Chapter 8S The Transportation Model: Teaching Notes

Chapter 08S - The Transportation Model
CHAPTER 8S
THE TRANSPORTATION MODEL
Teaching Notes
The transportation method seems to be middle-of-the-road in terms of students abilities to develop an
intuitive feel for what is happening during the process. Although in practice much of the actual
computations are done by computers using the simplex algorithm, I feel that students gain a certain
amount of insight and intuitive understanding by going through the calculations.
Cell evaluations are illustrated using the stepping-stone method and the MODI method. While it may
be more efficient to use the MODI method, note that for the size of the problems students will
encounter, the two methods are probably fairly similar in terms of efficiency. Consequently, I think it
is more a matter of personal preference which method is used.
Solutions to Problems
1.
Ship 15 units from source 1 to destination 2

Total cost of this transportation schedule is = $1,050.
2.
If N1 is opened, then the shipment schedule is as follows:

Ship 500 units from warehouse 1 to store B at a cost of $1,500
Ship 400 units from warehouse 2 to store A at a cost of $2,000
Ship 100 units from warehouse N1 to store B at a cost of $800
Ship 350 units from warehouse N1 to store C at a cost of $2,450
Excess supply at warehouse N1 is 50 units
Total cost of the transportation schedule if N1 is opened is $6,750.
If N2 is opened, then the shipment schedule is as follows:
Ship 100 units from warehouse N2 to store B at a cost of $600
Ship 350 units from warehouse N2 to store C at a cost of $ 1,400
8S-1
Excess supply at warehouse N2 is 50 units

Total cost of the transportation schedule if N2 is opened is $5,500.
Since 5,500 < 6,750, open the warehouse in location N2.
3.
If the plant is located in Toledo, the shipment schedule is as follows:

Ship 210 units from Plant 1 to Destination C at a cost of $2,100
Ship 140 units from plant 2 to destination A at a cost of $1,680
Ship 80 units from plant 3 to destination A at a cost of $880
Ship 60 units from plant 3 to destination B at a cost of $660
Ship 10 units from plant 3 to destination C at a cost of $120
Ship 160 units from Toledo to destination B at a cost of $1,280
Total cost of the shipment schedule if the plant is constructed in Toledo is $6,720.
If the plant is located in Cincinnati, the shipment schedule is as follows:
Ship 210 units from plant 1 to destination C at a cost of $2,100
Ship 60 units from plant 2 to destination A at a cost of $720
Ship 80 units from plant 2 to destination B at a cost of $1,360
Ship 140 units from plant 3 to destination B at a cost of $1540
Ship 10 units from plant 3 to destination C at a cost of $120
Ship 160 units from Cincinnati to destination A at a cost of $1,120
Total cost of the shipment plan if the plant is constructed in Cincinnati is $6,960.
Since 6,720 < 6,960, construct the new plant in Toledo.
4.
If the store is opened in South Coast Plaza (SCP), then the shipment schedule and the related
costs are as follows:
Ship 160 units from warehouse 1 to SCP store at a cost of $640
Ship 60 units from warehouse 3 to store A at a cost of $840
Ship 140 units from warehouse 3 to SPC store at a cost of $700
Total cost of the transportation schedule if the store is opened in South Coast Plaza is $10,080.
8S-2
If the store is opened in Fashion Island (FI), then the shipment schedule is as follows:
Ship 100 units from warehouse 1 to FI store at a cost of $700
Ship 200 units from warehouse 3 to FI store at a cost of $1,000
Total cost of the transportation schedule if the store is opened in Fashion Island is $10,500.
If the store is opened in Laguna Hill (LH), then the shipment schedule and the related costs are
as follows:
Ship 160 units from warehouse 1 to LH store at a cost of $800
Ship 140 units from warehouse 3 to SPC store at a cost of $840
Total cost of the transportation schedule if the store is opened in South Coast Plaza is $10,380.
Since 10,080 < 10,380 <10,500 open the store in South Coast Plaza.
Advanced Topics: The Transportation Model on the text web site

Answers to Discussion and Review Questions
1. Supply available from each origin, demand at each destination, and transportation cost per unit for
each origin/destination combination.
2. Check to see that supply and demand are equal. If they are not, add a dummy origin or destination
with a quantity equal to the difference between supply and demand. Use dummy cell costs of
$0.
3. No, a dummy is added to supply or demand, whichever is lower.
4. The transportation cost per unit is linear.
5. To maintain row and column totals.
6. The solution is optimum if there are no empty cells with negative cell evaluations.
7. The solution is not optimum.
8. a. Shift into the cell with the largest negative cell evaluation.
b.
Identify the cell path used to evaluate that empty cell.
c.
Transfer a quantity equal to the smallest quantity in a negative position along
the cell evaluation path.
8S-3
9. Degeneracy means there are too few completed cells to evaluate all empty cells. It is corrected by
changing an empty cell into a completed cell.
10. The transportation method can be used to compare the total cost of alternative locations in terms
of their transportation costs. It differs in the sense that multiple transportation matrices must
be evaluated, one for each location.
11. Total cost is the sum of the product of quantity and cell cost for all completed cells.
12. Quantities in dummy destinations indicate which origin will hold (not ship or not produce) the
excess. Quantities in dummy sources reveal which destinations demand will not be satisfied.
Also, the quantities indicate the amount of excess or shortage for an origin or destination.
13. The MODI method is a way to determine if a solution to a transportation problem is optimal. It
differs from the stepping-stone approach in that evaluation paths are not used. Instead, a set of
row and column index numbers are obtained. Both approaches yield the same results.
8S-4
Solutions
1.
Intuitive Solution: Intuitive rule

A
1
2
3
3
15
15
3
5
+2
7
45
Solution
To:
1
From:
3
1 2
55
Demand
55
C
40
45
+3
2 +1
3.
30
2.
2
7
+6
35
Number 2:
A
40
15
60
15
50
+2
50
3
6
40
+4
55
To:
From:
Supply
2
40
Demand
5
22
2
3
80
30
23
42
12
24
+7
34
50
+2
TC = $6,310
D4
14
+5
+13
30
16
+12
27
33
+24
31
50
26
8S-5
50
2 40
7 60
4 50
75
Number 2:
1
2
3
6
40
+4
TC = $6,330
C9
45
TC = $415
65
25
+3
+6
2 +1
45
B12
45
50
a,b,c Initial (Intuitive):

A20
B12
C9
D4
0
18
12
14
16
1
40
+12
2
+5
3
23
24
27
33
2
80
+15
+26
+9
22
42
34
31
26
3
10
40
30
50
d. Number 2:
A18
0
18
1
10
5
8
30
+5
+3
75
15
3
7
50
5
1
6
55
55
Optimal solution
TC = $485
No alternate solution
+2
+4
45
45
3
2
3
4
Supply
40
50
65
Solutions (continued)
4.
Initial (Intuitive):
A14
B11
0
14
24
1
41
+13
7
5
2
3
4
+11
17
30
41
3
1
13
28
+15
+6
80
+8
Dummy
10
14
17
30
+9
2
32
18
23
42
0
40
+1
30
10
80
Dummy-7
18
28
0
7
+19
+7
28
1
D9
25
22
35
24
18
16
24
34
0
30
+16
+2
0
56
0
32
+3
+5
+7
30
+3
TC = $2,268
Dummy-3
18
28
0
35
+15
+3
+4
48
D13
25
22
35
12
16
20
20
C18
34
90
6.
16
B15
41
5.
32
18
34
A14
0
C18
20
+16
16
30
+2
20
14
27
31
0
30
TC = $5,570
+12
+18
50
48
56
TC = $2,156 (optimal solution)
0
32
6
16
33
26
0
+8
40
80
110
20
50
Instructors: Please let your students know that in answering this question, to use the following
table in lieu of the table given in problem 6.
From
Baltimore to
A
B
C
D
Cost per unit

18
16
22
27
From
Philadelphia to
A
B
C
D
8S-6
Cost per unit

31
25
19
20
Baltimore:
A14
0
2 +10
4
4
41
3 +12
Bal.
B13
14
17
30
18
41
+12
+12
32
2
C18
24
18
16
16
7
+14
0
28
D23
18
25
22
22
28
+5
16
58
30
+3
27
34
35
60
V2 = 21
B
V3 = 18
C
V4 = 19
D
Dummy-4
0
+4
48
+11
0
16
58
TC = $2,842
0
32
0
50
16
Philadelphia:
V1 = 14
A
u1 = 0
u2 = 3
u3 = 5
u4 = 1
41
+6
3 +21
Phil. +16
14
17
30
31
+3
2
32
+3
24
18
16
25
7
+10
+9
28
18
28
+9
25
22
19
16
54
30
+16
20
41
34
35
60
Since 2,764 < 2,842, choose Philadelphia
8S-7
V5 = 1
Dummy
+1
+4
+6
16
16
0
0
48
56
0
32
0
50
TC = $2,764
7. a. Solution
To:
1
From:
6
1 1
2
+1
70
Demand
To:
From:
+1
90
+4
90
70
+2
+1
6
7
4
3
4
70
Demand
+1
90
+4
70
Supply
8
100
10
10
100
100
80
120
3
4
2
4
90
30
10
80
Supply
8
7
5
100
100
80
120
b. Optimal solution
TC = $1,310
c. There is no alternate optimal solution
8S-8
8.
Initial (intuitive) solution is optional:

a.
To:
RS1
RS2
RS3
From:
.80
.75
.60
Metro
+.10
1
23
RS4
16
(+)
Ridge
Colby
24
Demand
24
b.
To:
From:
.75
(-)
.70
+.10
Ridge
Colby
24
Demand
24
.80
.75
22
RS1
Metro
20
.80
.75
.70
4
1
22
+.10
.85
.70
0.05(+)
+.10
23
RS2
17
+.20
.75
.80
.75
+.20
+.10
.70
.80
16
RS3
23
.70
(-)
+.05
.85
.70
16
+.15
23
16
+.10
10
0
.90
.85
.80
10
RS4
.60
RS5
.70
.70
.80
10
0
10
40
30
25
95
RS5
+.10
Supply
.90
.85
.80
Supply
40
30
25
95
TC = 67
c. If Ridge-RS4 is not acceptable, the additional cost is 67.8 67 = .8 or $800.
Enrichment Module: Vogels Approximation Method and Supplemental

Problems
In addition to Intuitive Lowest-cost Approach, we can use Vogels Approximation to obtain an initial
reasonable solution.
Steps of Vogels Approximation
1.
Determine the penalty cost for each row and each column. (Penalty cost is obtained by
subtracting the smallest cost from the next smallest cost in a given row or column).
2.
Select the row or the column with the highest penalty cost. In that row/column, allocate as
many units as possible to the cell with the smallest cost.
3.
Reduce the row supply and column demand by the amount allocated in step 2. If the row
supply is now zero, eliminate the row from further consideration. If the column demand is
now zero, eliminate the column from further consideration. Go to step 1.
8S-9
Example
TO
FROM
Chicago
South Bend
Indianapolis
Cleveland
80
60
70
50
Columbus
75
65
55
40
Bowling Green
70
85
55
35
Cincinnati
90
55
48
60
Total
200
100
Fort Wayne
300
100
Total
150
175
275
100
700
Step 1
In establishing the penalty cost for row 1 (Cleveland), we subtract the lowest cost in row 1 from the
second lowest cost in row 1. For Cleveland, the lowest cost is $50 (unit shipping cost from Cleveland
to Ft. Wayne). The second lowest cost is $60 (unit shipping cost from Cleveland to South Bend).
$60 $50 = $10. For column 1, Bowling Green to Chicago has the lowest per unit transportation cost
($70) and Columbus to Chicago has the next lowest cost ($75). Therefore, the penalty cost for column
1 (Chicago) is: 75 70 = $5.
Proceeding in this fashion for the rest of the rows and columns, we obtain the following penalty costs:
Cleveland = 10
Columbus = 15
Bowling Green = 20
Cincinnati = 7
Chicago = 5
South Bend = 5
Indianapolis = 0
Ft. Wayne = 5
Step 2
Since row three (Bowling Green) has the largest penalty cost, it is selected. In row three, the shipping
route from Bowling Green to Ft. Wayne has the lowest shipping cost per unit ($35). Thus we allocate
as many units as possible (100 units) to it.
Step 3
Since the demand in Ft. Wayne is reduced to zero, we eliminate Ft. Wayne from further consideration.
Step 1
After eliminating Ft. Wayne from further consideration, Penalty costs are recalculated:
Cleveland = 10
Columbus = 10
Bowing Green = 15
Chicago = 5
South Bend = 5
Indianapolis = 0
8S-10
Cincinnati = 7
Step 2
Since Bowling Green has the largest penalty cost, it is selected again. Allocate 175 units from
Bowling Green to Indianapolis.
Step 3
Eliminate Bowling Green from further consideration.
Step 1
Updated penalty costs are:
Cleveland = 10
Columbus = 10
Cincinnati = 7
Chicago = 15
South Bend = 5
Indianapolis = 7
Step 2
Since Cleveland or Columbus has the largest penalty cost, we arbitrarily select Columbus. Allocate
125 units from Columbus to Indianapolis.
Step 3
Eliminate Indianapolis from further consideration.
Continuing in this fashion gives the following completed transportation table.
To
FROM
Chicago
South Bend
Indianapolis
Fort Wayne
70
50
55
40
Cleveland
150
80
60
Columbus
50
75
65
70
85
Bowling Green
90
Cincinnati
Total
200
100
100
125
175
55
55
100
48
300
TC = $41,250
8S-11
35
60
100
Total
150
175
275
100
700
Exercise 1
For the following transportation tableau determine the initial feasible solution using Vogels
approximation.
To:
From
Supply
18
12
14
16
23
24
27
33
42
34
31
26
Demand
90
80
30
40
80
130
50
Exercise 2
For the following transportation tableau determine the initial feasible solution using Vogels
approxima-tion method.
To:
From
Wichita, KS
Milwaukee,
WI
6
St, Louis,
MO
9
Dayton,
OH
10
Omaha, NE
11
175
Ames, IO
12
275
Demand
200
100
8S-12
300
Supply
150
Solution to Exercise 1
From
To
1
2
3
Demand
Iteration 1
Penalty
Cost
Iteration 2
Penalty
Cost
Iteration 3
Penalty
Cost
B
18
C
12
10
D
14
16
30
23
24
27
33
42
34
31
26
80
10
70
90
80
30
12
10
10
50
Demand
200
*PC1
PC2
PC4
SL
80
PC3
PC4
250
SUPPLY
150
7 175
11
175
4 100
5 125
12
275
100
300
PC1
600
*Penalty costs in iteration 1.

TC = 6(150) + 11(175) + 4(50) +5(100) + 12(125) = 5025
8S-13
PC2
1
2
TC = 6,480
DAY
10
PC3
Omaha
Ames
40
To
Wichita 150
Iteration 4
Penalty
Cost
Solution to Exercise 2
MILW
Iteration 3
Penalty
Cost
10
Iteration 2
Penalty
Cost
130
50
13
12
19
Iteration 4
Penalty
Cost
50
Supply
Iteration 1
Penalty
Cost
Supplemental Problems
1.
Refer to supplement Chapter 8, Problem 1 on the text web site and formulate it as a linear
programming problem with an objective function and a set of constraints.
2.
3.
Solutions to Supplemental Problems

1. x11 = quantity shipped from 1 to A, x12 = quantity shipped from 1 to B, etc.
Minimize Z = 3x11 + 4x12 + 2x13 + 5x21 + 1x22 + 7x23 + 8x31 + 7x32 + 4x33
s.t.
Supply
x11 + x12 + x13 = 40
x21 + x22 + x23 = 60
x31 + x32 + x33 = 50
Demand x11 + x21 + x31 = 30
x12 + x22 + x32 = 45
x13 + x23 + x33 = 75
All variables 0
2. x11 = quantity shipped from source 1 to destination 1, etc.
Minimize = 3x11 + 6x12 + 2x13 + 3x21 + x22 + 3x23 + 7x31 + 6x32 + 4x33
s.t.
Supply
x11 + x12 + x13 = 40
x21 + x22 + x23 = 50
x31 + x32 + x33 = 65
Demand x11 + x21 + x31 = 55
x12 + x22 + x32 = 55
x13 + x23 + x33 = 45
All variables 0
3. x11 = quantity shipped from 1 to A, x12 = quantity shipped from 1 to B, etc.
Minimize Z = 18x11 + 12x12 + 14x13 + 16x14 + 23x21 + ... + 26x34
s.t.
Supply
x11 +x12 + x13 + x14 = 40
x21 + x22 + x23 + x24 = 80
x31 + x32 + x33 + x34 = 130
Demand x11 + x21 + x31 = 90
x12 + x22 + x32 = 80
x13 + x23 + x33 = 30
x14 + x24 + x34 = 50
All variables 0
8S-14

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Chapter 08S - The Transportation Model

Ship 15 units from source 1 to destination 2

If N1 is opened, then the shipment schedule is as follows:

Chapter 08S - The Transportation Model

Excess supply at warehouse N2 is 50 units

If the plant is located in Toledo, the shipment schedule is as follows:

Chapter 08S - The Transportation Model

Advanced Topics: The Transportation Model on the text web site

Identify the cell path used to evaluate that empty cell.

Chapter 08S - The Transportation Model

Chapter 08S - The Transportation Model

Intuitive Solution: Intuitive rule

a,b,c Initial (Intuitive):

Chapter 08S - The Transportation Model

TC = $2,156 (optimal solution)

Cost per unit

Cost per unit

Chapter 08S - The Transportation Model

Chapter 08S - The Transportation Model

Chapter 08S - The Transportation Model

Initial (intuitive) solution is optional:

c. If Ridge-RS4 is not acceptable, the additional cost is 67.8 67 = .8 or $800.

Enrichment Module: Vogels Approximation Method and Supplemental

Chapter 08S - The Transportation Model

Chapter 08S - The Transportation Model

Chapter 08S - The Transportation Model

Chapter 08S - The Transportation Model

*Penalty costs in iteration 1.

Chapter 08S - The Transportation Model

Solutions to Supplemental Problems

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