a transportation problem is said to be a basic feasible
solution if it contains no more than m + n – 1 non – negative allocations, where m is the number of
rows and n is the number of columns of the transportation problem.
Optimal solution: A feasible solution (not necessarily basic) that minimizes (maximizes) the
transportation cost (profit) is called an optimal solution.
Non -degenerate basic feasible solution: A basic feasible solution to a (m x n) transportation
problem is said to be non – degenerate if,
1. the total number of non-negative allocations is exactly m + n – 1 (i.e., number of
independent constraint equations), and
2. these m + n – 1 allocations are in independent positions.
Degenerate basic feasible solution: A basic feasible solution in which the total number of non-
negative allocations is less than m + n – 1 is called degenerate basic feasible solution.
Methods to Solve Transportation problem:
To find the initial basic feasible solution there are three methods:
1. North West Corner Cell Method.
2. Least Cost Cell Method.
3. Vogel’s Approximation Method (VAM).
Problem 1:Find the initial basic feasible solution using the North West Corner Cell

Method
Solution:
Step 1: The problem is Balanced Transportation problem. i.e.,
m n

Σ ai = Σ bj = 1200, Balanced transportation problem.

i =1 j=1

According to North West Corner method, (O1, D1) has to be the starting point i.e. the north-
west corner of the table. Each and every value in the cell is considered as the cost per
transportation. Compare the demand for column D1 and supply from the source O1 and
allocate the minimum of two to the cell (O1, D1) as shown in the figure.
The demand for Column D1 is completed so the entire column D1 will be canceled. The
supply from the source O1 remains 300 – 250 = 50.

Step 2: Now from the remaining table i.e. excluding column D1, check the north-west corner
i.e. (O1, D2) and allocate the minimum among the supply for the respective column and the
rows. The supply from O1 is 50 which is less than the demand for D2 (i.e. 350), so
allocate 50 to the cell (O1, D2). Since the supply from row O1 is completed cancel the
row O1. The demand for column D2 remain 350 – 50 = 300.
Step 3:From the remaining table the north-west corner cell is (O2, D2). The minimum among
the supply from source O2 (i.e 400) and demand for column D2 (i.e 300) is 300, so
allocate 300 to the cell (O2, D2). The demand for the column D2 is completed so cancel the
column and the remaining supply from source O2 is 400 – 300 = 100.

Step 4: Now from remainig table find the north-west corner i.e. (O2, D3) and compare
the O2 supply (i.e. 100) and the demand for D2 (i.e. 400) and allocate the smaller (i.e. 100) to
the cell (O2, D2). The supply from O2 is completed so cancel the row O2. The remaining
demand for column D3 remains 400 – 100 = 300.

Step5: Proceeding in the same way, the final values of the cells will be:
Note: In the last remaining cell the demand for the respective columns and rows are equal which was cell (O3, D4). In this case, the supply
from O3 and the demand for D4 was 200 which was allocated to this cell. At last, nothing remained for any row or column.

Destination
D1 D2 D3 D4 SUPPLY
250 50
Source O1 3 1 7 4 300
300 100
O2 2 6 5 9 400
300 200
O3 8 3 3 2 400
DEMAND 250 350 400 200 1200

Step 6: The solution is Non degenerate basic feasible solution i.e;

m+n-1 = xij
3+4-1 = 6
6=6

Step 7:Now just multiply the allocated value with the respective cell value (i.e. the cost) and
add all of them to get the basic solution

i.e. The Optimal Transportation cost = (250 * 3) + (50 * 1) + (300 * 6) + (100 * 5)

+ (300 * 3) + (200 * 2)
= 4400
Problem 2: Determine basic feasible solution to the following transportation problem using
North west corner rule:

ORIGIN A B C D E SUPPLY
P 2 11 10 3 7 4
Q 1 4 7 2 1 8
R 3 9 4 8 12 9
DEMAND 3 3 4 5 6

Solution:

Step 1: The problem is Balanced Transportation problem. i.e.,

m n

Σ ai = Σ bj = 21 , Balanced transportation problems.

i =1 j=1

Step 2: The solution is Non degenerate basic feasible solution i.e;

m+n-1 = xij
3 + 5 -1 = 7

ORIGIN A B C D E SUPPLY
P 3 111 10 3 7 4
2
Q 1 24 47 22 1 8
R 3 9 4 38 612 9
DEMAND 3 3 4 5 6 21

Step 3: The Optimal Transportation cost =3*2+1*11+2*4+4*7+2*2+3*8+6*12

= Rs 153/-
Transportation Problem - Least Cost Cell Method
Problem 3: Solve the Transportation problem using LCM

Solution:
Step 1: The problem is Balanced Transportation problem. i.e.,
m n

Σ ai = Σ bj = 1200, Balanced transportation problem.

i =1 j=1

According to the Least Cost Cell method, the least cost among all the cells in the table has to be
found which is 1 (i.e. cell (O1, D2)).
Now check the supply from the row O1 and demand for column D2 and allocate the smaller value to
the cell. The smaller value is 300 so allocate this to the cell. The supply from O1 is completed so
cancel this row and the remaining demand for the column D2 is 350 – 300 = 50.
Step 2: Now find the cell with the least cost among the remaining cells. There are two cells with the
least cost i.e. (O2, D1) and (O3, D4) with cost 2. Let’s select (O2, D1). Now find the demand and
supply for the respective cell and allocate the minimum among them to the cell and cancel the row or
column whose supply or demand becomes 0 after allocation.

ADVERTISING

Step3: Now the cell with the least cost is (O3, D4) with cost 2. Allocate this cell with 200 as the
demand is smaller than the supply. So the column gets canceled.

Step4: There are two cells among the unallocated cells that have the least cost. Choose any at
random say (O3, D2). Allocate this cell with a minimum among the supply from the respective row
and the demand of the respective column. Cancel the row or column with zero value.
Step 5: Now the cell with the least cost is (O3, D3). Allocate the minimum of supply and demand
and cancel the row or column with zero value.

Step 6: The only remaining cell is (O2, D3) with cost 5 and its supply is 150 and demand is 150 i.e.
demand and supply both are equal. Allocate it to this cell.
 Step 7: The solution is Non degenerate basic feasible solution i.e;
m+n-1 = xij
3+4-1 = 6

Step 8:Now just multiply the allocated value with the respective cell value (i.e. the cost) and
add all of them to get the basic solution i.e.
The Optimal Transportation cost = (300 * 1) + (250 * 2) + (150 * 5) +

(50 * 3) + (250 * 3) + (200 * 2)

= 2850
Transportation Problem - Vogel’s Approximation Method
Problem 4: Solve the Transportation problem using Vogel’s Approximation method.
Solution: Step 1: The problem is Balanced Transportation problem. i.e.,
m n

Σ ai = Σ bj = 1200, Balanced transportation problem.

i =1 j=1

• For each row find the least value and then the second least value and take the absolute
difference of these two least values and write it in the corresponding row difference as shown
in the image below. In row O1, 1 is the least value and 3 is the second least value and their
absolute difference is 2. Similarly, for row O2 and O3, the absolute differences
are 3 and 1 respectively.
• For each column find the least value and then the second least value and take the absolute
difference of these two least values then write it in the corresponding column difference as
shown in the figure. In column D1, 2 is the least value and 3 is the second least value and
their absolute difference is 1. Similarly, for column D2, D3 and D3, the absolute
• Differences are 2, 2 and 2 respectively.

The value of row difference and column difference are also called as penalty. Now select the
maximum penalty. The maximum penalty is 3 i.e. row O2. Now find the cell with the least cost
in row O2 and allocate the minimum among the supply of the respective row and the demand
of the respective column. Demand is smaller than the supply so allocate the column’s demand
 i.e. 250 to the cell. Then cancel the column D1.

Step 2: From the remaining cells, find out the row difference and column difference.

• Again select the maximum penalty which is 3 corresponding to row O1. The least-cost cell in
row O1 is (O1, D2) with cost 1. Allocate the minimum among supply and demand from the
respective row and column to the cell. Cancel the row or column with zero value.
 Step 3: Now find the row difference and column difference from the remaining cells.

• Now select the maximum penalty which is 7 corresponding to column D4. The least cost cell
in column D4 is (O3, D4) with cost 2. The demand is smaller than the supply for cell (O3,
D4). Allocate 200 to the cell and cancel the column.
 Step 4: Find the row difference and the column difference from the remaining cells.

• Now the maximum penalty is 3 corresponding to the column D2. The cell with the least
value in D2 is (O3, D2). Allocate the minimum of supply and demand and cancel the
column.
 Step 5: Now there is only one column so select the cell with the least cost and allocate the
value.

• Now there is only one cell so allocate the remaining demand or supply to the cell

Step 6: The solution is Non degenerate basic feasible solution i.e;

m+n-1 = xij
3+4-1 = 6
Step 7:Now just multiply the allocated value with the respective cell value (i.e. the cost) and
add all of them to get the basic solution i.e.
• The Optimal Transportation cost = (300 * 1) + (250 * 2) + (50 * 3) + (250 * 3) +
(200 * 2) + (150 * 5)=2850
UNBALANCED TRANSPORTATION PROBLEM
Problem 5:
Solve the Transportation problem using North west corner method.
A B C D Supply
1 11 20 7 8 50
2 21 16 20 12 40
3 8 12 18 9 70
Demand 30 25 35 40

Solution:
Step 1: Since the total supply (Σ ai = 160 ) is greater than the total demand (Σ bj =130), the
given problem is an Unbalanced transportation problem. To convert this into a balanced one
we introduce a dummy destination E with zero unit transportation costs and having demand
equal to 160 – 130 = 30 units then,
The problem is Balanced Transportation problem. i.e.,
m n

Σ ai = Σ bj =160, Balanced transportation problem.

i =1 j=1

By applying NWCM

A B C D E Supply
1 1130 2020 7 8 0€ 50
2 21 16 5 2035 12 0 40
3 8 12 18 940 030 70
Demand 30 25 35 40 30 160

Step 2: Since the number of non-negative allocations is 6 which is less than 7 then the basic
solution is a degenerate one. To resolve this degeneracy, we allocate a small quantity € to the
unoccupied cell so that the degeneracy become non degeneracy one.

Hence the solution is Non degenerate basic feasible solution i.e;

m+n-1 = xij
3+5-1 = 7
7=7

Step 3:Now just multiply the allocated value with the respective cell value (i.e. the cost) and
add all of them to get the basic solution i.e.

The Optimal Transportation cost = 11*30+20*20+16*5+20*35+9*40+0*€+0*30

= Rs.1870/-
DEGENERACY IN TRANSPORTATION PROBLEM

Problem 6: Solve the Transportation problem using VAM

TO SUPPLY
10 20 5 7 10
13 9 12 8 20
FROM 4 5 7 9 30
14 7 1 0 40
3 12 5 19 50
DEMAND 60 60 20 10

Solution:
Step 1: The problem is Balanced Transportation problem. i.e.,
m n

Σ ai = Σ bj =150, Balanced transportation problem.

i =1 j=1

TO SUPPLY
1010 20 5 7 10
13 9 20 12 8 20
FROM 4€ 5 30 7 9 30
14 7 10 1 20 0 10 40
3 50 12 5 19 50
DEMAND 60 60 20 10 150
Step 2: Since the number of non-negative allocations is 7 which is less than 8 then the basic
solution is a degenerate one. To resolve this degeneracy, we allocate a small quantity € to the
unoccupied cell so that the degeneracy become non degeneracy one.
Hence the solution is Non degenerate basic feasible solution i.e;
m+n-1 = xij
5+4-1 = 8
Step 3:Now just multiply the allocated value with the respective cell value (i.e. the cost) and
add all of them to get the basic solution i.e.

The Optimal Transportation cost = 10*10+4*€+3*50+9*20+5*30+7*10+1*20+0*10 = Rs 670/-

MODIFIED DISTRIBUTION METHOD:

Problem 7:Find Solution using Voggel's Approximation method, also find optimal solution
using MODI method,
 D1 D2 D3 D4 Supply
S1 19 30 50 10 7
S2 70 30 40 60 9
S3 40 8 70 20 18
Demand 5 8 7 14
Solution:
Step 1: The problem is Balanced Transportation problem. i.e.,
m n

Σ ai = Σ bj = 34, Balanced transportation problem.

i =1 j=1

By Applying VAM :

Initial feasible solution is

D1 D2 D3 D4 Supply Row Penalty

S1 19(5) 30 50 10(2) 7 9 | 9 | 40 | 40 | -- | -- |

S2 70 30 40(7) 60(2) 9 10| 20 | 20 | 20 | 20 | 40 |

S3 40 8(8) 70 20(10) 18 12 | 20 | 50 | -- | -- | -- |

Demand 5 8 7 14 34

21 22 10 10
21 -- 10 10
Column -- -- 10 10
Penalty -- -- 10 50
-- -- 40 60
-- -- 40 --

Step2: The solution is Non degenerate basic feasible solution i.e;

m+n-1 = xij
3+4-1 = 6

Step 3:The Optimal Transportation cost = 19×5+10×2+40×7+60×2+8×8+20×10

= 779
Optimality test using MODI method...
Allocation Table is
D1 D2 D3 D4 Supply
S1 19 (5) 30 50 10 (2) 7
S2 70 30 40 (7) 60 (2) 9
S3 40 8 (8) 70 20 (10) 18
Demand 5 8 7 14 34

Iteration-1 of optimality test

1. Find ui and vj for all occupied cells (i,j), where cij = ui+vj

D1 D2 D3 D4 Supply ui
S1 19 (5) 30 50 10 (2) 7 u1=10
S2 70 30 40 (7) 60 (2) 9 u2=60
S3 40 8 (8) 70 20 (10) 18 u3=20
Demand 5 8 7 14 34
vj v1=9 v2= -12 v3=-20 v4=0

1. Substituting, v4=0, (because it has more allocated cells ) we get,

2.c14= u1+v4⇒ u1=c14-v4⇒u1=10-0⇒u1=10

3.c11=u1+v1⇒v1=c11-u1⇒v1=19-10⇒v1=9

4.c24=u2+v4⇒u2=c24-v4⇒u2=60-0⇒u2=60

5.c23=u2+v3⇒v3=c23-u2⇒v3=40-60⇒v3=-20

6.c34=u3+v4⇒u3=c34-v4⇒u3=20-0⇒u3=20

7.c32=u3+v2⇒v2=c32-u3⇒v2=8-20⇒v2=-12

( )
2. Find dij for all unoccupied cells(i,j), where dij=cij- ui+vj
 D1 D2 D3 D4 Supply ui

S1 19 (5) 30 [32] 50 [60] 10 (2) 7 u1=10

S2 70 [1] 30 [-18] 40 (7) 60 (2) 9 u2=60

S3 40 [11] 8 (8) 70 [70] 20 (10) 18 u3=20

Demand 5 8 7 14 34

vj v1=9 v2=-12 v3=-20 v4=0

1.d12=c12-(u1+v2)=30-(10-12)=32

2.d13=c13-(u1+v3)=50-(10-20)=60

3.d21=c21-(u2+v1)=70-(60+9)=1

4.d22=c22-(u2+v2)=30-(60-12)=-18

5.d31=c31-(u3+v1)=40-(20-9)=11

6.d33=c33-(u3+v3)=70-(20-20)=70

3. Now choose the minimum negative value from all dij (opportunity cost) = d22 = [-18]
and draw a closed path from S2D2.

Closed path and plus/minus sign allocation...

D1 D2 D3 D4 Supply ui
S1 19 (5) 30 [32] 50 [60] 10 (2) 7 u1=10

S2 70 [1] 30 [-18] (+) 40 (7) 60 (2) (-) 9 u2=60

S3 40 [11] 8 (8) (-) 70 [70] 20 (10) (+) 18 u3=20

Demand 5 8 7 14

vj v1=9 v2=-12 v3=-20 v4=0

Closed path is S2D2→S2D4→S3D4→S3D2

4. Minimum allocated value among all negative position (-) on closed path = 2, Substract 2 from all
(-) and Add it to all (+)

D1 D2 D3 D4 Supply

S1 19 (5) 30 50 10 (2) 7

S2 70 30 (2) 40 (7) 60 9

S3 40 8 (6) 70 20 (12) 18

Demand 5 8 7 14

5. Repeat the step 1 to 4, until an optimal solution is obtained.

Iteration-2 of optimality test

1. Find ui and vj for all occupied cells(i,j), where cij=ui+vj

D1 D2 D3 D4 Supply ui
S1 19 (5) 30 50 10 (2) 7 u1=0
S2 70 30 (2) 40 (7) 60 9 u2=32
S3 40 8 (6) 70 20 (12) 18 u3=10
Demand 5 8 7 14
vj v1=19 v2=-2 v3=8 v4=10

1. Substituting, u1=0, we get

2.c11=u1+v1⇒v1=c11-u1⇒v1=19-0⇒v1=19

3.c14=u1+v4⇒v4=c14-u1⇒v4=10-0⇒v4=10

4.c34=u3+v4⇒u3=c34-v4⇒u3=20-10⇒u3=10

5.c32=u3+v2⇒v2=c32-u3⇒v2=8-10⇒v2=-2

6.c22=u2+v2⇒u2=c22-v2⇒u2=30+2⇒u2=32

7.c23=u2+v3⇒v3=c23-u2⇒v3=40-32⇒v3=8

2. Find dij for all unoccupied cells(i,j), where dij=cij-(ui+vj)

D1 D2 D3 D4 Supply ui
S1 19 (5) 30 [32] 50 [42] 10 (2) 7 u1=0
S2 70 [19] 30 (2) 40 (7) 60 [18] 9 u2=32
S3 40 [11] 8 (6) 70 [52] 20 (12) 18 u3=10
Demand 5 8 7 14
vj v1=19 v2=-2 v3=8 v4=10
1.d12=c12-(u1+v2)=30-(0-2)=32

2.d13=c13-(u1+v3)=50-(0+8)=42

3.d21=c21-(u2+v1)=70-(32+19)=19

4.d24=c24-(u2+v4)=60-(32+10)=18

5.d31=c31-(u3+v1)=40-(10+19)=11
 6.d33=c33-(u3+v3)=70-(10+8)=52

Since all dij≥0, the final optimal solution is arrived.

D1 D2 D3 D4 Supply
S1 19 (5) 30 50 10 (2) 7
S2 70 30 (2) 40 (7) 60 9
S3 40 8 (6) 70 20 (12) 18
Demand 5 8 7 14

Therefore our final minimum total transportation / optimal

cost =19×5+10×2+30×2+40×7+8×6+20×12=743
MODI Method Steps (Rule)
Step-1: Find an initial basic feasible solution using any one of the three methods NWCM, LCM or VAM.
Step-2: Find ui and vj for rows and columns. To start

a. assign 0 to ui or vj where maximum number of

allocation in a row or column respectively.

b. Calculate other ui's and vj's using cij=ui+vj, for all

occupied cells.
Step-3: For all unoccupied cells, calculate dij=cij-(ui+vj), .
Step-4: Check the sign of dij

a. If dij>0, then current basic feasible solution is optimal and stop this procedure.

b. If dij=0 then alternative soluion exists, with different set allocation and same transportation
cost. Now stop this procedure.

b. If dij<0, then the given solution is not an optimal solution and further improvement in the
solution is possible.
Step-5: Select the unoccupied cell with the largest negative value of dij, and included in the next solution.
Step-6: Draw a closed path (or loop) from the unoccupied cell (selected in the previous step). The right
angle turn in this path is allowed only at occupied cells and at the original unoccupied cell. Mark
(+) and (-) sign alternatively at each corner, starting from the original unoccupied cell.
Step-7: 1. Select the minimum value from cells marked with (-) sign of the closed path.

2. Assign this value to selected unoccupied cell (So unoccupied cell becomes occupied cell).

3. Add this value to the other occupied cells marked with (+) sign.

4. Subtract this value to the other occupied cells marked with (-) sign.
Step-8: Repeat Step-2 to step-7 until optimal solution is obtained. This procedure stops when all dij≥0 for
unoccupied cells.