Lesson-6 2

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Transportation Problems

Transportation Problem is a type of linear programming that deals with minimizing


the cost of shipping goods from one location (source) to another (destination). In doing so
that the needs of each destination are met while each source is operating within its capacity.
In this section, we will study Balanced Transportation Problem only where the goods
demanded is equal to the goods supplied[10].
Steps in solving Transportation Problem:
1. Formulate the Problem and set it up in tabular form.
2. Obtain the initial feasible solution. Here we apply the Northwest Corner Rule.
3. Test the initial solution for optimality.
4. Update the solution. Here we apply the Stepping Stone Method
Steps in Northwest Corner Rule[11]:
1. Place the largest possible allocation in the cell located at the upper left hand corner
of the initial table.
2. Allocate to adjacent feasible cells by satisfying the supply from each row before
moving down the next row and by satisfying the demand from each column before
moving to the right to the next column
3. Do step 2 until all supply and demand requirements are met.
Steps in Stepping Stone Method[12]:
1. Select an unused square to be evaluated.
2. Beginning at this square, trace a closed path back to the original square via squares
that are currently being used (only horizontal or vertical moves allowed). You can
only change directions at occupied cells.
3. Beginning with a plus(+) sign at the unused square, place alternative minus(-) signs
on each corner square of the closed path just traced.
4. Calculate an improvement index (II) by adding together the unit cost figures
found in each square containing a plus sign and then subtracting the unit costs in
each square containing a minus sign.
5. Repeat steps 1 to 4 until an improvement index has been calculated for all unused
squares. If all indices are greater than or equal to zero, an optimal solution has been
reached.
Example 6.6: The Oragon Logistics delivers rice from three sources A, B, C to three destinations
X, Y, and Z. The sources are able to supply the following tons of rice per week.
Source Supply (Capacity)
A 36
B 44
C 80
The number of tons of rice required by the destinations per week are:
Destination Demand (Requirement)
X 27
Y 68
Z 65

1
The cost (in hundred pesos) of transporting per ton of rice from source to destinations are:

X Y Z
A 9 10 10
B 15 20 15
C 6 9 12

Find the optimal strategy and minimum cost of transporting these rice from source to destina-
tions?
The three given tables above can be summarized into a single table below:
X Y Z Supply
A 9 10 10 36
B 15 20 15 44
C 6 9 12 80
Demand 27 68 65

Solution:
Set up the initial table using the Northwest Rule.

Table 1

Compute for the initial cost.


Cost: 27(9) + 9(10) + 44(20) + 15(9) + 65(12) = 2128
Use Stepping Stone method, compute for the improvement index.

Improvement Index:

AZ: 10 - 10 + 9 - 12 = -3
BX: 15 - 20 + 10 - 9 = -4
BZ: 15 - 20 + 9 - 12 = -8
CX: 6 - 9 + 10 - 9 = -2
Since BZ has the most negative value (-8), then in Table 2, we make the necessary adjust-
ment starting with BZ.

2
Table 2

Compute for the initial cost.


Cost: 27(9) + 9(10) + 44(15) + 59(9) + 21(12) = 1776. Observe that this cost is lower
than the cost from table 1. It means we are on the right track.
Use Stepping Stone method, compute for the improvement index.

Improvement Index:

AZ: 10 - 10 + 9 - 12 = -3
BX: 15 - 15 + 12 - 9 + 10 - 9 = 4
BY: 20 - 9 + 12 - 15 = 8
CX: 6 - 9 + 10 - 9 = -2
Since AZ has the most negative value (-3), then in Table 3, we make the necessary adjust-
ment starting with AZ.

Table 3

Compute for the initial cost.


Cost: 15(9) + 21(10) + 44(15) + 12(6) + 68(9) = 1689
Use Stepping Stone method, compute for the improvement index.

Improvement Index:

AY: 10 - 9 + 6 - 9 = -2
BX: 15 - 15 + 10 - 9 = 1
BY: 20 - 15 + 10 - 9 + 6 - 9 = 3
CZ: 12 - 10 + 9 - 6 = 5
Since AY has the most negative value (-2), then in Table 4, we make the necessary adjust-
ment starting with AY.

3
Table 4

Compute for the initial cost.


Cost: 15(10) + 21(10) + 44(15) + 27(6) + 53(9) = 1659
Use Stepping Stone method, compute for the improvement index.

Improvement Index:

AX: 9 - 6 + 9 - 10 = 2
BX: 15 - 6 + 9 - 10 + 10 - 15 = 3
BY: 20 - 15 + 10 - 10 = 5
CZ: 12 - 10 + 10 - 9 = 3
Since all improvement indices have values greater than or equal to zero (non negative values),
then the optimal solution has been obtained.

Conclusion: Therefore, the strategy of shipping


15 tons from A to Y,
21 tons from A to Z,
44 tons from B to Z,
27 tons from C to X, and
53 tons from C to Y,
will minimize the total cost(Php 1659 hundred of Php 165,900) of transporting rice from
source to destination.

Assignment L-6.2
1. The SM Group of Companies transport from three warehouses, A, B, and C to three
malls X, Y, and Z. Below is the summary table showing the number of tons per week of goods
supplied, demanded and cost(in hundred pesos) of transporting per ton of cement.

X Y Z Supply
A 1 2 2 224
B 4 6 4 328
C 2 4 6 308
Demand 288 408 164

Find the optimal strategy that will minimize the total cost of transporting goods from each
warehouse to mall.

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