MANEESH P

DEPT. OF APPLIED ECONOMICS

 INTRODUCTION

The basic transportation problem was developed in 1941 by F.I.

Hitchaxic. However it could be solved for optimally as an answer to
complex business problem only in 1951,when Geroge B. Dantzig
applied the concept of Linear Programming in solving the
Transportation models.

Transportation problems are primarily concerned with the optimal

(best possible) way in which a product produced at different factories
or plants (called supply origins) can be transported to a number of
warehouses (called demand destinations).
Transportation problem is a special kind of LP
problem in which goods are transported from a set
of sources to a set of destinations subject to the
supply and demand of the source and the
destination respectively, such that the total cost of
transportation is minimized.

The objective in a transportation problem is:-To

fully satisfy the destination requirements within
the operating production capacity constraints at
the minimum possible cost.
 Whenever there is a physical movement of goods from
the point of manufacture to the final consumers through
a variety of channels of distribution (wholesalers,
retailers, distributors etc.), there is a need to minimize
the cost of transportation so as to increase the profit on
sales. Transportation problems arise in all such cases.

.
It aims at providing assistance to the top
management in ascertaining how many units of a
particular product should be transported from each
supply origin to each demand destinations to that
the total prevailing demand for the company’s
product is satisfied, while at the same time the
total transportation costs are minimized
i.e.; The total supply available at the plants exactly matches
the total demand at the destinations. Hence, there is neither
excess supply nor excess demand.
Such type of problems where supply and demand are
exactly equal are known as Balanced Transportation
Problem.

Supply (from various sources) are written in the rows,

while a column is an expression for the demand of different
warehouses. In general, if a transportation problem has m
rows an n columns, then the problem is solvable if there are
exactly (m + n –1) basic variables
.UNBALANCED TRANSPORTATION PROBLEM :

A transportation problem is said to be unbalanced if the

supply and demand are not equal.
Two situations are possible:-
1. If Supply < demand, a dummy supply variable is
introduced in the equation to make it equal to demand.
2. If demand < supply, a dummy demand variable is
introduced in the equation to make it equal to supply.
Then before solving we must balance the demand & supply.

When supply exceeds demand, the excess supply is assumed to go to

inventory. A column of slack variables is added to the transportation
table which represents dummy destination with a requirement equal to
the amount of excess supply and the transportation cost equal to zero.
When demand exceeds supply, balance is restored by adding a dummy
origin. The row representing it is added with an assumed total
availability equal to the difference between total demand & supply and
with each cell having a zero unit cost.
Demand Less Than Supply
 Suppose that a plywood factory increases its rate of
production from 100 to 250 desks
 The firm is now able to supply a total of 850 desks each
period
 Warehouse requirements remain the same (700) so the
row and column totals do not balance
 We add a dummy column that will represent a fake
warehouse requiring 150 desks
 This is somewhat analogous to adding a slack variable
 We use the northwest corner rule and either vogel’s
approximation method or MODI to find the optimal
solution
FROM A B C TOTAL
AVAILABLE

TO
I 5 4 3 250

II 8 4 3 300

III 9 7 5 300

WAREHOUSE 300 200 200 850

REQUIREMENTS

700
FROM A B C D TOTAL
AVAILABLE

TO
I 5 4 3 0 250

II 8 4 3 0 300

III 9 7 5 0 300

300 200 200 150

WAREHOUSE
REQUIREMENTS
850= 850
FROM A B C D TOTAL
AVAILABLE

TO
I 250 250
5 4 3 0 (1)

II 300
(1)
8 4 3 0

III 300
9 7 5 0 (2)

WAREHOUSE 300 200 200 150

REQUIREMENTS

(3) (0) (0) (0)

300-250=50
FROM TOTAL
A B C D AVAILABLE

TO
200
II 0 300
8 4 3 (1)

III 9 7 5 0 300 (2)

WAREHOUSE 50 200 200 150

REQUIREMENTS

(1) (3) (2) (0) 300-200=100

FROM TOTAL
A C D AVAILABLE

TO

100 (5)
II 8 3 0 100

(4)
III 9 5 0 300

WAREHOUSE
50 200 150
REQUIREMENTS

(1) (2) (0)

200-100=100
FROM TOTAL
A C D AVAILABLE
TO
50
III 9 5 0 300 (4)

WAREHOUSE
REQUIREMENTS 50 100 150

(9) (5) (0)

300-50=250
FROM TOTAL
C D AVAILABLE
TO

150 (5)
III 5 0 250

WAREHOUSE
REQUIREMENTS 100 150

(5) (0)

250-150=100
 TOTAL
FROM
AVAILABLE
TO C

100

III 5 100

WAREHOUSE
REQUIREMENTS
100

100-100=0
 FROM
TOTAL
A B C D AVAILABLE
TO

250
I 5 4 3 0 250

200 100
II 8 4 3 0 300

50 100 150
III 9 7 5 0 300

WAREHOUSE
REQUIREMENTS 300 200 200 150

m+n-1 = 3+4-1= 6
 v1 v2 v3 v4
FROM
TOTAL
A B C D AVAILABLE
TO

250
I 5 4 3 0 250
u1
200 100
u2 II 8 4 3 0 300

50 100 150
U3 III 9 7 5 0 300

WAREHOUSE
REQUIREMENTS 300 200 200 150
 ASSUMING U3=0

U1+V1=5
0+V1=9 U2+V3=3
(V3=5)
V1=9 U2+5=3
U2+V2=4 U2= 3-5= -2
0+V3=5
U2+V3=3 V3=5 U3+V4=0
U3+0=0
(V4=0)
U3+V1=9 0+V4=0 U3=0
V4=0
U3+V3=5 U2+V2=4
U1+V1=5
U1+9=5 -2+V2=4
U3+V4=0 U1= 5-9 = -4 V2= 4-(-2) = 6
(U2= -2)
 CIJ TABLE
V1 V2 V3 V4
U1
4 3 0 -4

U2
8 0 -2

U3
7 0

9 6 5 0
 uI-VJ TABLE
V1 V2 V3 V4
U1
2 1 -4
U2
7 -2
U3
7
 DIJ TABLE
V1 V2 V3 V4
U1
2 2 4
U2
1 2
U3
0
Here all the dij values are positive, therefore the solution is
optimal.

Initial basic feasible solution

Total cost = 250*5+200*4+100*3+50*9+100*5+150*0

1250+800+300+450+500+0 = 3,300
 Demand Greater than Supply
 The second type of unbalanced condition
occurs when total demand is greater than
total supply
 In this case we need to add a dummy row
representing a fake factory
 The new factory will have a supply exactly
equal to the difference between total
demand and total real supply
FROM PLANT
A B C SUPPLY
TO

W 6 4 9 200

X 10 5 8 175

Y 12 7 6 75

WAREHOUSE 450
DEMAND 250 100 150 500

Totals do not
balance
FROM PLANT
A B C SUPPLY
TO

W 6 4 9 200

X 10 5 8 175

Y 12 7 6 75

Z 0 0 0 50

WAREHOUSE 500
DEMAND 250 100 150 500
FROM PLANT
A B C SUPPLY
TO

200 200
W 6 4 9
0 100 75
X 10 5 8 175

75
Y 12 7 6 75

50
Z 0 0 0 50

WAREHOUSE
DEMAND 250 100 150
 CIJ TABLE

V1 V2 V3
U1 4 9 -4

U2 0

U3 12 7 -2

U4 0 0 -10

10 5 8
 UI+VJ TABLE

V1 V2 V3
U1 1 4

U2

U3 8 3

U4 -5 -2
 DIJ TABLE DIJ= CIJ-(UI+VJ)

V1 V2 V3
U1 3 5

U2

U3 4 4

U4 5 2
Here, all the dij values are positive, therefore the
solution is optimal.
TC= 200*6+0*10+100*5+75*8+75*6+50*0

1200+500+600+450= 2750
 CONCLUSION

In real-life problems, total demand is frequently not

equal to total supply
These unbalanced problems can be handled easily by
introducing dummy sources or dummy destinations
If total supply is greater than total demand, a dummy
destination (warehouse), with demand exactly equal to
the surplus, is created
If total demand is greater than total supply, we introduce
a dummy source (factory) with a supply equal to the
excess of demand over supply
Any units assigned to a dummy destination represent
excess capacity

Any units assigned to a dummy source represent unmet

demand
THANK YOU FOR YOUR
ATTENTION!!!