The Trangportation-Location Problem

Leon Cooper
Southern Methodist University, Dallas, Texas

(Received January 8, 1971)

This paper defines a problem type, called the transportation-location problem, that can be considered a generalization of the Hitchcock transportation
problem in which, in addition to seeking the amounts to be shipped from
origins to destinations, it is also necessary to find, at the same time, the optimal locations of these sources with respect to afixedand known set of destinations. This new problem is characterized mathematically, and exact and
approximate methods are presented for its solution.
T N A P R E V I O U S paper,'*' I formulated a problem that was a generalization of
both the Hitchcock 'transportation problem' (see HADLKY'") and a problem
that is sometimes referred to as the 'location-allocation' problem with unlimited
capacities (see COOPER.'^''') Here I will consider both that problem and an even
more general formulation in much greater detail.
We are given n fixed locations, to be called destinations, whose positions in
Euclidean space are known. Their coordinates will be given by (xDj,yD,), j =
1, , n. We are also given a set of known requirements r,,j=l, , n, for some
commodity or product at each of the n destinations. We wish to locate m sources,
whereTOis a given number, from which the product is to be shipped. These sources
are supposed to have certain limitations on their capacity to ship the product.
These numbers are known and will be designated c, i=l,
, m. Finally, there
may be 'weights' relating to destination requirements, e.g., multiplicity of trips in
a time period, or other possible weights. These will be designated fij,j = i, , n.
We shall designate by (xi, y,),i=\, ,m, the locations that are to be determined
for the sources, and by to,,, the amounts to be 'shipped' from source i to destination
j , which are also to be determined. Finally, we will define a set of 'cost functions'
that depend on the relative locations of the sources with respect to the destinations.
These will be designated:
^(XD,, 2/D,;x,,!/,) = cost of supplying a unit quantity to the jth destination
from the tth source.
We assume that the ^ functions are continuous. Our object is to minimize total
cost subject to capacity and requirement constraints. This problem may be
formulated as follows:
min z = ; i r S J - I " ISJW.JV'CXcj, yo,; x., 2/.) subject to:
E l - r w.ygc.,
i=\,--,m;

(1)

In what follows, let us designate the set TF as all tii = \wj} satisfying the constraints
of (1).
The relation of the problem given in (1) to the transportation problem and the

The Trantporfation-Locatiem Problem

location-allocation problem is readily seen. If the 4'(XD,, yo,; Xi, y.) =o,,, a set of
constant costs, and if a,,;3, is designated as y,,, then (1) can be written as:
min 21= : : ? J2',-i y./^.,,
weW,
(2)
which is a usual form of the transportation problem. Hence, for a fixed set of costs,
problem (1) becomes a transportation problem.
Returning to equations (1), we may also note that (a) if the requirements are
stated in terms of the P, and (b) the capacities associated with each source are unlimited, then the set of m-\-n constraints of (1) are no longer explicitly required and
(1) now becomes:

2^ T

This is the location-allocation problem discussed in references 2 and 3.

The particular form of the functions ^ that we shall be most interested i
throughout this paper is
which is the usual Euclidean distance in a two-dimensional space. However, we
shall give some consideration to the more general form given in (1).
CHARACTERISTICS OF THE GENERAL TRANSPORTATIONLOCATION PROBLEM

W E SHALL REFER to the problem stated in equations (1) as the general transportation-location problem,. There are a number of important observations that can
be made concerning this problem.
T H E O R E M 1. A necessary and sufficient cmdition for (1) to have a feasible set of w^
is
that-',-'r^^Zl^Ci.

Proof. This result is the same as for a transportation problem (see reference 8).
In what follows and throughout this paper, it can be shown that the functions
f(xD,, ym; *., yi) are such that (1) has a finite minimum. The next theorem is an
important result.
THEOREM 2.

For the problem

min 2= E ; r r E',-r /3,^.,iKxy, y^,-, x,, y,), WW,

an optimal solution will occur at an extreme point of the convex set W of feasible solutions to (1).
Proof. Let {*, y*, iv*\ be an optimal solution to (1), where x=(xi, x^, ,
Xm), y=(yi,yu
,/.), a n d w=(wu,wn,
,wi,,,wn,
,vhn, ^ l o ^ n ) . If we

fix (x, y) so that (x, y) = (x*, *), we obtain a resulting problem

min2= E ; ^ H'.-i 0/^',4'(xoi,yDi)X*,yi*),

weW,

which is a transportation problem. Hence, it has a solution at an extreme point

WgtW. From this it follows that (x*, y*, Wg) is an optimal solution to the original
problem (1).

96

Leon Cooper
THE TRANSPORTATION-LOCATION PBOBLEM

LET US NOW consider the problem of equations (1) for a particular form of the
function 4/:
^(xo,, yv,; X., y,) = [(xD,-x,)'+(y:>i-y,)']"\

(4)

Hence, what we shall now call the transportation-location problem is the following:

We shall now characterize the transportation-location problem. The constraint

set is clearly a convex set. What of the objective function? Theorem 3 has some
less-than-comforting information.
THEOREM 3. The function 2 = E T.',-" ^/u}>A{XD,-x.)^+(yD,-y.)^f''
is
neither a convex function nor a concave function of the vector (x, y, w) for all values of
X, y, and w.
Proof. Let us represent the objective function

as z(x, y, iv). Consider the special case where all w,,=0 except Wu- Further,
let all Xi, y, be fixed and known for i>l and let 2/1 = 2/01 and xm>xi.
Hence z(x,
y, w) =zi(xi, Wn)+K, where K is the sum of all the constant terms. If 2, is neither
convex nor concave over all of the space defined by (x, y, w), then the same will be
true of 2. Hence, we examine 2i(xi, w^u) =/SIM'U(XDI-XI).
It is well known'"
that a function such as Zi will be neither convex nor concave if the Hessian matrix
associated with 21 is neither positive nor negative semidefinite. The Hessian matrix
for z is
(8)

which is indefinite. Hence 21 is neither convex nor concave in the portion of the
space defined by xi and ;. Therefore, z(x, y, w) is neither convex nor concave
over all of the space defined
hy(x,y,iv).
This proof shows that the objective function 2 is not a convex or a concave function over all possible values of x, y, iv. A more pertinent question is whether or
not the objective function is convex or concave over values of x, y, and w limited
by the constraint set of the transportation-location problem. The answer to this
is given in the following result.
THEOREM 4. The function 2= E S ^ E i - i " ;8,w.,[(xBy-x.)'+(2//>,-j/.)T rteither a convex nor a concave function of the vector (x,y,w) over the constraint set of (7).
Proof. Consider the following problem:
subject to

(9)

where D.y=l(xBy-x.)'+(2/B-2/i)'rIn order to simplify the argument but allow sufficient variation over the constrMnt set, we assume that (xj, j/,) = (x, j/) and further that v,=vm = Wn. and

The Transportation-LocaHon Problem

XDI> XI, xta> Xl. This simplifies the objective function to:
2(Xi, Wu, toil, UI-i)
where

='Pl'Wll(xDlXi)+^Wu(XmXi

KD^XDIXM-

Let us consider the Hessian matrix of 2(xi, Wn, Wn, Wn):

-/3j

Since the Hessian matrix is indefinite for the problem given by (9), we see that, in
general, the objective function is neither convex nor concave over the constraint
set of the transportation-location problem.
A consequence of Theorem 4 is that the transportation-location problem, which
is given by equations (7), is a nonconvex nonlinear programming problem in which
we are minimizing a nonconvex objective function over a convex set. However,
because of Theorem 2, we can state the equivalent result for the transportationlocation problem.
T H E O R E M 5.

For the problem

r,
some optimal solution wiU (x
to (7).

I extreme

point

w,W, (7)

X set of feasible

solution!

Proof. The problem above is a special case of the general formulation proven
in Theorem 2.
The importance of this result is that it makes it unnecessary to consider any
but basic feasible solutions to the constraints of (7). This will be important when
we consider computational approaches in the next section of this paper.
AN EXACT ALGORITHM FOR THE TRANSPORTATION-LOCATION PROBLEM

THE FIRST algorithm we shall consider is exact and relatively simple in concept.
However, its use will be limited, as will be evident, to relatively small problems.
We may note, according to Theorems 2 and 5, that an optimal solution t the
transportation-location probleni_will occur at an extreme point of the convex set of
solutions, W=\iv,,\Aw^b,w^O\.
We know that the extreme points of W correspond to basic feasible solutions of Aw^b, w^O. If the number of basic feasible
solutions is designate<l as Ners, for an m-source, n-destination problem, NarsS
( T^ ) "^^ follows from the basic theory of the transportation problem.'"

98

leon Cooper

\
1 is the number of basic solutions, most of which are infeasible.
TO+n-1/
Hence, it is usually the case that NBrs.("^^_^\
For example, in the simple
example we shall present, with m = 2, n = 4, f _ ^ _ j j = U j = 8!/5!3! = 56.
However, there are only nine different nondegenerate basic feasible solutions.
According to results of DEMUTH'" AND DOIG,'" the minimum number of basic
feasible solutions, for mgn, to a transportation problem of order mXn is w!/(n
m+1)! Form = 2, n=4, wehave4!/3! = 4. Hence, the number of bases we have
had to examine, 9, is much closer to 4, the minimum number, than to the unrealistic
upper bound, 56. This is somewhat encouraging.
In any case, Nara is a finite number. Suppose we generate all basic feasible
solutions. Let us designate any such solution t6={iol- (We consider, subsequently, how to do this.) For each such solution, we can then solve the problem:
by considering this problem as a set of problems of the form:
We can do this, since the {iJ,,| are simply known nonnegative constants or weights
An iterative technique for solving problems of the form given by equations (13)
was given by the author in references 2 and 3, and is repeated here for convenience.
The initial estimates of (z,, j/,) are given by

and the general iteration equations are:

where the superscript on the z, and y, is the iteration parameter and

D\i = {(xu,-x^f^(y,>-y^ff\

(16)

If we now designate the minimum value of z for the 2th basic feasible solution as z*,
then it is obvious that the optimal value of the objective function 2* for the transportation-location problem will be:
/ = minV,2i*.

(17)

If the minimum is taken on at l=s, then the optimal values of the variables are
(X,,, Vi.), t = l , ,m, and it>,y., t = l, ,m,j=l,
,n, where the designation
(xi,, 2/..) indicates (x,, y.) for the sth basic feasible solution and T.y. are the set of
?,j for this solution.
Let us now return to a point we g l o s ^ over, earlier, viz., generating all the
basic feasible solutions to the constraints of the transportation-location problem,
i.e., the constraints:

i:;:r...c.,
w.,gO,

.=i,...,.; Ei-o=r.
1=1,

,m, j = l, , n .

,=i,...,; ^^^^

The Tronsporfation-LocaHon Problem

99

As has already been mentioned, these are simply the constraints of the standard
transportation problem. We can make use of the transportation problem tableau
(see reference 8) to advantage in order to generate only basic feasible solutions.
The alternative would be to find all basic solutions and discard the infeasible solu-

70

70

10
40

90

40

10

80

90

30

120

90

40

70

70

80

80

80

120

40

40

30

90

70

90

80

70

10

40

70

90

40

40

40

70

50

70

90

120

80
120

40

80
120

40

tions. This may require orders of magnitude more work.

below is more efficient.

T h e method described

As an example, consider a problem with m =2, n =3. There wiU be at most 2-1-3-1 = 4
noniero values of w.y in a basic feaaibk solution. Suppose c, =80, c = 120, r, =70, r, =90,
r. =40. An initial tableau is shown in Tableau 1 of Table I. The blank squares bave zero
values of u>,y, i.e., wwO, Wsi=O. It is a simple matter to find all basic feasible solutions

100

Leon Cooper

from this initial Tableau 1. We can use the standard 'loop' method for allowing a zero
variable to become positive and still remain feasible (see reference 8). This is merely the
application of the simplex method to the special case of the transportation problem. From
Tableau 1, we can generate two new tableaux. These are given in Tableaux 2 and 3. From
Tableau 2 we can generate one new tableau given in Tableau 4. From Tableau 3 we can
generate Tableau 5. From Tableau 4 we can generate Tableau 5, and from Tableau 5 back
to Tableau 4.
We have now generated all the basic feasible solutions. The relations between them for
this example can be represented as the directed graph shown in Fig. 1.
It can be seen that there are five basic feasible solutions. If all basic solutions had been
found, we would have had to solve four simultaneous equations in four variables, ( 1 = 15
times. The above procedure is simpler and very much less work.

We now state the algorithm we have been discussing for solving the transportation-location problem and then present a numerical example.

Enumeration Algorithm for the Transportation-Location Prohlem

1. Using the transportation-problem tableau, starting with any basic feasible solution,
generate the connected graph of all basic feasible solutions. Designate each such solution,
I ui,,i 1,2 = 1, , T, where there are T basic feasible solutions.
2. For each such solution, solve the set of location problems:

The Transportafion-Locolion Problem

and set 2,*= X i i ? Z.I.

3. The optimal solution is found by z* =min;_,.
the corresponding values of the variables.

with w*,, and (i* , yf,) being

A sample problem. Let (xm, J/ci)=(O, 0); (x, ym)=(O, I ) ; (xm, VDZ) =(1, 1); (xw,
yot) = (1, 0); m =2, n =4; c, =50, Cj = 100; n =20, r, =40, r, =60, r, =30. A basic feasible
solution is given in Tableau 1 of Table I I . From Tableau 1 we can generate Tableaux 2, 3
and 4. From Tableau 2 we can generate Tableaux 5 and 6. From 3 we generate 7 and 4.
From 4 we generate 8 and 4. From 5 we generate 6 and 7. From 6 we generate 5 and 8.
TABLE II

20

30
10

20

40

50
60

30

60

30

100

10
2

40

10
20

40

Tableau 1
2

40
20

40

20

c.

30

30

100

60

30

30

40

20

40

50

30

20
2
20

100

30
40

60

40

60

c.

50
100

30

Tablea i4
4

10

c.

50

40

50

30

20

60

30

r.

20

Tableau 5

60

Tableau 3

20

30

rablea
4

50
60

40

10

50

60

20

100

60

30

Tablea

leon Cooper

TABLE n-Cont.
1
50
20

40

20

40

10

30

60

30

100

20

20

40

50

Tableau 7

20

30

60

60

50
100

30

Tableau 8
1

3
20
40
40

4c,
30

40
60

50
100

30

Tableau 9
From 7 we generate 9 and 5. From 8 we generate 6 and 9. From 9 we generate 4 and 8.
Hence we are done. All of these tableaux are shown in Table II. Figure 2 gives the graph
of the nine basic feasible solutions.
For each of these nine basic feasible solutions to the constraints of the transportationlocation problem, two location problems were solved with the results shown in Table III.
It can be seen that the minimum occurs for solution 2. Hence the solution to our problem is:
U)u = 10, 'is=40, wn=O, u)n=O; Wn = 10, teM=O, u>23=60, Wj = 30; (xi, i/i) =(0, 1), (xj, 1/2) =
( l , l ) ; z * =54.143.

Fig. 2. Graph of solutions to the sample problem.

103

TJie Transportation-Location Problem

W e h a v e m a d e use, in the above algorithm, of t h e usual transportation-problem

m e t h o d . A worthwhile point t o investigate is whethei
~ '
It be found to generate all possible basic feasible
t h a n this 'loop' m e t h o d might no1
i THRALL""' have pr^ented a method for finding
solutions. MoTZKiN, R A I F ,
ledral set, as has BALTNSKI."' WITZGALL AND
all t h e vertices of a convex polyhedra
" o fof tthe
most comprehensive
studW E T S " " h a v e also examined this problem. One
h e most
comprehens
,_ KOHLER;"' it considers a more
ies, a n d perhaps t h e most promising, ii
gdld'tii
uut
UC
uisci-* tI*J
SOlUtlOHS. I t IS C|Ult6
general |jruuit;iiij
problem, b
u t ULJ1
can b
e used
o iiim
find an
all cXtrGIXlG-pOUlt
e
" ' and. this
. . is. under
^^^ investigation,
invpsfi(Tfl+inn that,
thai if
lT either
pithpr of
nt these
Tnpisp methods
mernon.s is
^ applied
.*^^
possible,
simplified
to the specific polyhedral convex set of the transportation problem.
TABLE I I I

Basic feasible
solution

(x<, y.)

Z,i

(0,1)
(1,1)

20
40

60

(0,1)
(1,1)

10
44.143

54.143

(1, 1)
(0.641, 0.792)

28.286
65.490

93.776

(1,0)
(1,1)

20
40

60

(0,1)
(1,1)

10
58.284

68.284

(0, 1)
(1,1)

14.142
48.286

62.428

(1, 1)
(0.287, 0.596)

0
69.126

69.126

(1,0)
(1,1)

28.286
48.286

76.572

(1,0)
(0.173,0.924)

20
59.579

79.579

m e t h o d for finding all t h e basic feasible solutions will result t h a t is more efficient
t h a n t h e usual 'loop' m e t h o d . T h i s would greatly improve t h e algorithm presented
here.
HEURISTIC ALGORITHM NO. 1 FOR THE TRANSPORTATIONLOCATION PROBLEM
THE HEURISTIC algorithm described in this section was a first attempt to devise a
rapid suboptimal method for solving transportation-location problems. It was

suggested by a heuristic method previously developed for the pure location-allocation problem and described in reference 3. This method, called the 'alternate
location-allocation method,' is as follows:
1. Select some subset consisting of m of the n destinations that are given and consider
these as source locations.
2. Allocate each of the remaining n -m destinations to the closest of the m sources given
in Step 1.
3. Within each of theTOsets of destinations determined in Step 2, use the iteration method
given in references 2 and 3 [also used in equations (14) and (15) of this paper] to find the
exact location of the optimal source location.
4. Determine for each destination whether or not it is closer to another of the sources
located in Step 3 than the one to which it is allocated. This defines a new grouping of m
subsets of destinations.
5. Repeat Steps 3 and 4 until no further changes are possible.
It is shown in reference 3 that this algorithm is a moderately successful one, but
by no means the best of the several heuristics tested for the pure location-allocation
problem. A modification of this method for the transportation-location problem
can be made as follows.
Alternating Transportation-Location Heuristic
1. Select arbitrarily m of the (XD,, yoi) and let these be the m initial source locations.
This then yields a set of distances between each of the destinations and the assumed sources.
2. Using these distances as cost coefficients 7,y [as in equations (2)], we can solve an
ordinary transportation problem tofinda set of [w,,\.
3. Using the |te,j| from Step 2, we can solve a location problem using equations (14)
and (15) andfinda new set of source locations.
4. We now iterate Steps 2 and 3 until no further changes, to within some tolerance, are
obtained in two successive cycles.
It can be seen that the general notion behind this approximate method is to
locate sources alternately given a pattern of allocations and to determine an allocation given a set of source locations. The location-allocation problem method and
the usual transportation-problem method are alternately applied to perform the
calculations. It can readily be seen that this iteration method yields a convergent
monotone nonincreasing sequence of values for z. However, there is no guarantee
that it will converge to the global maximum we seek. Still, what experience we
have with this and similar algorithms indicates that the result, when not optimal,
lies within -^lO percent and usually within 2-3 percent of the optinval solution.
Table IV indicates the results with this heuristic method for the first seven
problems given in reference 2. These are location-allocation problems with m=2,
n = 7. They were solved as transportation-location problems by using a set of
capacities and requirements such that each destination was supplied by only one
source. The starting points in each of these problems were completely random.
For problems 3 and 4 the optimal solutions were obtained. In the others, results
of varying degrees of closeness to optimality are obtained.

The Transportation-location Problem

ALTEKNATING TRANS PORTATION-LOCATION HEUI isTic RESULTS

Problem

Allocations
obtained

Z
obuined

Optimal

allocations

(1, 2, 3, 4, 5)
(6,7)

(1,2,4,5)
(3, 6, 7)

52.118

50.450

(1, 3, 4, 6, 7)
(2,5)

(1,3,4,6)
(2, 5, 7)

81.764

72.000

(1,2,3,4)
(5, 6, 7)

(1, 2 , 3 , 4 )
(5, 6, 7)

38.323

38.323

(1. 2, 3, 7)
(4, 5, 6)

(1,2,3,7)
(4, 5, 6)

48.850

48.850

(1, 2, 3, 4, 5)
(6,7)

(1, 2 , 3 , 5 )
(4, 6, 7)

38.560

38.033

(1, 2,3)
(4, 5, 6, 7)

(1, 2,3, 4)
(5,6,7)

44.564

36.175

(1,5,6,7)
(2, 3, 4)

(1,3,4,5,6,7)
(2)

61.935

59.716

In order to study how the results obtained by the heuristic are related to
initial choice of the sources, 17 different (randomly selected) starting values w
chosen and the heuristic then applied for Problem 1 of Table IV. Table V ii
cates the results obtained. It will be noted, from Table IV, that, for problem ni

R PROBLKM 1

Allocation
obtained

obt4ied

No. of times (out of 17)

this solution occurs

(1, 2,3,4,5)
(6,7)

52.118

(1, 2, 4, 5)
(3, 6, 7)

50.450

3 (optimal solution)

(1, 2, 3, 4)
(5, 6, 7)

52.001

(1,3,4,5,6,7)
(2)

59.705

(1, 2, 3, 7)
(4, 5, 6)

60.128

57.672

(1,2,4,5,6)
(3,7)

106

Leon Cooper

ber 1, the optimal allocations are ( 1 , 2, 4, 5), (3, 6, 7) and the optimal value of z
is .50.450.
From the results of Table V we can see that in three of the 17 trials we obtained
the optimal solution. In roughly 60 percent of the trials we obtained a solution no
worse than about 3 percent of optimal and usually better than this. The maximum
error was about 15 percent. However, it can be seen that repeated use of the
heuristic method, with varying starting values, is apt to give a reasonably good
approximation to the optimal solution, if not the optimal solution itself.

HEURISTIC ALGORITHM NO. 2 FOR THE TRANSPORTATIONLOCATION PROBLEM

THIS ALGORITHM is based on earlier work reported in reference 4. It seems to be

extremely efficient, as will be seen. The heuristic method that has been developed
is as follows.

Transportation-Location Heuristic Method

1. Use one of the heuristic methods reported in reference 3 (the "alternate locationallocation" method referred to in the previous section is one of these) to find a solution with
unspecified destination requirements and unlimited source capacities. Let the matrix
A =||a,,|| he the allocation matrix for the solution obtained, i.e., a,y = l if source i supplies
destination j and a,,- =0 otherwise. A is a matrix of zeros and ones such that each column
contains exactly one '1.* There are no restrictions on the rows, since one source may supply
more than one destination. The allocation matrix A is merely a convenient way of indicating
the subdivision of n destinations into m subsets, i.e., m subsets served by each of the m
2. Replace the nonzero elements of A by their respective ry, thus forming a new matrix
W', = l|.;-, II where

""'"lo','

o!!=0.'

3. Using the original matrix A of allocations, we now derive two new matrices, analogous
to Wl of Step 2 above, as follows. Find the pair of points being served by the same source
such that the distance between them is a maximum. Let the sources be 8,,, u = l, ,m,
and let Q be the subsets of destinations. Then we wish to find a pair of points p,, p, as
follows:

Let the subset in which this occurs be Qi, with source . We then eliminate source 8^ and
replace it with points p . , p,. We now have a set of m + 1 sources (, u = l, . , m; u^h),
p., p,. Therefore, we have one more source than is desired. Let ft = ((, u = l,
, m;
U}^h), p., p,\. The source coordinates are (z., ;/) for u.,ih, (XD,, yo,), (XD,, yot). For
notational simplicity, we rename the sources as ,. Therefore, R = [sJ\v = \, , T O + 1 1 ,
where the first m 1 sources are ,,(u^h) and where s = p , , s+i =pt. We now wish to find
the pair of sources s. and % that are closest together. Let us designate the set of indices
V, corresponding to ,eK, as V, i.e., V = l|,eSl. The pair of sources and i is now de-

The Transportation-Location PrtMem

107

terminedby

Ux.-Xt)*+(y.-yt)']'i'=imiii.,.T-t^,Uxt-x,)'+(yt-y,)']^".
Having found the pair of sources ,that are closest toother, first we eliminate s, and apply
the 'alternate' method of successive location and allocation until convergence, as referred to
under step 1 above. This will determine a second solution. Next we restore source .
and eliminate sj, apply the 'alternate' procedure and obtain a third solution. We calculate
two new matrices Wi and W) corresponding to these solutions, as we did in step 2.
4. Sum the requirements for each subset of destinations served by one source, i.e., calculate E . . . . I-/for each subset Si, i = l,
, m. We now calculate the differences, c.E^.-i r,,
1 = 1,
,m. A negative difference implies a capacity deficit and a positive difference
indicates a capacity surplus.
5. The iterative calculation begins with this step. Let / _ be any set with a capacity
deficit and let /+ be any set with a capacity surplus. Choose a destination point pt in the
.let / _ such that the difference in the distances from pt to the source of / _ and from pt to
the source of 7+ is a minimum. Symbolically, if pt has coordinates {x^t, y,,t) and the source
location of / _ is (a:_, yJ) and that of 7+ is {x+, y+), then we choose p* as the index j from 7_
such that
e'=imn,.,JUx,,-x..y-t(yD,-y-)'V"-l(xD,-x+)'-i-(yo,-y^)'V"\.
6. We now reallocate part or all (if possible) of the requin
7_ to the source in I+. The amount reallocated depends on t
the surplus at 7+. The four cases are
(a) If the (requirement at pt) S (deficit for 7_) and the (surplus for 7^.) (deficit for 7_),
then we reallocate the deficit from 7_ by supplying this amount to p* from 7+ instead of 7_.
(b) If the (requirement at p*)fe(deficit for 7_) and the (surplus for 7+) <(deficit for 7_),
then we reallocate the amount of the surplus at 7+ by supplying this amount to p* from 7+
instead of 7...
(c) If the (requirement at pt) < (deficit for 7_) and the (surplus at 7+)fe(requirement at
Pk), then we reallocate the entire requirement at pt from 7_ to 7+.
(d) If the (requirement at pt) < (deficit for 7_) and the (surplus at 7+) < (requirement at
Pt), then we reallocate the amount of the surplus at 7+ by supplying this amount to pt from
7+ instead of 7...
7. With the new allocations, new source locations are computed for each subset of destinations S, by the use of equations (14) and (15), using the allocations as weights.
8. Each subset of destination points S, is now examined for the points that might be
closer to a different source with an excess capacity. If possible, we reallocate part or all of
its requirement, depending on the amount of the surplus at this source.
9. We now repeat steps 7 and 8 (exact source location and subsequent reallocation to
satisfy requirements), until no further change in the allocation matrix occurs.
10. The entire reallocation process (steps 5-9) is now repeated until all capacity deficits
are removed. The value of z for this allocation matrix Wi is computed.
11. The procedure of steps 4-10 is repeated for allocation matrices W, and W,.
12. The minimum of the three values of z obtained is chosen as the solution, together with
its source locations and destination allocations.
This heuristic method was tested on the eight two-source, seven-destination
problems listed in reference 2. The requirements were generated randomly. The
capacities were chosen all equal, with their sum 5 percent higher than the sum of the

Leon Cooper
requirements. In order to have exact solutions to compare the heuristic against,
the exact extremal equations (14) and (15) were used to solve for all possible allocations that, for these test problems, included the optimal solutions. For these eight
problems, the heuristic method produced the optimal solution.
In reference 4 this basic method was also applied to 100 randomly generated
problems with apparently good results, although the correct solutions were not
known in advance.

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3. , "Heuristic Methods for Location-Allocation Problems," SIAM Review 6, 37-52
(1964).
4.
, "Solutions of Generalized Locational Equilibrium Models," J. of Regional Science
7, 1-18 (1967).
5. 0 . DEMUTH, "A Remark on the Transportation Problem," Casopis pest. mat. 86,103-110
(1961).
6. A. DoiG, "The Minimum Number of Basic Feasible Solutions to a Transport Problem,"
Opnat. Res. Quart. U, 387-391 (1963).
7. W. H. FLEMING, Functions of Severat Variables, Addison-Wesley, Reading, Mass., 1965.
8. G. HADLEY, Linear Programming, Addison-Wesley, Reading, Mass., 1962.
9. D . A. KoHLEE, "Projections of Convex Polyhedral Sets," ORC 67-29, University of
California, Berkeley, 1967.
10. T. S. MoTZKiN, H. RAIFPA, AND R . M. THRALL, "The Double Description Method,"
in H. W. KuHN AND A. W. TUCKER (eds.), ContribiUions to ihe Theory of Games, Vol.
II, Annals of Mathematics Study No. 28, Princeton U. Press, Princeton, 1953.
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71B, 1-7 (1967).