Assignment: 1 Date: 30/01/2019

Problem statement:
 The Transportation Problem:
Milk in a milk shed area is collected on three routes A, B and C. There are four chilling centers P, Q, R
and S where milk is kept before transporting it to a milk plant. Each route is able to supply on an
average one thousand liters of milk per day. The supply of milk on routes A, B and C are 150, 160 and
90 thousand liters respectively. Daily capacity in thousand liters of chilling centers is 140, 120, 90 and
50 respectively. The cost of transporting 1000 liters of milk from each route (source) to each chilling
center (destination) differs according to the distance. These costs (in Rs.) are shown:

The problem is to determine how many thousand liters of milk is to be transported from each route on
daily basis in order to minimize the total cost of transportation.
(Solve the problem using different methods and compare results. Do not hard code the values)

Objective:
 Minimization of transportation cost using methods: NWCR, LCM and VAM.

Outcome:
 Learnt and implemented transportation cost minimization techniques: NWCR, LCM, VAM.
 Comparative analysis of the minimization techniques: NWCR, LAM, VAM

Theory:
In transportation problem, minimization techniques are used to minimize the transportation cost required
to deliver goods and services while maintaining the desired level of quality.
Following methods are used to minimize the transportation cost:
1) Northwest corner method.
2) Least cost method.
3) Vogel approximation method.
1) Northwest corner method:
The Northwest Corner Method is a heuristic that is applied to a special type of Linear
Programming problem structure called the Transportation Model, which ensures that there is an initial
basic feasible solution (non artificial).

Algorithm:
The Northwest Corner Method starts in the cell (route) corresponding to the northeast corner, or the
upper left, of the tableau (variable ). Below is a description of the steps:

Step 1: Allocate the maximum amount available to the selected cell and adjust the associated supply and
demand quantities by subtracting the allocated quantity.

Step 2: Exit the row or the column when the supply or demand reaches zero and cross it out, to show
that you cannot make any more allocations to that row or column. If a row or a column simultaneously
reach zero, only cross out one (the row or the column) and leave a zero supply (demand) in the row
(column) that is not crossed out.

Step 3: If exactly one row or column is left that is not crossed out, stop. Otherwise, advance to the cell
to the right if a column has just been crossed out, or to the cell below if a row was crossed out. Continue
with Step 1.

Method:
Iteration 1:

Chilling Centers
Routes
P Q R S Available
A 16 (140) 18 21 12 150 10
B 17 19 14 13 160
C 32 11 15 10 90
Demand 140 0 120 90 50 400
Iteration 2:
Chilling Centers
Routes
P Q R S Available
A 16 (140) 18 (10) 21 12 150 10 0
B 17 19 14 13 160
C 32 11 15 10 90
Demand 140 0 120 110 90 50 400

Iteration 3:
Chilling Centers
Routes
P Q R S Available
A 16 (140) 18 (10) 21 12 150 10 0
B 17 19 (110) 14 13 160 50
C 32 11 15 10 90
Demand 140 0 120 110 0 90 50 400

Iteration 4:
Chilling Centers
Routes
P Q R S Available
A 16 (140) 18 (10) 21 12 150 10 0
B 17 19 (110) 14 (50) 13 160 50 0
C 32 11 15 10 90
Demand 140 0 120 110 0 90 50 50 400

Iteration 5:
Chilling Centers
Routes
P Q R S Available
A 16 (140) 18 (10) 21 12 150 10 0
B 17 19 (110) 14 (50) 13 160 50 0
C 32 11 15 (50) 10 90 50
Demand 140 0 120 110 0 90 50 0 50 400

Iteration 6:
Chilling Centers
Routes
P Q R S Available
A 16 (140) 18 (10) 21 12 150 10 0
B 17 19 (110) 14 (50) 13 160 50 0
C 32 11 15 (50) 10 (50) 90 50 0
Demand 140 0 120 110 0 90 50 0 50 0 400

Allocation cost: (16 * 140) + (18 * 10) + (19 * 110) + (14 * 50) + (15 * 50) + (10 * 50) = 6310
2) Least cost method:
The Least Cost Method is another method used to obtain the initial feasible solution for the
transportation problem. Here, the allocation begins with the cell which has the minimum cost. The lower
cost cells are chosen over the higher-cost cell with the objective to have the least cost of transportation.

Algorithm:
Step 1: Select the smallest transportation cost cell available in the entire table and allocate the supply
and demand.
Step 2: Delete that row/column which has exhausted. The deleted row/column must not be considered
for further allocation.
Step 3: Again select the smallest cost cell in the existing table and allocate. (Note: In case, if there are
more than one smallest costs, select the cells where maximum allocation can be made)
Step 4: Obtain the initial basic feasible solution.

Method:
Iteration 1:
Chilling Centers
Routes
P Q R S Available
A 16 18 21 12 150
B 17 19 14 13 160
C 32 11 15 10 (50) 90 40
Demand 140 120 90 50 0 400

Iteration 2:
Chilling Centers
Routes
P Q R S Available
A 16 18 21 12 150
B 17 19 14 13 160
C 32 11 (40) 15 10 (50) 90 40 0
Demand 140 120 80 90 50 0 400

Iteration 3:
Chilling Centers
Routes
P Q R S Available
A 16 18 21 12 150
B 17 19 14 (90) 13 160 70
C 32 11 (40) 15 10 (50) 90 40 0
Demand 140 120 80 90 0 50 0 400
Iteration 4:
Chilling Centers
Routes
P Q R S Available
A 16 (140) 18 21 12 150 10
B 17 19 14 (90) 13 160 70
C 32 11 (40) 15 10 (50) 90 40 0
Demand 140 0 120 80 90 0 50 0 400

Iteration 5:
Chilling Centers
Routes
P Q R S Available
A 16 (140) 18 (10) 21 12 150 10 0
B 17 19 14 (90) 13 160 70
C 32 11 (40) 15 10 (50) 90 40 0
Demand 140 0 120 80 70 90 0 50 0 400

Iteration 6:
Chilling Centers
Routes
P Q R S Available
A 16 (140) 18 (10) 21 12 150 10 0
B 17 19 (70) 14 (90) 13 160 70 0
C 32 11 (40) 15 10 (50) 90 40 0
Demand 140 0 120 80 70 0 90 0 50 0 400

Allocation cost: (10 * 50) + (11 * 40) + (14 * 90) + (16 * 140) + (18 * 10) + (19 * 70) = 5950

3) Vogel approximation method:

The Vogel Approximation Method is an improved version of the Minimum Cell Cost Method and
the Northwest Corner Method that in general produces better initial basic feasible solution, which are
understood as basic feasible solutions that report a smaller value in the objective (minimization) function
of a balanced Transportation Problem (sum of the supply = sum of the demand).

Algorithm:
Step 1: Determine a penalty cost for each row (column) by subtracting the lowest unit cell cost in the
row (column) from the next lowest unit cell cost in the same row (column).

Step 2: Identify the row or column with the greatest penalty cost. Break the ties arbitrarily (if there are
any). Allocate as much as possible to the variable with the lowest unit cost in the selected row or
 column. Adjust the supply and demand and cross out the row or column that is already satisfied. If a row
and column are satisfied simultaneously, only cross out one of the two and allocate a supply or demand
of zero to the one that remains.

Step 3:
 If there is exactly one row or column left with a supply or demand of zero, stop.
 If there is one row (column) left with a positive supply (demand), determine the basic variables in the
row (column) using the Minimum Cell Cost Method. Stop.
 If all of the rows and columns that were not crossed out have zero supply and demand (remaining),
determine the basic zero variables using the Minimum Cell Cost Method. Stop.
In any other case, continue with Step 1.

Method:
Iteration 1:
Chilling Centers
Routes Penalties 1 7 1 1
P Q R S Available
A 4 16 18 21 12 150
B 1 17 19 14 13 160
C 1 32 11 (90) 15 10 90 0
Demand 140 120 30 90 50 400

Iteration 2:
Chilling Centers
Routes Penalties 1 71 17 11
P Q R S Available
A 4 16 18 21 12 150
B 1 17 19 14 (90) 13 160 70
C 1 32 11 (90) 15 10 90 0
Demand 140 120 30 90 0 50 400

Iteration 3:
Chilling Centers
Routes Penalties 1 71 17 11
P Q R S Available
A 4 16 18 21 12 (50) 150 100
B 14 17 19 14 (90) 13 160 70
C 1 32 11 (90) 15 10 90 0
Demand 140 120 30 90 0 50 0 400
Iteration 4:
Chilling Centers
Routes Penalties 1 71 17 11
P Q R S Available
A 42 16 (100) 18 21 12 (50) 150 100 0
B 142 17 19 14 (90) 13 160 70
C 1 32 11 (90) 15 10 90 0
Demand 140 40 120 30 90 0 50 0 400

Iteration 5:
Chilling Centers
Routes Penalties 1 71 17 11
P Q R S Available
A 42 16 (100) 18 21 12 (50) 150 100 0
B 142 17 (40) 19 14 (90) 13 160 70 30
C 1 32 11 (90) 15 10 90 0
Demand 140 40 0 120 30 90 0 50 0 400

Iteration 6:
Chilling Centers
Routes Penalties 1 71 17 11
P Q R S Available
A 42 16 (100) 18 21 12 (50) 150 100 0
142 160 70 30
B 17 (40) 19 (30) 14 (90) 13
0
C 1 32 11 (90) 15 10 90 0
Demand 140 40 0 120 30 0 90 0 50 0 400

Allocation = (11 * 19) + (14 * 90) + (12 * 50) + (16 * 100) + (17 * 40) + (19 * 30) = 5700
1) Northwest corner method:
Program:
Output:
2) Least cost method:
Program:

Output:
3) Vogel approximation method:
Program:
Output:
Conclusion:
The cost matrix of given transportation problem is as follows:

METHOD: NWCR LCM VAM

COST 6310 5950 5700

ALLOCATION 6 6 6

The optimal transportation cost of the given transportation problem was obtained by VAM method with
cost 5700. The Vogel Approximation Method generally gives a better initial solution.