Chapter 7

Transportation, Assignment &

Transshipment Problems Part
1
ISE204/IE252
Prof. Dr. Arslan M. RNEK

Remember from ISE 203:

A Transportation Example
Warehouse supply of
Television Sets:

Retail store demand

for television sets:

1 - Cincinnati

300

A - New York

150

2 - Atlanta

200

B - Dallas

250

3 - Pittsburgh

200

C - Detroit

200

Total

700

Total

600

Transportation Problem:
Characteristics
A transportation problem aims to find the best
way to fulfill the demand of n demand points
using the capacities of m supply points.
A product is transported from a number of sources
to a number of destinations at the minimum
possible cost.
Each source is able to supply a fixed number of
units of the product, and each destination has a
fixed demand for the product.
The linear programming model has constraints for
supply at each source and demand at each
destination.
3
In a balanced transportation model supply

7.1 Formulating Transportation

Problems
How many tons of wheat to transport from each
grain elevator to each mill in order to minimize the
total
of transportation?
Graincost
Elevator
Supply
Mill
Demand
1. Kansas City

150

A. Chicago

200

2. Omaha

175

B. St. Louis

100

3. Des Moines

275

C. Cincinnati

300

Total

600 tons

Total

600 tons

Transportation Model Example

Transportation Network Routes

5
ure 6.1 Network of Transportation Routes for
Wheat Shipme

Transportation Model Example

Linear Programming Model Formulation
xij = tons of wheat from each grain elevator, i, i = 1,
2, 3,
to each mill j = A,B,C
Minimize Z = $6x1A + 8x1B + 10x1C + 7x2A + 11x2B +
11x2C +
4x3A + 5x3B + 12x3C
subject to:
x1A + x1B + x1C = 150
x2A + x2B + x2C = 175
x3A + x3B + x3C = 275
x1A + x2A + x3A = 200
x1B + x2B + x3B = 100
6
x1C + x2C + x3C = 300

ansportation Model Example

ptimal Solution

Figure 6.2 Transportation Network Solution

7

7.1 Formulating Transportation

Problems

Example 1:
Powerco has three electric power plants that supply
the electric needs of four cities.
The associated supply of each plant and demand of
each city are known.
The cost of sending 1 million kwh of electricity from
a plant to a city depends on the distance the
electricity must travel.
Formulate an LP to minimize cost.

Solution:
Decision Variable:

x14 = Amount of electricity produced at plant 1 and

sent to city 4
Since we want to minimize the total cost of shipping
from plants to cities;
Objective Function:
Minimize Z =
8X11+6X12+10X13+9X14+9X21+12X22+13X23+7X24
+14X31 +9X32 +16X33 +5X34

Solution (cont):
Since each supply point has a limited production
capacity;
X11+X12+X13+X14 <= 35
X21+X22+X23+X24 <= 50

Supply Constraints

X31+X32+X33+X34 <= 40
Since each demand point has a demand to satisfy;
X11+X21+X31 >= 45
X12+X22+X32 >= 20

Demand Constraints

X13+X23+X33 >= 30
X14+X24+X34 >= 30

Sign Constraints

Solution (cont):
LP formulation:

Network representation of Optimal

Solution:

General Description of a Transportation

Problem
1. A set of m supply points with a supply of
at most si units.
2. A set of n demand points with a demand
of at least dj units.
3. Each unit produced at supply point i and
shipped to demand point j incurs a
variable cost of cij.

General Formulation of a Transportation

Problem
xij = number of units shipped from supply
point i to demand point j

General Formulation of a Transportation

Problem
If a problem has these constraints and is a
maximization problem, then it is still a
transportation problem.
If total supply equals to total demand, the
problem is said to be a balanced
transportation problem:

General Formulation of a Balanced

Transportation Problem

It is desirable to formulate a problem as a

balanced transportation problem (due to the
ease of solution procedures).

Balancing a Transportation Problem if

total supply exceeds total demand

If total supply exceeds total demand, we can

balance the problem by adding a dummy
demand point.
Since shipments to the dummy demand point
are not real, they are assigned a cost of
zero.

Balancing a TP if total supply exceeds

total demand

Example 1: Suppose that in the Powerco problem,

the demand for city 1 were reduced to 40 million
kwh.
To balance the Powerco problem, we would add a
dummy demand point (City 5) with a demand of Total
Supply Total Demand = 125 - 120 = 5 million kwh.
From each plant, the cost of shipping 1 million kwh to
the dummy is 0.

Optimal Solution of the Balanced Powerco

Problem

Transportation tableau
A transportation problem is specified by the supply,
the demand, and the shipping costs. So the relevant
data can be summarized in a transportation tableau.

Transportation tableau
Optimal transportation tableau for Powerco:

Balancing a transportation problem

if total supply is less than total
demand
If total supply < total demand The problem
has no feasible solution.
When total supply is less than total demand,
it is sometimes desirable to allow the
possibility of leaving some demand
unsatisfied. In such a situation, a penalty is
often associated with unmet demand.

 Example 2 (Handling Shortages):

23

 Solution:

24

25

Sailco Corporation must determine how many

sailboats should be produced during each of the next
four quarters (one quarter is three months).
Demand : first quarter, 40 sailboats; second quarter,
60 sailboats; third quarter, 75 sailboats; fourth
quarter, 25 sailboats.
Sailco must meet demand on time. At the beginning
of the first quarter, Sailco has an inventory of 10
sailboats.
At the beginning of each quarter, Sailco must decide
how many sailboats should be produced during the
current quarter.
For simplicity, we assume that sailboats
manufactured during a quarter can be used to meet

During each quarter, Sailco can produce up to 40

sailboats at a cost of $400 per sailboat. By having
employees work overtime during a quarter, Sailco
can produce additional sailboats at a cost of $450
per sailboat.
At the end of each quarter (after production has
occurred and the current quarters demand has been
satisfied), a carrying or holding cost of $20 per
sailboat is incurred.
Formulate a balanced transportation problem to
minimize the sum of production and inventory costs
during the next four quarters.

Capacity of each OT supply point = 150 =

200 (Total demand) 10 (initial
inventory) 40 (regular time production
capacity)

7.2 Finding Basic Feasible

Solution for TP
A balanced TP with m supply points and n
demand points is easier to solve than a
regular LP, although it has m + n equality
constraints.
If a set of values for the xijs satisfies all
but one of the constraints of a balanced
transportation problem, then the values
for the xijs will automatically satisfy the
other constraint.
This means that only m+n-1 constraints

Methods to find the bfs for a

balanced TP
There are three basic methods:
1. Northwest Corner Method
2. Minimum Cost Method
3. Vogels Method

1. Northwest Corner Method (NWC)

To find the bfs by the NWC method:
Begin in the upper left (northwest) corner
of the transportation tableau and set x11
as large as possible (the limitations for
setting x11 will be the demand of demand
point 1 and the supply of supply point 1.
Your x11 value can not be greater than the
minimum of this two values).

Example: Set x11=3 (meaning demand

of demand point 1 is satisfied by supply
point 1).
5
6
2
3

2
6
2

3
35

After we check the east and south cells,

we see that we can go east (meaning
supply point 1 still has capacity to fulfill
some demand).
3

X
6
2

3
2

36

After applying the same procedure, we

see that we can go south this time
(meaning demand point 2 needs more
supply by supply point 2).
3

2
3

X
2

1
2

2
3

3
X

X
2

37

Finally, we will have the following bfs:

x11=3, x12=2, x22=3, x23=2, x24=1, x34=2

2
3

X
2

38

Example:

39

Example:

Supply and
demand
equal, cross
only one,
not both!

40

Example:
Degenerate
solution

m+n-1 =
3+4-1=6
basic
variables

1
41

2. Minimum Cost Method

The Northwest Corner Method does not
utilize shipping costs. It can yield an initial
bfs easily but the total shipping cost may
be very high.
The minimum cost method uses shipping
costs in order come up with a bfs that has
a lower cost. To begin the minimum cost
method, first we find the decision variable
with the smallest shipping cost.
Then assign xij its largest possible value,
which is the minimum of si and dj.
Cross out the row or column, then continue

Example: Step 1: Select the cell with

minimum cost.

12

10

15

Step 2: Cross-out column 2

2

8
3

12

6
44

15

Step 3: Find the new cell with minimum

shipping cost and cross-out row 2
2

8
3

10

6
45

15

Step 4: Find the new cell with minimum

shipping cost and cross-out row 1
2

8
3

6
46

15

Step 5: Find the new cell with minimum

shipping cost and cross-out column 1
2

8
3

5
X

6
47

10

Step 6: Find the new cell with minimum

shipping cost and cross-out column 3
2

8
3

4
X

6
48

Step 7: Finally assign 6 to last cell. The bfs

is found as: X11=5, X21=2, X22=8, X31=5,
X33=4 and X34=6
2

8
3

4
X

6
X

X
49

3. Vogels Method
Begin with computing each row and column
a penalty. The penalty will be equal to the
difference between the two smallest
shipping costs in the row or column.
Identify the row or column with the largest
penalty. Find the first basic variable which
has the smallest shipping cost in that row or
column. Then assign the highest possible
value to that variable, and cross-out the row
or column as in the previous methods.
Compute new penalties and use the same
procedure.

Example: Step 1: Compute the penalties.

Demand
Column Penalty

15

80

78

15

15-6=9

80-7=73

78-8=70

Supply

Row Penalty

10

7-6=1

15

78-15=63

51

Step 2: Identify the largest penalty and

assign the highest possible value to the
least-cost variable.
6

80

78

5
15

Demand
Column Penalty

15

15-6=9

78-8=70

Supply

Row Penalty

8-6=2

15

78-15=63

52

Step 3: Identify the largest penalty and

assign the highest possible value to the
variable.
6

7
5

15

Demand
Column Penalty

80

78

15

15-6=9

Supply

Row Penalty

15

53

Step 4: Identify the largest penalty and

assign the highest possible value to the
variable.
6
0

7
5

8
5

15

80

78

Demand

15

Column Penalty

Supply

Row Penalty

15

54

Step 5: Finally the bfs is found as X11=0,

X12=5, X13=5, and X21=15

6
0

7
5

8
5

15

80

78

15
Demand

Column Penalty

Supply

Row Penalty

55