Transportation Model

The 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 logistic activities. It is originally known
as Hitchcock distribution problems. It plays a vital role in our society. The price of the
commodities of a company mostly depends on the transportation system. It helps in solving
problems in distribution and transportation of resource from one place to another.
Transportation model deals with transferring goods from sources ( e.g. factories) to destinations
(e.g. ware houses). The objective of the transportation model is to determine the amount to be
shipped from each source to each destination so as to maintain the supply and demand
requirements at the lowest transportation cost.
Transportation models or 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). The total transportation
cost, distribution cost or shipping cost and production costs are to be minimized by applying the
model.
Transportation cost minimization has become as one of the important issues in business
activities. Transportation modeling can help to find an optimal solution and save the costs in
transportation activities.

But, there are so many factors need to consider determining transportation cost more
effectively, such as fuel cost, types of vehicles, undue problems, transportation time etc. In case
of military operations where weapons need to reach in time or perishable goods where goods
need to reach the market in time and also in case of swift marketing to achieve the most profit
etc. the transportation time is significantly important matter.

Background of the transportation model

American mathematician F.L. Hitchcock developed the basic transportation problem in 1941.
That year he has presented a study entitled The Distribution of a Product from several sources
to Numerous Localities. That was first contribution to the solution of transportation problems. In
1947, T.C Koopmans presented a study called Optimum Utilization of the Transportation
System. These two studies are mainly cause for the development of transportation model
which contains a number of sources and another number of destinations. Each source has a
certain capacity while each destination has certain requirement associated with certain cost of
transportation from each source to each destination. The objective is to minimize transportation
cost while meeting the requirements at the destination.

The mathematical model of transportation problem

Transportation problems in general are concerned with distributing any commodity from any
group of supply centre, called sources, to any group of receiving centre, called destinations.
Mathematically a transportation problem is nothing but a special linear programming problem.
The objective of the model is to determine the amount to be shipped from each source to each
destination such that total transportation cost is minimized.
Each source has a fixed supply of units, where the entire supply must be distributed to the
destinations. Similarly, each destination has fixed demand of units, where the entire demand
must be received from the sources.

In general problem is represented by the network in the following figure.














There are m sources and n destinations, each represented by a node. The arcs joining the
source and a destination represent the route through which the commodity is transported.

s
i
=The amount of supply at source i
d
j
=The amount of demand at destination j.
c
ij
=The transportation cost per unit commodity distributed from the source i to destination j.
x
ij
=The amount of commodities to be transported from source i to destination j.
z = The total transportation cost.
Total transportation cost of all allocation i.e. the sum of x
ij
multiplied by the respective cost c
ij

must be minimal.
Then mathematically, the linear programming model representing the transportation problem is
given generally as

Minimize z =

=
m
i 1

=
n
j 1
c
ij
x
ij
.

Subject to

=
m
i 1
x
ij
s
i
. i = 1,2, m

=
n
j 1
x
ij
d
j
. j = 1,2, ..n

x
ij
0. for all i and j




cmn : xmn
1
2
1
m
2
n
Units of
supply Units of
demand
Sources
Destinations
c11 : x11
s
1

x
1
1

s
2

x
1
1

s
m

x
1
1

d
1

x
1
1

d
2

x
1
1

d
n

x
1
1

where the values of c
ij
, x
ij
can be written as a matrix form
c
ij
= c
11
c
12
------- c
1n
x
ij
= x
11
x
12 -------
x
1n
c
21
c
22 -------- ---
c
2n
x
21
x
22 --------
x
1n
-- - -- -- --- -- -- -- - - - - - -- - -

c
m1
c
m2 -----------
c
mn
x
mn
x
m2 ------
x
mn

and cost and requirements table for the transportation model: (Cost per unit distributed)

Sources Destinations Supply
1 2 3 -- n
1 c
11
c
12
c
13
-- c
1n
s
1
2 c
21
c
22
c
23
-- c
2n
s
2
3 c
31
c
32
c
33
-- c
3n
s
3
m c
m1
c
m2
c
m3
-- c
mn
s
m
Demand d
1
d
2
d
3 --
d
n


The first set of constraints stipulates that the sum of the shipments from a source cannot exceed
its supply. Similarly, the second set requires that the sum of the shipments to a destination must
satisfy its demand.
In addition, we can minimize time
t
ij
=The amount of time commodity to be transported from source i to destination j.
T=The total transportation time.
Minimize T =

=
m
i 1

=
n
j 1
t
ij
.

Subject to

=
n
j 1
x
ij
s
i
. i = 1,2, m

=
m
i 1
x
ij
d
j
. j = 1,2, ..n

x
ij
0. for all i and j
The two sets of constraints will be consistent that is the total supply

=
m
i 1
s
i
must be equal to the
total demand

=
n
j 1
d
j
. i.e. (

=
m
i 1
s
i
=

=
n
j 1
d
j
). This may be verified by observing that the restrictions
require that both

=
m
i 1
s
i
and

=
n
j 1
d
j
. are equal to

=
m
i 1
x
ij
. i.e.

=
m
i 1
x
ij
= s
i
. i = 1,2, m

=
n
j 1
x
ij
= d
j
. j = 1,2, ..n
x
ij
0. for all i and j

In real life it is not necessarily true that supply equal demand. However, a transportation model
can always be balanced.


Formulation of the transportation model as a linear programming problem

Let us consider P denote the plant (factory) where goods are being manufactured and W denote
the warehouse (godown) where the finished product are stored by the company before shipping
the various destinations.
Again let
c
ij
=The transportation cost per unit commodity distributed from source i to destination j.
x
ij
=The amount of commodities to be transported from source i to destination j.
z = The total transportation cost.

Objective function: The objective function can be represented as,
Minimize z= c
11
x
11
+ c
12
x
12
+ c
13
x
13
+ c
21
x
21
+.. + c
m1
x
m1
+ + c
mn
x
mn
from a plant to a
warehouse.
Where, supply constraints : x
11
+

x
12
++ x
1n
= s
1

x
21
+

x
22
++ x
2n
= s
2


x
m1
+

x
m2
+ + x
mn
= s
m

and demand constraints : x
11
+

x
21
++ x
m1
= d
1

x
12
+

x
22
++ x
m2
= d
2

x
1n
+

x
2n
++ x
mn
= d
n


- If supply demand , a dummy supply variable is introduced in the equation to make it
equal to demand.
- If demand supply , a dummy demand variable is introduced in the equation to make it
equal to supply.

Balanced Transportation Problem
A transportation problem said to be balanced if the total supply is equal to the total demand. i.e

=
m
i 1
s
i
=

=
n
j 1
d
j
where

=
m
i 1
s
i
is the total quantity of supply and

=
n
j 1
d
j
is the total quantity of
demand.

Unbalanced Transportation Problem
A transportation problem is said to be unbalanced if total supply does not equal to the total
demand. i.e.

=
m
i 1
s
i

=
n
j 1
d
j
where

=
m
i 1
s
i
is the total quantity of supply and

=
n
j 1
d
j
is the total quantity of
demand.


The unbalanced transportation problem can be changed into a balanced problem by introducing
a dummy plant (or supply center) or warehouse (or destination) depending on the following two
cases.

Case -1: An extra warehouse should be added in the solution table if

In this case, surplus supply will be allocated to the dummy warehouse with zero transportation
cost per unit from each plant to that warehouse.
Case -2: An extra plant (factory should) be added in the solution table if

In this case, the extra demand is taken as the supply available at the dummy plant with zero
transportation cost per unit from this plant to each warehouse.

Matrix Terminologies

The matrix used in the transportation models consists of squares called cells, which when
stacked from columns vertically and rows horizontally.
The cell located at the intersection of a row and a column is designated by its row and column
heading. Thus the cell located at the intersection of row a
1
and column b
1
is called cell (a
1,
b
1
).
Unit costs and transportation times are placed in each cell

Sources Destinations Supply
b
1
b
2
b
3
-- b
n
a
1
c
11
c
12
c
13
-- c
1n
s
1
a
2
c
21
c
22
c
23
-- c
2n
s
2
a
3
c
11
c
11
c
33
-- c
3n
s
3
a
m
c
m1
c
m2
c
m3
-- c
mn
s
m
Demand d
1
d
2
d
3 --
d
n



Example-1 (Balanced transportation model)

The MK auto company has three production centres in Dhaka, Chittagong and Rajshahi. Its
major distribution centre are located in Commilla and Bogra. The capacities of the three
plants/centres during the next quarter are 1000, 1500 and 1200 cars. The quarterly demands at
the two distribution centre are 2300 and 1400 cars. The transportation cost per car per kilometer
is approximately 0.08 taka and time per kilometer is approximately 0.50 minute.
The kilometer chart between the production and distribution centre is given below.

Destination

Source
Commilla Bogra
Dhaka 1000 2690
Chittagong 1250 1350
Rajshahi 1275 850

The chart of the transportation cost per car

Destination

Source
Commilla (1) Bogra (2)
Dhaka (1) 80 215
Chittagong (2) 100 108
Rajshahi (3) 102 68

The chart of the transportation time (in hour)

Destination

Source
Commilla (1) Bogra (2)
Dhaka (1) 8 22
Chittagong (2) 10.25 11.25
Rajshahi (3) 10.50 7

Let x
ij
represent the number of cars transported from source i to destination j. Since the total
supply (1000+1500+1200=3700) happens to equal the total demand (2300+1400=3700), the
resulting transportation model is balanced.

Hence the linear programming model is

Minimize z = 80x
11
+ 215x
12
+100x
21
+108x
22
+102x
31
+68x
32


Subject to x
11
+ x
12
= 1000
x
21
+ x
22
= 1500
x
31
+ x
32
= 1200
x
11
+ x
21
+ x
31
= 2300
x
12
+ x
22
+ x
32
= 1400

x
ij
0. for all i and j

A more compact method for representing the transportation model is to use what we call the
transportation tableau. It is a matrix form with its rows representing the sources and its column
representing the destination.

The MK transportation model is



Destination

Source
Commilla (1) Bogra (2) Supply
Dhaka (1) 8 80
x
11

22 215
x
12

1000

Chittagong (2) 10.25 100
x
21

11.25 108
x
22

1500

Rajshahi (3) 10.50 102
x
31

7 68
x
32

1200

Demand 2300 1400 3700


Example-2 (Unbalanced transportation model)

Suppose, the Chittagong plant capacity is 1300 cars instead of 1500 cars. Since the total supply
(1000+1300+1200=3500) happens not equal the total demand (2300+1400=3700). Thus the
resulting transportation model is said to be unbalanced. This unbalanced situation means that it
will not be possible to fill all the demand at the distribution centre. Because the demand exceeds
the supply, a dummy source (plant) with a capacity of 200 cars (3700-3500) is added to balance
the transportation model. The unit transportation costs from the dummy plant to the two
destinations are zero because the plant does not exist. The following table shows that the
balanced model under the new capacity restriction of the Chittagong plant. The dummy plant
has a capacity of 200 cars.

Destination

Source
Commilla (1) Bogra (2) Supply
Dhaka (1) 80

215

1000

Chittagong (2) 100

108

1300

Rajshahi (3) 102

68

1200

Dummy plant 0 0 200

Demand 2300 1400 3700


In similar manner, if the demand of Commilla destination is 1900 cars instead of 2300 cars.
Since the total demand (1900+1400=3300) happens not equal the total supply
(1000+1500+1200=3700). Thus the resulting transportation model is said to be unbalanced.
This unbalanced situation means that it will be possible to fill all the demands at the distribution
centre also surplus quantity of cars remain at that supply centre. Because the supply exceeds
the demand, a dummy destination (distribution centre) to receive the surplus supply of 400 cars
(3700-3300) is added to balance the transportation model.
The unit transportation costs to the dummy distribution centre are zero. The following table
shows that the balanced model under the new capacity restriction of the Commilla destination.
The dummy distribution centre has a capacity of 400 cars.

Destination

Source
Commilla (1) Bogra (2) Dummy dis
n

centre
Supply
Dhaka (1) 80

215

0 1000

Chittagong
(2)
100

108

0 1300

Rajshahi (3) 102

68

0 1200

Demand 2300 1400 400 3700


Example-3 (Multicommodity transportation model)

The MK Company produces four different models M1, M2, M3 and M4 of cars. The Dhaka plant
produces model M3 and M4, Chittagong plant produces model M1, M2 and M4, Rajshahi plant
produces model M1 and M2. The capacities of the various plants and the demands of the
distribution centre are given below.

Source and

Destination
Models of Car
Supply M1 M2 M3 M4
Dhaka (1)



700 300 1000

Chittagong
(2)
500

600

400 1500

Rajshahi (3) 800 400

1200

Commilla (1) 700 500 500 600 2300

Bogra (2) 600

500 200 100 1400

Let us consider the transportation rate remains 0.08 taka per kilometer for all models. To
account for the multiple car models, we view the transportation problem in the following manner.
Instead of considering each plant as one source, we now subdivide it into a number of sources
equal to the number of models it produces. Similarly, each distribution centre may be viewed as
consisting of four receiving stations representing the four models. The result of the situation is
that we have seven sources and eight destinations. The complete independence of the different
models we should be able to represent the problem for each car model by a separate, yet such
smaller transportation tableau. The transportation model are given below




Source &
Destination
Commilla Bogra Supply
Chittagong 100 108 500
Rajshahi 102 68 800
Demand 700 600 1300

Source &
Destination
Commilla Bogra Supply
Chittagong 100 108 600
Rajshahi 102 68 400
Demand 500 500 1000

Source &
Destination
Commilla Bogra Supply
Dhaka 80 215 700
Demand 500 200 700

Source &
Destination
Commilla Bogra Supply
Dhaka 80 215 300
Chittagong 100 108 400
Demand 600 100 700

Thus we provide a complete representation of the transportation tableau.

Source &
Destination
Commilla Bogra Supply
M1 M2 M3 M4 M1 M2 M3 M4

Dhaka
M3 80 215

700
M4 80 215

300

Chittagong
M1 100 108

500
M2 100 108

600
M4 100

108 400
Rajshahi M1 102 68

800
M2 102 68

400
Demand 700 500 500 600 600 500 200 100




Example-4 (Production inventory transportation model)

A company is developing a master plan for the production of an item over a four months
(January to April) period. The demands for the four months are 100, 200, 180 and 300 units
respectively. It is estimated that the production capacity for the next four months are 50, 180,
280 and 270 units respectively.

Model M1
Model M2
Model M3
Model M4
A current months demand may be satisfied in one of three ways.
1. Production in the current month.
2. Surplus production in the earlier month held in stock for later consumption.
3. Surplus production in a later month backordered for preceding months.

In the first case, the production cost per unit is tk 40.00. The second case incurs an additional
holding cost of tk 0.50 per unit per month. In the third case, an additional penalty cost of tk 2.00
per unit is incurred for each month delay.
The objective is to devise the minimum cost production inventory plan. The equivalence
between the elements of the production and the transportation system is established as follows.

Transportation system Production system
1. Source i Production period i
2. Destination j Demand period j
3. Supply amount at source i Production capacity of period i
4. Demand at destination j Demand per period j
5. Unit transportation cost from
source i to destination j
Unit cost (production, inventory,
penalty) from period i to j

c
ij
is the unit transportation cost from period i to period j, that is

c
ij
=

+
+
j to i f rom t penalty i in t oduction
j to i f rom t holding i in t oduction
i in t oduction
cos cos Pr
cos cos Pr
cos Pr


Thus the definition of c
ij
indicates that the production in period i for the same period (i = j) will
result in production cost only. If period i produces for future periods (i j), an additional holding
cost is incurred. Similarly, production in i to fill backorders (i j) incurs an additional penalty
cost.

c
11
= 40.00 c
12
= 40.00 + 0.50 = 40.50 c
24
= 40.00 + 0.50 +0.50 = 41.00
c
41
= 40.00 + 2.00 + 2.00 + 2.00 = 46.00

The resulting transportation model is given below

Period January 1 February 2 March 3 April 4 Supply

January 1 40.00 40.50 41.00 41.50 50

February 2 42.00 40.00 40.50 41.00 180

March 3 44.00 42.00 40.00 40.50 280

April 4 46.00 44.00 42.00 40.00 270

Demand 100 200 180 300


i=j
i j
i j