The Transportation

Problem

Production Systems Design

MG 3400
A.Gerstenfeld

Introduction

Concept: " The transportation problem involves

the transportation or physical distribution of
goods and services from several supply origins
to several demand destinations"
It involves a variety of shipping routes and
associated costs for the origin-to destination
movements possible
Special algorithm to solve it
 Mathematical Structure
Known:
Quantities of a Given product at each m
origins
n destinations require known quantities of
the same product
per unit cost for shipping one unit of the
given product from any origin to any
destination

Mathematical Structure (2)

Unknown:
Shipping schedule. (It will satisfy the
requirements at each destination while
minimizing the total cost of the shipments)
 Mathematical structure of the
transportation problem
Mathematical Structure

- ai= The quantity of the product available at origin i

- bj= The quantity of the product required at destination j
- cij= The unit cost associated with shipping one unit of
product from origin i to destination j
- xij= The unknown quantity to be shipped from origin i to
destination j

Solving xij, which

m n
Minimize Z = cij xij (Objective function)
i=1 j=1

Mathematical Structure of the

transportation problem
Subject to
n
xij= ai ai > 0, i=1,2,3,.....m
j=1
m
xij= bj bj > 0, i=1,2,3,.....n
i=1

Additionally, in the balanced transportation problem it is

assumed that:
m n
ai = bj bj > 0, i=1,2,3,.....n
i=1 j=1
(The total amount available at the m origins will exactly
satisfy the quantity required at the n destinations)
Solving the transportation problem
Finding an Initial Feasible Solution: The
Minimum Cost Method
Select the (m+n-1) basic variables one at a
time
Assign a value to the variable that will satisfy
either:
an origin availability or a destination
requirement (but not both)

Problem Situation
Company: Sea Treasures Seafood Co.
- Located in Jacksonville
- Two seafood caneries- San Diego, N.Orleans
- Warehouses: Los Angeles, Kansas City, Atlanta, and
Philadelphia
Management wants:
Minimum shipping cost from the three cannery locations
to the four distribution warehouses
 Problem Situation (2)
Data
Warehouses Yearly Demmand Canneries Estimated
(# of cases) yearly Output (#
Los Angeles 35,000 of cases)
Kansas City 20,000 San Diego 40,000

Atlanta 25,000 New Orleans 50,000

Philadelphia 45,000 Jacksonville, Fl 35,000

Tuna Fish Shipping Costs (per Case)

From Cannery To Los Angeles To Kansas City To Atlanta To Philadelphia

San Diego 1.00 7.5 8.5 11.0

New Orleans 7.50 4.5 3.0 7.5
Jacksonville 10.00 6.5 1.0 6.0

Procedures for determining an

initial basic feasible solution
Northwest Corner Rule
begin in cell (1,1)
Set X11=min(a1,b1)
If a1>b1 then move to cell (1,2) and set
x12=min(a1-b1,b2)
If b1>a1 then move to cell (2,1) and set x21=
min(b1-a1,a2)
a1=b1 degeneracy will occur
Eventually Solution (m+n-1) solutions
 Applied to Treasures Seafood Co.
Origin D1 D2 D3 D4 Origin
Los Angeles Kansas City Atlanta Philadelphia Availability

O1 1.00 7.5 8.5 11.00

San Diego 35,000 5,000 40,000

O2 7.5 4,5 3.00 7.5

N.Orleans 15,000 25,000 10,000 50,000

O3 10.0 6.5 1.00 6.00

Jacksonville 35,000 35,000

Destination
Requirement 35,000 20,000 25,000 45,000 125,000

Total shipping cost

$USD 500,000
Shipping Route Number of Cases Cost per case Total

San Diego-Los 35,000 1.00 35,000

Angeles
San Diego-Kansas 5,000 7.50 37,500
City
N.Orleans-Kansas 15,000 4.50 67,500
City
N.Orleans-Atlanta 25,000 3.00 75,000
N.Orleans-Philadelph 10,000 7.50 75,000
ia
Jacksonville-Philadel 35,000 6.00 210,000
phia
 Matrix Minima Rule
It involves the successive determination of matrix minima
Begin by determining the lowest cost in the entire tableau
If a tie occurs, we may break it arbitrarily
If this occur to cell(i,j), then set xij=min(ai,bj) and eliminate
for further consideration either row i or colum j
If xij = ai, we decrease bj by ai and if xij = bj, we decrease ai
by bj
Whenever the search process reaches a point at which the
minimun cost is not unique, choose among the arbitrarily.
Degeneracy can again occur
It produces a better initial feasible solution than the northwest
corner rule. Eventually (m+n-1) solutions

Initial Basic Feasible Solution

Matrix Minima Rule
Origin D1 D2 D3 D4 Origin
Los Angeles Kansas City Atlanta Philadelphia Availability

O1 1.00 7.5 8.5 11.00

San Diego 35,000 5,000 5,000 40,000

O2 7.5 4,5 3.00 7.5

N.Orleans 20,000 30,000 50,000

O3 10.0 6.5 1.00 6.00

Jacksonville 25,000 10,000 35,000

Destination
Requirement 35,000 20,000 25,000 45,000 125,000
 Total Shipping cost
$USD 490,000
Shipping Route Number of Cases Cost per case Total

San Diego-Los 35,000 1.00 35,000

Angeles
San 5,000 11.00 55,500
Diego-Philadelphia
N.Orleans-Kansas 20,000 4.50 90,000
City
N.Orleans-Philadelph 30,000 7.50 225,000
ia
Jacksonville-Atlanta 25,000 1.00 25,000

Jacksonville-Philadel 10,000 6.00 60,000

phia

Moving to an Optimal Solution:

The Stepping-stone Method
This method evaluate each of the unoccupied cells to determine
the effect upon the objectie function of transferring one unit from
an occupied cell to the unoccupied cell.
It involves two steps:
Evaluate all unoccupied cells for the net cost effect of
transferring one unit from an occupied cell to the unoccupied
cell
Make a reallocation to the unoccupied cell that the tableau
indicates would have the greatest net cost per unit savings
 The Stepping-stone Method
Procedure:
1. Begin with the unoccupied cell to be evaluated and place a +1 in the
unoccupied cell
2. Draw an arrow from the unoccupied cell being evaluated to an occupied
cell in the same row or to an occupied cell in the same collumn. Place a
-1 in the cell to which the arrow was drawn
3. Move horizontally or vertically (but never diagonally) from the occupied
cell just selected to another occupied cell
4. Repeat the process of moving from occupied cell to unoccupied cell
untill we loop back to the original unocuppied cell. Alternate the +1, -1
allocations at each step of the looping process maintaining the row or
column balance

The Stepping-stone Method

Procedure (2)
5. Throughout the looping process, maintain the important
restriction that there is exactly one positive allocation (+1) and
exactly one negative allocation (-1) in any row or column through
which the loop happens to pass.
6. After constructed the entire closed loop, determine the net cost
associated with the unoccupied cell by adding the cij values in all
the cells marked with a +1 and substracting the cij values in all the
cells marked with a -1
 The Stepping-stone Method
Initial Basic Feasible Solution
Origin D1 D2 D3 D4 Origin
Los Angeles Kansas City Atlanta Philadelphia Availability

O1 1.00 7.5 8.5 11.00

San Diego 35,000 5,000 +2.50 +0.50 40,000

O2 7.5 4,5 1 3.00 7.5

N.Orleans +9.50 15,000 25,000 10,000 50,000

O3 10.0 6.5 1.00 6.00

Jacksonville +13.50
2 +3.50 -0.5 35,000 35,000

Destination
Requirement 35,000 20,000 25,000 45,000 125,000
 Example
The Stepping-stone Method
Begin the analysis with step 1 (closed
loop) assigned +1, -1, to offset the matrix
By following our closed path in the different
unoccupied cells, we obtain the following:
Cell (1,3) (STEP 1)
1. Add one unit to cell (1,3) = +8.50
2. Substract one unit from one cell (2,3) = - 3.00
3. Add one unit to cell (2,2) = +4.50
4. Substract one unit from cell (1,2) = - 7.50
Net Change = +2.50

Example
The Stepping-stone Method
Another example is to get the number in
cell (3,1) (STEP 2)
Cell (3,1) (STEP 2)
1. Add one unit to cell (3,1) = + 10.00
2. Substract one unit from one cell (3,4) = - 6.00
3. Add one unit to cell (2,4) = + 7.50
4. Substract one unit from cell (2,2) = - 4.50
5. Add one unit to cell (1,2) = + 7.50
6. Substract one unit from cell (1,1) = - 1.00
Net Change = +13.50
 Example
The Stepping-stone Method
If all net cost changes are >= 0, the basic feasible solution is
optimal. If one or more of the net cost changes is < 0, we can
reduce the value of the objective function (shipping cost)
In the table we have in cell (3,3) a negative value of -0.50.
Optimization:
a. The amount of the allocation we place in an unoccupied
cell is always the minimum amount in the cells .
D3 D4

O2 -1 3.00 +1 7.5
25,000 10,000
1
O3 +1 1.00 -1 6.00
35,000
2

Example
The Stepping-stone Method
Diagramatically, we have 2 possibilities (1
and 2 in the table)
We compute the number of units to
allocate to cell (3,3) as
Allocation to Cell (3,3) =
minimum cell(2,3) cell(3,4)
25,000 35,000
= 25,000
 Solution (1)- Table
Origin D1 D2 D3 D4 Origin
Los Angeles Kansas City Atlanta Philadelphia Availability

O1 1.00 7.5 8.5 11.00

San Diego 35,000 5,000 +2.50 +0.50 40,000

O2 7.5 4,5 3.00 7.5

N.Orleans +9.50 15,000 +0.5 35,000 50,000

O3 10.0 6.5 1.00 6.00

Jacksonville +13.50 +3.50 25,000 10,000 35,000

Destination
Requirement 35,000 20,000 25,000 45,000 125,000
 Solution (2) - Cost
$USD 487,500
Shipping Route Number of Cases Cost per case Total

San Diego-Los 35,000 1.00 35,000

Angeles
San Diego-Kansas 5,000 7.50 37,500
City
N.Orleans-Kansas 15,000 4.50 67,500
City
N.Orleans-Philadelph 35,000 7.50 262,500
ia
Jacksonville-Atlanta 25,000 1.00 25,000

Jacksonville-Philadel 10,000 6.00 60,000

phia

Special Situations
Alternative Optimal Solutions:
More than one optimal solution (one or more of the
unoccupied cells could have a net cost savings equal to zero)
Reallocation will provide another solution iwht the same
total transportation cost
Unacceptable Transportation Routes:
You could select an undesirable transporation route by
assigning an arbitrary large cost to that location
Degeneracy
It occurs when less than (m+n-1) of the Xij values are
strictly positive. (Initial basic feasible solution, or It could
occur in the interation
 Degeneracy (Example)
Initial Feasible Solution
Origin D1 D2 D3 D4 Origin
Availability

O1 2 6 3 4
15 15

O2 3 1 4 2
5 10 15 30

O3 3 6 3 2
20 20

Destination
Requirement 20 10 15 20 65

* It has 5 solutions instead of 6 (m+n-1) z = 115

Degeneracy (Example)
Initial Feasible Solution
Origin D1 D2 D3 D4 Origin
Availability

O1 2 6 3 4
15 +6 0 +3 15

O2 3 1 4 2
5 10 15 0 30
*Cell Added
O3 3 6 3 2
0 +5 -1 20 20

Destination
Requirement 20 10 15 20 65

z=155
* Use the stepping-stone method
 Degeneracy (Example)
Initial Feasible Solution
Origin D1 D2 D3 D4 Origin
Availability

O1 2 6 3 4
15 +6 +1 +3 15

O2 3 1 4 2
5 10 +1 15 30

O3 3 6 3 2
0 +5 15 5 20

Destination
Requirement 20 10 15 20 65

z = 140
(Optimal)

Unbalanced Transportation Model

The Total supply is not equal to the total
demand
If supply greater than total Demand:
SLACK or DUMMY DESTINATION
If total demand is greater than total supply:
SLACK or DUMMY ORIGIN
 Unbalanced Transportation
Model(2)
Origin D1 D2 D3 D4 D5 D6 Slack Origin
Destin. Availabi.

O1 5 10 15 8 9 7 0
45 +2 +9 +4 +7 -2 +4 45

O2 14 13 10 9 20 21 0
+5 +1 10 +1 +14 +8 60 70

O3 15 11 13 25 8 12 0
+7 20 +4 +18 +3 10 +1 30

O4 9 19 12 8 6 13 0
5 +7 +2 35 15 40 5 100

Dest.
Requir. 50 20 10 35 15 50 65 245

Unbalanced Transportation
Model(3)(2nd. BFS)
Origin D1 D2 D3 D4 D5 D6 Slack Origin
Destin. Availabi.

O1 5 10 15 8 9 7 0
5 +4 +9 +4 +7 40 +4 45

O2 14 13 10 9 20 21 0
+5 +3 10 +1 +14 +10 60 70

O3 15 11 13 25 8 12 0
+5 20 +2 +16 +1 10 -1 30

O4 9 19 12 8 6 13 0
45 +9 +2 35 15 +2 5 100

Dest.
Requir. 50 20 10 35 15 50 65 245
 Unbalanced Transportation
Model(3)(3rd. BFS)
Origin D1 D2 D3 D4 D5 D6 Slack Origin
Destin. Availabi.

O1 5 10 15 8 9 7 0
0 +4 +10 +4 +7 45 +5 45

O2 14 13 10 9 20 21 0
+4 +2 10 0 +14 +9 60 70

O3 15 11 13 25 8 12 0
+5 20 +3 +16 +1 5 5 30

O4 9 19 12 8 6 13 0
50 +9 +3 35 15 +2 +1 100

Dest.
Requir. 50 20 10 35 15 50 65 245

Optimal Solution!!

Unbalanced Transportation
Model(3)
Shipping Route number of units $ per unit Total
01-D1 0 5 0
O1-D6 45 7 315
O2-D3 10 10 100
O2-SLACK DEST 60 0 0
O3-D2 20 11 220
O3-D6 5 12 60
O3-SLACK DEST 5 0 0
O4-D1 50 9 450
O4-D4 35 8 280
O4-D5 15 6 90
TOTAL 1,515