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The transportation cost per unit is given in the next slide. The entire availability is 700 units which exceeds the cumulative demand of 600 units. Decide the optimal transportation scheme for this case.
Typical problem
Solution --Step 1
Check for balance of supply and demand
S Supply = 250 + 200 + 250 = 700 units
(i)
If S Supply = S Demand
then, add a dummy destination with zero transportation cost. (iii) Or else; if S supply < S Demand
transportation cost and balance demand which is difference in supply and demand (= 100 units). The initial transportation matrix is now formulated with transportation cost in the small box of each route. Note that each cell of the transportation matrix represents a potential route.
Step 2:
i)
(ii)
Initial assignment
Initial assignment may be done by using any of the
following approaches :
(i) (ii) (iii)
route) in the initial matrix. For example: it is route S1D5, S2D5 and S3D5 in our problem with zero shipping cost. last column) and demand (in last row).
Let us select S1D5 route. One can also select other route
(S2D5 or S3D5) in case of tie. For S1D5, available supply is 250 and available demand is 100 units. The lower is 100 units. Hence, allocate 100 units-through this route (i.e, S1D5).
Allocation 2
Next, least cost route is S1D1, with 13 per unit of
shipping cost. For this route, the demand is 100 units and remaining supply is 150 units. We allocate minimum of the two, i.e., 100 units in this route. With this destination, D1 is consumed but source S1 is still left with (150-100) = 50 units of supply. So, now leave the destination D1 and we get the following matrix.
Allocation 3
Now, we work on remaining matrix, which excludes
first column (D1) and last column (D5). Next assignment is due in the least cost route, which is route S2D4. For this route, we can allocate 100 units which is lesser of the corresponding demand (100 units) and (200 units). By this allocation in route S2D4, the demand of destination D4 is consumed. So, this column is now crossed out.
Allocation 4.
Now, we work on the remaining matrix which excludes,
column, D1, D4 and D5. Next assignment is due in the least cost route of the remaining routes. Note that we have two potential routes: S1D2 and S2D3. Both have 16 units of transportation cost. In case of any tie (such as this), we select any of the routes. Let us select route, S1D2, and allocate 50 units (minimum of demand of 150 and supply of remaining 50 units). With this, all supply of source S1 is consumed. Therefore, cross out row of S1. We get the following matrix:
Allocation 5
Now, remaining allocation is done in route S2D3 (as 100
units). With this source, S2 is consumed. Next allocation of 100 units is done in route S3D2 and 150 units in route S3D3. Final initial assignment is as follows:
have done in the least cost method. Therefore, this approach should not be applied if initial assignment has already been made by any other method. In the North-West Corner (NWC) method, we start with the top-left (corner-most) route, which is S:Dr Irrespective of cost, allocation is made in this route for the minimum of supply or demand. In our case, demand for this route is 100 and supply is 250. Therefore, allocate 100 units in this route. With this, column corresponding to D1 is consumed.
Allocation 2
Now, work on the remaining matrix, which excludes
column Dr Again, select the top-left route. Now, it is cell S1D2. Allocate in the same way. Thus, 150 units are allocated in this route. Note that, with this, both D2 and S, are consumed.
the two least-cost routes for each row and column. The difference is called as penalty cost for not using the least-cost route. Highest of all calculated penalty costs is for S3 and (S2). Therefore, allocation is to made in row of source S3. The route (or cell), which one must select, should be the lowest cost of this row. This route S3D5. Hence, first allocation is as follows.
the lowest cost of this row. This route S3D5. Hence, first allocation is as follows.
Allocation 3.
After second allocation, since destination D1 is
consumed, we leave this column and proceed for calculation of next penalty cost. Allocation is done in route S1D2. Since there is tie between all routes, we break the tie by arbitrarily selecting any route (S1D2 in this case.)
Step 4: We allocate in the least-cost un-filled cell. This cell is route S1D5 or S2D5. Let us select route S1D5. Thus, we get following matrix after removing degeneracy.
Final allocation
With the fourth allocation, column D4 is consumed.
The only left column D3, the allocations of 100 units
and 150 units are done in route S2D3 and S4D3 respectively. Thus, we get the following allocations in the Vogels approximation method.
routes. For this, use the following equation: where ui = row value
vj = column value
routes, the initial solution is optimal. If in case any of the opportunity costs is positive, then go to next step
0 + 17 19 = 2 0 + 16 17 = 1 1 + 13 17 = 5 1 + 16 19 = 4 1 + 0 0 = 1 0 + 13 15 = 2 0 + 16 17 = 1 0 + 16 16 = 0
initial assignment of Vogels solution is optimal with total cost of Rs. 9350. The optimal assignment of routes is 100 units in S1D2, 100 units in S2D3, 100 units in S2D4, and 150 units in S3D3. Note that this solution is different from NorthWest corner solution but total cost is same and minimum.
Since route S3D5 has positive opportunity cost, the solution is non-optimal; hence, we go to next step and make a loop as follows.
(13 100 + 16 50 + 100 0 + 16 100 + 15 100 + 17 150) or Rs. 9450. The total initialcost in North west corner method is (13 100 + 16 150 + 16 100 + 0 100) or Rs. 9350. The total initial cost for this allocation is (13 100 + 16 150 + 16 100 + 15 100 + 17 150 + 0 100) or equal to Rs. 9350:
Removing Degeneracy
Allocate in the least-cost un-filled cell.
This cell is route S1D5 or S2D5. Let us select route S1D5.
degeneracy