Chapter 7

TRANSPORTATION PROBLEM
Chapter 7 Transportation
Transportation problem is a special case of linear programming which aims to minimize
the transportation cost to supply goods from various sources to different destinations,
while satisfying the supply limit and demand requirement.

Mathematical representation of a transportation problem

In general, if there be m sources and n destinations with ai availability in ith source and
bj requirement in jth destination. Also ‘ ’ is the cost of transportation from ith source to
jth destination, then a transportation problem seeks to determine non- negative values
of ‘ ’, so as to
Minimize Z =
such that for i = 1,….,m
for j = 1,….,n
∀ i, j
Also for a balanced transportation problem

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Basic feasible solution: A feasible solution of a transportation problemin which
allocations ‘ ’ are provided satisfying the conditions and
for each i and j , is said to be a basic feasible solution.
Optimal solution : A basic feasible solution which minimizes the total transportation
cost is known as an optimal solution.
Non-degenerate Basic feasible solution: A basic feasible solution of a
transportation problem is said to be non degenerate if
(i) total number of allocations ‘ ’ are exactly equal to .
(ii) these allocations are in independent position i.e. they do not form a loop within
themselves, horizontally or vertically.

7.1 Methods to find basic feasible solution

An initial basic feasible solution to
a transportation problem can be found by any one of thefollowing methods:
(i) North West Corner Rule
(ii) Least Cost Method or Matrix Minima method
(iii) Row / Column Minima Method
(iv) Vogel's Approximation Method (VAM)

(i) North West Corner Rule

1. Balance the transportation problem if not originally by adding a dummy
source or destination making with zero transportation
cost in added cells.
2. Start with the cell in the upper left hand corner which is north west corner
(1,1) and allocate the maximum possible amount = Min in the
cell (i, j), such that either the availability of the source is exhausted or the
requirement at destination is satisfied or both.
3. Adjust supply and demand across the row and column in which allocation
has been made.

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4. Move to right hand cell (1,2) if there is still any available quantity left
otherwise move down to cell (2,1).
5. Continue the procedure until all the available quantity is exhausted.
(ii) Least cost method or Matrix minima method
1. Balance the transportation problem if not originally by adding a
dummy source or destination making with zero
transportation cost in added cells.
2. Choose the cell with lowest cost and allocate the maximum feasible
amount = Min in the cell (i, j), such that either the
availability of the source is exhausted or the requirement at
destination is satisfied or both. If such cell of lowest cost is not
unique, select the least cost cell where we allocate more amount.
3. Adjust supply and demand across the row and column in which
allocation has been made.
4. Repeat the process until all the available quantity is exhausted.
(iii) Row / Column Minima method
1. Balance the transportation problem if not originally by adding a
dummy source or destination making with zero
transportation cost in added cells.
2. Select the smallest cost in the first row/ column of the transportation
table and allocate the maximum feasible amount = Min
in the cell (i, j), such that either the availability of the source is
exhausted or the requirement at destination is satisfied or both.
3. Adjust supply and demand across the row and column in which
allocation has been made.
4. Move to next row/ column and repeat the process until all the
available quantity is exhausted.
(iv) Vogel's approximation method (VAM)
1. Balance the transportation problem if not originally by adding a
dummy source or destination making with zero
transportation cost in added cells.
2. For each row and column of the transportation table, write the
difference between smallest and the next to smallest cost below each
column and on the right of the corresponding row. These differences
are known as penalties.
3. Row or column having largest penalty is identified and the minimum
cost cell in that particular row or column is allocated with the largest
possible amount = Min in the cell (i, j), such that either
the availability of the source is exhausted or the requirement at
destination is satisfied or both.In case of tie for maximum
penalties, choose arbitrarily.

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 4. Adjust supply and demand across the row and column in which
allocation has been made.
5. Re-compute the row and column penalties for the reduced
transportation table and make the allocations.
6. Repeat the procedure until all the requirements are satisfied.
 Transportation cost using VAM is not unique due to arbitrary choosing of
penalties in case of tie.
 VAM determines an initial basic feasible solution which is very close to
the optimum solution.

Example 1. Obtain an initial basic feasible solution to the following transportation

problem by
(i) North West Corner rule (ii) Row Minima method
(iii) Matrix minima method (iv) Vogel Approximation method

w1 w2 w3 w4 ai ↓
S1 19 30 50 10 7
S2 70 30 40 60 9
S3 40 8 70 20 18
bj  5 8 7 14
Solution: (i) NorthWest Corner rule
Given transportation problem is already balanced, ∴ allocating min [5,7] =5 to cell (1,1)
and adjusting supply and demand across the row and column.

w1 w2 w3 w4 ai↓
S1 19 30 50 10 7,2
S2 70 30 40 60 9
S3 40 8 70 20 18
bj  5 8 7 14

Moving to right hand cell (1,2), allocating min [2,8] =2 and adjusting supply&demand
across the row and column.

w1 w2 w3 w4 ai↓
S1 19 30 50 10 7,2
S2 70 30 40 60 9
S3 40 8 70 20 18
bj  5 8,6 7 14

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Moving down to cell (2,2), allocating min [6,9] =6 and adjusting supply and demand
across the row & column.

w1 w2 w3 w4 ai↓
S1 19 30 50 10 7,2
S2 70 30 40 60 9,3
S3 40 8 70 20 18
bj  5 8,6 7 14

Moving to right hand cell (2,3), allocating min [3,7] =3 and adjusting supply &
demand across the row and column.

w1 w2 w3 w4 ai↓
S1 19 30 50 10 7,2
S2 70 30 40 60 9,3
S3 40 8 70 20 18
bj  5 8,6 7,4 14

Moving down to cell (3,3), allocating min [4,18] =4 and adjusting supply and demand
across the row & column.

w1 w2 w3 w4 ai↓
S1 19 30 50 10 7,2
S2 70 30 40 60 9,3
S3 40 8 70 20 18,14
bj  5 8,6 7,4 14

Allocating the balance supply/demand i.e. ‘14’ in the cell (3,4), the initial basic feasible
solution using north west corner rule is given by

w1 w2 w3 w4 ai↓
S1 19 30 50 10 7,2
S2 70 30 40 60 9,3
S3 40 8 70 20 18,14
bj  5 8,6 7, 4 14

Transportation cost = 19(5) + 30(2) + 30(6) + 40(3) + 70(4) + 20(14) = 1015units

 Note: All the above computations may be done in a single table practically.
Separate tables are being taken for demonstration purpose only.

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(ii) Row minima method
Allocating min [7, 14] =7 to minimum cost cell (1,4) in row S1 and adjusting supply and
demand across the row and column.

w1 w2 w3 w4 ai↓
S1 19 30 50 10 7
S2 70 30 40 60 9
S3 40 8 70 20 18
bj  5 8 7 14,7

Supply in row S1 has been exhausted, so moving to row S2and allocating min [8, 9] =8 to
minimum cost cell (2,2) and adjusting supply and demand across the row and column.

w1 w2 w3 w4 ai↓
S1 19 30 50 10 7
S2 70 30 40 60 9,1
S3 40 8 70 20 18
bj  5 8 7 14,7

Supply in row S2 is still remaining, ∴ allocating remaining supply min [1, 7]= 1 to next
minimum cost cell (2,3) and adjusting supply and demand across the row and column.

w1 w2 w3 w4 ai↓
S1 19 30 50 10 7
S2 70 30 40 60 9,1
S3 40 8 70 20 18
bj  5 8 7, 6 14,7

Supply in row S2 has been exhausted, so moving to row S3and allocating min [7,18] =7 to
minimum cost cell (3,4) and adjusting supply and demand across the row and column.

w1 w2 w3 w4 ai↓
S1 19 30 50 10 7
S2 70 30 40 60 9, 1
S3 40 8 70 20 18 ,11
bj  5 8 7, 6 14 ,7

Supply in row S3 is still remaining, ∴ allocating remaining supply min [5, 11]= 5 to next
minimum cost cell (3,1) and adjusting supply and demand across the row and column.
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 w1 w2 w3 w4 ai↓
S1 19 30 50 10 7
S2 70 30 40 60 9,1
S3 40 8 70 20 18,11, 6
bj  5 8 7, 6 14, 7

Allocating the balance supply/demand i.e. ‘6’ in the cell (3,3), the initial basic feasible
solution using row minima method is given by

w1 w2 w3 w4 ai↓
S1 19 30 50 10 7
S2 70 30 40 60 9,1
S3 40 8 70 20 18,11, 6
bj  5 8 7 ,6 14, 7
Transportation cost = 10(7) + 30(8) + 40(1) + 40(5) + 70(6) + 20(7) = 1110units
 Note: All the above computations may be done in a single table practically.
Separate tables are being taken for demonstration purpose only.
(iii) Matrix minima method: Allocating min [8, 18] =8 to minimum cost cell (3,2)
in the matrix and adjusting supply and demand across the row and column.

w1 w2 w 3 w4 a i ↓
S1 19 30 50 10 7
S2 70 30 40 60 9
S3 40 8 70 20 18,10
bj  5 8 7 14
Allocating min [7, 14] =7 to next minimum cost cell (1,4) in the matrix and
adjusting supply and demand across the row and column.

w1 w2 w3 w4 ai ↓
S1 19 30 50 10 7
S2 70 30 40 60 9
S3 40 8 70 20 18,10
bj  5 8 7 14 ,7

Allocating min [7, 10] =7 to next minimum cost cell (3,4) in the matrix and
adjusting supply and demand across the row and column.

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 w1 w2 w3 w4 ai ↓
S1 19 30 50 10 7
S2 70 30 40 60 9
S3 40 8 70 20 18,10 , 3
bj  5 8 7 14 ,7

Next minimum cost cell in the matrix are (2,3) and (3,1). Allocating min [7, 9] =7
to (2,3) as more supply amount can be assigned to this cell compared to (3,1).

w1 w2 w3 w4 ai ↓
S1 19 30 50 10 7
S2 70 30 40 60 9, 2
S3 40 8 70 20 18,10, 3
bj  5 8 7 14 , 7

Allocating remaining supply amount ‘2’ and ‘3’ respectively to cells (2,1) and
(3,1), demand of w1has been met and an initial basic feasible solution using
matrix minima method is given by

w1 w2 w3 w4 ai ↓
S1 19 30 50 10 7
S2 70 30 40 60 9,2
S3 40 8 70 20 18,10,3
bj  5 8 7 14 ,7
Transportation cost = 10(7) + 70(2) + 40(7) + 40(3) + 8(8) + 20(7) = 814units
(iv) Vogel's Approximation Method (VAM): Writing the difference of minimum cost
and next minimum cost below each column and on the right of each row. Maximum
penalty is 22 against w2, so allocating min[8,18]=8 to minimum cost cell (3,2) in w2
column.
w1 w2 w3 w 4 a i ↓
S1 19 30 50 10 7 (9)
S2 70 30 40 60 9 (10)
S3 40 8 70 20 18 , 10 (12)
bj  5 8 7 14
(21) (22) (10) (10)

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Again writing the difference of minimum cost and next minimum cost, skipping allocated
cells and crossed out cells, maximum penalty is 20 against S2 and S3. Taking S3row
arbitrarily and allocating min[10,14]=10 to minimum cost cell (3,4) in S3, also adjusting
corresponding supply and demand
w1 w2 w3 w4 ai ↓
S1 19 30 50 10 7 (9) (9)
S2 70 30 40 60 9 (10) (20)
S3 40 8 70 20 18 , 10 (12) (20)
bj  5 8 7 14, 4
(21) (22) (10) (10)
(21) (10) (10)

Rewriting the difference of minimum cost and next minimum cost, skipping allocated
cells and crossed out cells, maximum penalty is 51 against W1.Allocating min[5,7]=5 to
minimum cost cell (1,1) in w1, also adjusting corresponding supply and demand
w1 w2 w3 w4 ai↓
S1 19 30 50 10 7,2 (9) (9) (9)
S2 70 30 40 60 9 (10) (20) (20)
S3 40 8 70 20 18 , 10 (12) (20)
bj  5 8 7 14 , 4
(21) (22) (10) (10)
(21) (10) (10)
(51) (10) (50)

Rewriting the difference of minimum cost and next minimum cost, skipping allocated
cells and crossed out cells, maximum penalty is 50 against W4.Allocating min[2,4]=2 to
minimum cost cell (1,4) in S1 , also adjusting corresponding supply and demand
w1 w2 w3 w4 ai ↓
S1 19 30 50 10 7,2 (9) (9) (9) (40)
S2 70 30 40 60 9 (10) (20) (20) (20)
S3 40 8 70 20 18 , 10 (12) (20)
bj  5 8 7 14 , 4, 2
(21) (22) (10) (10)
(21) (10) (10)
(51) (10) (50)
(10) (50) (50)

Now allocating remaining demands 7 and 2 of W3 and W4, supply in S2 is exhausted.

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 w1 w2 w3 w4 ai ↓
S1 19 30 50 10 7,2 (9) (9) (9) (40)
S2 70 30 40 60 9 (10) (20) (20) (20)
S3 40 8 70 20 18 , 10 (12) (20)
bj  5 8 7 14 , 4 , 2
(21) (22) (10) (10)
(21) (10) (10)
(51) (10) (50)
(10) (50)

Transportation cost = 19(5) + 10(2) + 40(7) + 60(2) + 8(8) + 20(10) = 779units

 Note: All the above computations may be done in a single table practically.
Separate tables are being taken for demonstration purpose only.

7.2 MODI (Modified Distribution)orTransportation method to find optimal solution

1. Find an initial basic feasible solution using any appropriate method preferably
VAM.
2. Assign a set of numbers , ui (i= 1,2,…,m) with each row and vj (j=1,2,…..,n) with
each column, such that for each occupied cell (r,s), cr,s= ur + vs . Start with a ui =0
for the row having maximum number of occupied cells and calculate remaining ui
and vj using given relation for only occupied cells.
3. Enter cijfor each unoccupied cell (i,j) in the upper left corner and enter ui + vj for
the same cell in the upper right corner.
4. Enter dij= cij – (ui + vj )for each unoccupied cell at lower right corner.
5. Examine dij for unoccupied cells.
(i) If all dij > 0, solution is optimal and unique.
(ii) If all dij 0, solution is optimal and an alternate optimal solution exists.
(iii) If least one dij < 0, solution is not optimal and go to step 6.
6. Form a new basic feasible solution by giving an allocation to the cell for which
dij is most negative. For this unoccupied cell, generate a path forming a closed
loop with occupied cells by drawing horizontal and vertical lines between them.
Alternately put ‘+’ and ‘-’ signs at vertices of the loop starting with the
unoccupied cell which is seeking an allocation. Add and subtract the minimum
allocation where a subtraction is to be made so that one of the occupied cells is
vacated in this process.
7. Repeat steps 2 to 5 until and optimal solution is obtained.

Example 2. Find an optimal solution of the transportation problem given in example 1.

Solution: An initial basic feasible solution of the transportation problem as given by
VAM is :
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 w1 w2 w3 w4
S1 19 30 50 10
S2 70 30 40 60
S3 40 8 70 20

To assign set of numbers ui and vj, putting u2 =0 arbitrarily as all the rows are having
equal number of allocations. Calculating remaining ui and vjusing the relation cij = (ui
+ vj ) for occupied cells.
w1 w2 w4 w3
S1 19 10 u1 =-50
S2 40 60 u2 = 0
S3 8 20 u3= -40
v1=69 v2=48 v3=40 v4=60

Now entering cij for each unoccupied cell (i,j) in the upper left corner and (ui + vj) for the
same cell in the upper right corner. Also writing dij= cij – (ui + vj) at lower right
corner. We observe that d22 = -18, seeking an allocation which is fulfilled by forming
a closed loop with other occupied cells travelling horizontally or vertically.
w1 w2 w3 w4
S1 30
-2 50 -10 u1= -50
+32 +60
S2 70 69 30 ? 48 u2= 0
+1 -18
S3 40 29 70 0 u3 = -40
+11 +70
v1=69 v2=48 v3=40 v4=60

Adding and subtracting min[2,8]=2 at vertices of the loop to adjust supply and demand
requirements as given below
?+2 2-2

8-2 10+2
Modified distribution of allocations is as shown in the table below:
w1 w2 w3 w4
S1 19 30 50 10
S2 70 30 40 60
S3 40 8 70 20

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Reduced transportation cost = 19(5) + 10(2) + 30(2)+ 40(7) + 8(6) + 20(12) = 743units
To check whether the new solution is optimal, assign set of numbers ui and vj, putting u1
=0 arbitrarily as all the rows are having equal number of allocations. Calculating
remaining ui and vjusing the relation cij = (ui + vj)for occupied cells.
w1 w2 w3 w4
S1 19 10 u1 =0
S2 30 40 u2 =32
S3 8 20 u3=10
v1=19 v2=-2 v3=8 v4=10

Now entering cijfor each unoccupied cell (i,j)in the upper left corner and (ui + vj) for the
same cell in the upper right corner.
w1 w2 w3 w4
S1 30 -2 50 8 u1= 0
+32 +42
S2 70 41 60 42 u2=32
+29 +18
S3 40 29 70 18 u3=10
+11 +52
v1=19 v2=-2 v3=8 v4=10

All dij , ∴ the solution is optimal and minimum transportation cost = 743 units
7.2.1 Unbalanced Transportation Problem
A transportation problem is unbalanced if sum of supplies from different sources is not
equal to sum of requirements in various destinations
i.e.
(i) If , add a dummy destination
(ii) If , add a dummy source
Example3. Solve the following transportation problem, where goods are to be
transported from 3 factories to 3warehouses. Cost of transportation is given in terms
of 100$ and quantity in tons.
W1 W2 W3 ai ↓
F1 2 3 3 3
F2 3 4 4 4
F3 1 5 1 5
bj  3 4 3

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Solution: Here , the problem is unbalanced.
Adding a dummy destination with demand 2 tones and zero transportation cost to make
the problem balanced:
W1 W2 W3 W4 ai↓
F1 2 3 3 0 3
F2 3 4 4 0 4
F3 1 5 1 0 5
bj  3 4 3 2
Now solving the given problem by VAM in single table by calculating penalties for each
row and column and assigning maximum amount in minimum cost cell to row/
column with maximum penalty in each round.
W1 W2 W3 W4 ai ↓
F1 2 3 3 0 3 (2)(1)(0) (0)
F2 3 4 4 0 4,2, 1 (3)(1) (0) (0)
F3 1 5 1 0 5, 2 (1) (4) (4)
bj  3 4,1 3 2
(1) (1) (2) (0)
(1) (1) (2)
(1) (2)
(1) (1)

Transportation cost = 3(3) + 4(1) + 4(1) + 1(3) + 1(2) = 2200$

Now for optimality check using MODI method, finding set of numbers ui and vj, putting
u2 =0 as 2nd row is having maximum number of allocations. Calculating remaining ui
and vj using the relation cij = (ui + vj ) for occupied cells.
w1 w2 w3 w4
F1 3 u1 =-1
F2 4 4 0 u2 = 0
F3 1 1 u3= -3
v1=4 v2=4 v3=4 v4=0

Now entering cij for each unoccupied cell (i,j) in the upper left corner and (ui + vj) for the
same cell in the upper right corner. Also writing dij= cij – (ui + vj ) at lower right
corner. We observe that d11 = -1 and d12 = -1 which are equal. Choosing (1,1)
arbitrarily for allocation by forming a closed loop with other occupied cells travelling
horizontally or vertically.

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 W1 W2 W3 W4
2 ?3 3 3 0 -1
F1 u1= -1
-1 0 1
3 ?4
F2 u2 = 0
-1
5 1 0 -3
F3 u3 = -3
4 3
v1=4 v2=4 v3=4 v4=0

Adding and subtracting min[1,3]=1 at vertices of the loop to adjust supply and demand
requirements as given below
?+1 3-1
1+ 1 1-1

3- 1 2+1
Modified distribution of allocations is as shown in the table below:
W1 W2 W3 W4
F1 2 3 3 0
F2 3 4 4 0
F3 1 5 1 0

Reduced transportation cost = 2(1) + 3(2) + 4(2)+ 1(2) + 1(3) = 2100$

To check whether the new solution is optimal, assign set of numbers ui and vj, putting u3
=0 arbitrarily as all the rows are having equal number of allocations. Calculating
remaining ui and vj using the relation cij = (ui + vj) for occupied cells.

W1 W2 W3 W4
F1 2 3 u1 =1
F2 4 0 u2 =2
F3 1 1 u3=0
v1=1 v2=2 v3= 1 v4=-2

Now entering cij for each unoccupied cell (i,j) in the upper left corner and (ui + vj) for
the same cell in the upper right corner. Also writing dij= cij – (ui + vj ) at lower right
corner.

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 W1 W2 W3 W4
3 2 0 -1 u1= 1
F1
1 1
3? 3 4 3 u2= 2
F2
0 1
5 2 0 -2 u3 = 0
F3
3 2
v1=1 v2=2 v3=1 v4=-2
All dij , ∴ the solution is optimal and an alternate optimal solution exists as d21=0. To
find the alternate solution, giving an allocation to cell (2,1) by making a loop with other
allocated cells and adding and subtracting min[1,2] =1 at the vertices of the loop.
1-1 2+1

? +1 2-1
Modified distribution of allocations is as shown in the table below:
W1 W2 W3 W4
F1 2 3 3 0
F2 3 4 4 0
F3 1 5 1 0

Transportation cost = 3(3) + 3(1) + 4(1)+ 1(2) + 1(3) = 2100$

7.2.2 Degeneracy in Transportation Problems
As stated earlier, degeneracy occurs in transportation problems if total number of
allocations ‘ ’ are less than or if these allocations form a loop within
themselves. If degeneracy occurs while solving a transportation problem, all ui and vj
cannot be found out while optimality check using MODI method.
To resolve degeneracy, an extremely small quantity is allocated to a least cost
unallocated cell such that it does not form any loop with allocated cells. If the
allocation in least cost cell forms a loop with already allocated cells, the allocation
may be given to next least cost cell.
Example4. Solve the following transportation problem, where goods are to be
transported from 3 sources to 3 destinations.
D1 D2 D3 ai ↓
S1 1 4 3 5
S2 4 2 2 4
S3 5 2 4 6
bj  5 5 5

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Solution: Solving the given problem by VAM in single table by calculating penalties for
each row and column and assigning maximum amount in minimum cost cell to row/
column with maximum penalty in each round.

D1 D2 D 3 a i ↓
S1 1 4 3 5 (2)
S2 4 2 1 4 (1) (1)
S3 5 2 4 6 (2) (2)
bj  5 5 5, 1
(3) (2) (2)
(0) (3)
Transportation cost = 1(5) + 1(4) + 2(5) + 4(1) = 23 units
Total number of allocated cells are 4, which are less than (m+n-1) i.e. 5. Trying to
allocate small quantity to least cost unallocated cell which forms a loop with
other allocated cells (2,3), (3,3) and (3,2). ∴ Allocating to next least cost cell
(1,3)

D1 D2 D3 ai ↓
S1 1 4 3 5
S2 4 2 1 4
S3 5 2 4 6
bj  5 5 5, 1

Now for optimality check using MODI method, finding set of numbers ui and vj, putting
u3 =0 and calculating remaining ui and vj using the relation cij = (ui + vj ) for occupied
cells.
D1 D2 D3
S1 1 3 u1 =-1
S2 1 u2 = -3
S3 2 4 u3 =0

v1 =2 v2 =2 v3 =4

Entering cij for each unoccupied cell (i,j) in the upper left corner and (ui + vj) for the same
cell in the upper right corner. Also writing dij= cij – (ui + vj ) at lower right corner

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 D1 D2 D3
S1 4 1 u1 =-1
+3
S2 4 -1 2 -1 u2 = -3
+5 +3
S3 5 2 u3 =0
+3
v1 =2 v2 =2 v3 =4

All dij , ∴ the solution is optimal and minimum transportation cost = 23 units

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