Chapter Three

TRANSPORTATION AND
ASSIGNMENT PROBLEMS
 Learning objectives
After the successful completion of this chapter, students should be able to:

 Explain transportation and assignment problems

 Discuss methods for finding initial solution
 Discuss test for optimality and variation in
transportation.

By: Menberu T. 2
03/07/2025
 TRANSPORTATION AND ASSIGNMENT
PROBLEMS
 The purpose of using a LP model for transportation problems is to
minimize transportation costs, taking into account the origin of supplies,
the destination demands, and the transportation costs.
 The transportation method is similar in certain respects to the simplex
technique because both involve an initial feasible solution that is evaluated
to determine if it can be improved.
 Moreover, both involve displaying initial and improved solutions in a
series of tableaus or tables.
 However, the transportation method requires considerably less
computational effort. In addition, it is not unusual to discover that the
initial feasible solution in a transportation problem is the optimum.
 Examples of transportation problems include shipments from warehouses
to retail stores, shipment from factories to warehouses, shipments between
departments within a company, and production scheduling.
By: Menberu T. 3
03/07/2025
 Formulating the model
 A transportation problem typically involves a set of sending
locations, which are referred to as origins, and a set of receiving
locations, which are referred to as destinations.
 In order to develop a model of a transportation problem, it is
necessary to have the following information:
 Supply quantity (capacity) of each origin.
 Demand quantity of each destination.
 Unit transportation cost for each origin-destination route.

By: Menberu T. 4
03/07/2025
 Assumptions
•The transportation algorithm requires the assumption that:
 All goods be homogeneous, so that any origin is capable of
supplying any destination, and
 Transportationcosts are a directlinear function of the
quantity shipped over any route.
 The total quantity available is equal to the total demand.
•Harley’s Sand and Gravel Pit has contracted to provide topsoil for
three residential housing developments. Top soil can be supplied from
three different “farms” as follows:
By: Menberu T. 5
03/07/2025
 Cont…

 Demand for the topsoil generatedby the construction

projects
Project
is: Weekly demand (cubic yards)

1 50
2 150
3 300

 The manager of the sand and gravel pit has estimated the cost per
cubic yard to ship over each of the possible routes:
By: Menberu T. 6
03/07/2025
 Cont…

 This constitutes the information needed to solve the problem. The next
step is to arrange the information into a transportation table. This is
shown in the following table.
By: Menberu T. 7
03/07/2025
 Cont…
Transportation table for Harley’s sand and gravel

By: Menberu T. 8
03/07/2025
 It is possible to write this transportation
problem in LPM
LPM for this problem is:
Z min: 4x11+ 2x12+8x13+5x21+ x22+9x23+7x31+6x32+3x33

Subject to:

x11+x12+x13 ≤ 100
x21+x22+x23 ≤ 200 Capacity/Source constraint
x31+x32+x33 ≤ 200
x11+x21+x31≤ 50
Demand/ Destination contraint
x12+x22+x32≤ 150
x13+x23+x33≤ 300
By: Menberu T. 9
03/07/2025
 Cont…
•This can be rewritten as
Z min: 4x11+ 2x12+8x13+5x21+ x22+9x23+7x31+6x32+3x33

Subject to:

x11+x12+x13 ≤ 100
x21+x22+x23 ≤ 200
x31+x32+x33 ≤ 200
x11+x21+x31≤ 50
x12+x22+x32≤ 150
x13+x23+x33≤ 300
X11,x12,
03/07/2025
x13, x21,x22,x23,x31,x32,x33>=0
By: Menberu T. 10
 Finding an initial feasible solution
•The starting point of the transportation method is a feasible solution. For an
assignment to be feasible, two conditions must be fulfilled:
1. A feasible solution is one in which assignments are made in such
a way that all supply and demand requirements are satisfied.
2. . The number of non-zero(occupied) cells should equal one less
than the sum of the number of rows and the number of columns in a
transportation table.

By: Menberu T. 11
03/07/2025
 Cont…
 A number of different approaches can beused to
find an initial feasible solution. Three of these are
described here:
 The North West-corner method.
 An intuitive approach/Least cost method
 Vogel’s/Penalty Method

By: Menberu T. 12
03/07/2025
 The Northwest-Corner Method
 The Northwest corner method is a systematic approach for developing
an initial feasible solution.
 Its chief advantages are that it is simple to use and easy to understand.
 Its chief drawback is that it does not take transportation costs into
account.
 Consequently, such a solution may require much additional effort to
obtain the optimal solution.
•The northwest corner method gets its name because the starting point for
the allocation process is the upper left- hand(Northwest) corner of the
13
transportation table.
03/07/2025 By: Menberu T.
 Cont…
 For the Harley problem, this would be the cell that represents the route
from Farm A to Project # 1.
 The following set of principles guides the allocation:
• Begin with the upper left-hand cell, and allocate as many units as possible to
that cell. This will be the smaller of the row supply and the column demand.
Adjust the row and column quantities to reflect the allocation.
• Remain in a row or column until its supply or demand is completely satisfied,
allocating the maximum number of units to each cell in turn, until all supply
has been allocated (and all demand has been satisfied because we assume
total supply and demand are equal).
By: Menberu T. 14
03/07/2025
Cont…

By: Menberu T. 15
03/07/2025
 Cont…
 The total cost is found by multiplying the quantities in “completed” (i.e.
non-empty) cells by the cell’s unit cost and, then, summing those
amounts. Thus:
 Total cost = 50(4)+50(2)+100(1)+100(9)+200(3) = $1900

By: Menberu T. 16
03/07/2025
 Cont…
•Example: Find the initial basic feasible
solution by using North-West Corner Rule and the total
cost.

By: Menberu T. 17
03/07/2025
 Cont…

 Initial Basic Feasible Solution

x11=21, x12=13, x22=12, x23=3, x33=12, x43=2, x44=17
 21(1)+13(5)+12(3)+3(1)+12(2)+2(2)+17(4)=221(transportation
cost)
03/07/2025 By: Menberu T. 18
 The Intuitive Approach
 This approach, also known as the minimum-cost method, uses lowest
cell cost as the basis for selecting routes. The procedure is as follows:
1. Identify the cell that has the lowest unit cost. If there is a tie, select
one arbitrarily. Allocate a quantity to this cell that is equal to the
lower of the available supply for the row and the demand for
the column.
2. Cross out the cells in the row or column that has been exhausted (or
both, if both have been exhausted), and adjust the remaining row
or column total accordingly.

By: Menberu T. 19
03/07/2025
3. Identify the cell with the lowest cost from the remaining cells. Allocate
a quantity to this cell that is equal to the lower of the available supply of
the row and the demand for the column.
4. Repeat steps (ii) and (iii) until all supply and demand have been
exhausted.

Total cost = 50(4) + 50(8) + 150(1) + 50(9) + 200(3) = $1800

By: Menberu T. 20
03/07/2025
 Cont…
•Compared to the plan generated using the Northwest-corner method, this
one has a total cost that is $100 less. This is due to the fact that the
previous one did not involve the use of cost information in allocating
units.

By: Menberu T. 21
03/07/2025
Example 2

By: Menberu T. 22
03/07/2025
 Cont…
• Solution: 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.
• 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. Lets 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. 23
03/07/2025 By: Menberu T.
 Cont…

• 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. 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.
By: Menberu T. 24
03/07/2025
 Cont…

• 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.

By: Menberu T. 25
03/07/2025
 Cont…
• 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.

• Now just multiply the cost of the cell with their respective
allocated values and add all of them to get the basic
solution i.e. (300 * 1) + (250 * 2) + (150 * 5) + (50 * 3) +
(250 * 3) + (200 * 2) = 2850
03/07/2025 By: Menberu T. 26
 Vogel’s Approximation Method
(VAM)
 The third method for determining an initial solution, Vogel’s
Approximation Method(also called VAM), is based on the concept
of penalty cost or regret.
 If a decision maker incorrectly chooses from several alternative
courses of action, a penalty may be suffered (and the decision
maker may regret the decision that was made).
 In transportation problem, the courses of action are the alternative
routes and a wrong decision is allocating to a cell that does not
contain the lowest cost.
By: Menberu T. 27
03/07/2025
 Cont…
•With VAM the basis of allocation is unit cost penalty i.e. that column or row
which has the highest unit cost penalty (difference between the lowest and the
next highest cost) is selected first for allocation and the subsequent allocations in
cells are also done keeping in view the highest unit cost penalty.
Steps in VAM
1. Construct the cost, requirement, and availability matrix i.e. cost matrix
with column and row information.

2. Compute a penalty for each row and column in the transportation table.
The penalty is merely the difference between the highest cost and the
next highest cost element in that particular row or column.
By: Menberu T. 28
03/07/2025
Cont…
1. Identify the row and column with the largest penalty. In this
identified row (column), choose the cell which has the smallest cost
and allocate the maximum possible quantity to this cell. Delete the
row (column) in which capacity (demand) is exhausted. When
there is a tie for penalty, select one arbitrarily. After allocation,
cross that row or column and disregard it from further
consideration.
2. Repeat steps 1 to 3 for the reduced table until the entire
capabilities are used to fill the requirement at different
warehouses.
Cont…
Cont…
Cont…
 Since there is no penaltyfor the
remainingcells, we allocate for these cells
according to their cost.
Cont…
Therefore the final allocation will be:

 Total cost: 1x150+ 3x200+4x50 + 8x50 + 9x50 = Birr 1800

 By: Menberu T. 35
03/07/2025
 By: Menberu T. 36
03/07/2025
 By: Menberu T. 37
03/07/2025
 By: Menberu T. 38
03/07/2025
 By: Menberu T. 39
03/07/2025
 By: Menberu T. 40
03/07/2025
 By: Menberu T. 41
03/07/2025
 By: Menberu T. 42
03/07/2025
 By: Menberu T. 43
03/07/2025
 By: Menberu T. 44
03/07/2025
 By: Menberu T. 45
03/07/2025
 By: Menberu T. 46
03/07/2025
 By: Menberu T. 47
03/07/2025
 By: Menberu T. 48
03/07/2025
 By: Menberu T. 49
03/07/2025
 By: Menberu T. 50
03/07/2025
 By: Menberu T. 51
03/07/2025
 By: Menberu T. 52
03/07/2025
 By: Menberu T. 53
03/07/2025
 By: Menberu T. 54
03/07/2025
 By: Menberu T. 55
03/07/2025
 By: Menberu T. 56
03/07/2025
 By: Menberu T. 57
03/07/2025
 By: Menberu T. 58
03/07/2025
 By: Menberu T. 59
03/07/2025
 By: Menberu T. 60
03/07/2025
 By: Menberu T. 61
03/07/2025
 By: Menberu T. 62
03/07/2025
 By: Menberu T. 63
03/07/2025
 By: Menberu T. 64
03/07/2025
 By: Menberu T. 65
03/07/2025
 By: Menberu T. 66
03/07/2025
 By: Menberu T. 67
03/07/2025
 By: Menberu T. 68
03/07/2025
 By: Menberu T. 69
03/07/2025
 By: Menberu T. 70
03/07/2025
 By: Menberu T. 71
03/07/2025
 By: Menberu T. 72
03/07/2025
 By: Menberu T. 73
03/07/2025