Transportation Methods

Developing Initial Solutions

• Northwest Method
• Intuitive Method
• Vogel Approximation Method

Evaluating Solutions

• Stepping Stone Method

• MODI Method
Example
Warehouse
A B C Supply

5 9 3

1 100
Factory

4 2 6

2 100

200
Demand 80 90 30
200
 OBJ. FUNCTION : Minimize C = 5X1 + 9X2 + 3X3 + 4X4 + 2X5 + 6X6

A B C

5 9 3
Constraints :
1 100
X1 X2 X3 X1 +X2 + X3 = 100

X4 +X5 + X6 = 100
4 2 6

2 100 X1 +X4 = 80
X4 X5 X6
X2 + X5 = 90

200 X3 +X6 = 30
80 90 30
200 Conditions :

X1 , X 2 , X3 , X4 , X 5 , X 6 = > 0
Northwest corner rule
• Allocate the available supply to the cells starting
from the northwest corner (Upper left) and moving
down vertically or horizontally, satisfying the demand.
• Observed that the number of cells used must be equal
to the number of rows + the number of columns – one.
• Compute for the cost of transportation summing up the
products of the cost of transport and amount to be
transported to the destination.
• Proceed to check for areas of improvement using any of
the methods stated in the next number.
 Northwest Method N

W E
A B C
S
5 9 3
20
1 80 100

4 2 6

2 100

200
80 90 30
200
 Northwest Method

A B C
5 9 3
20
1 80 20 100

4 2 6

2 100

200
80 90 30
200
 Northwest Method

A B C
5 9 3
20
1 80 20 100

4 2 6
30
2 100
70

200
80 90 30
200
 Northwest Method

A B C
5 9 3
20
1 80 20 100

4 2 6
30
2 100
70 30

200
80 90 30
200

Completed Cells = R + C - 1 = 2 + 3 - 1 = 4 TC =80(5)+20(9) + 70(2) + 30(6) = 900

 Stepping Stone Method
A B C
5 9 33

1 - +
100 2A
80 20
+ -

Factory 2A +4 1A -5
4 2 6

1B +3 2C -2
2 70 30 100 ____ ____
+ - +7 -7

+6
200
80 90 30
200
 Stepping Stone Method

A B C
5 9 3
- + 1C
1 80 20 100 + -

1C +3 2C -6
4 2 6
2B +2
____ 1B ____
-9

2 70 30 100 +5 -15
+ -

-10

200
80 90 30
200
 Stepping Stone Method
A B C
5 9 3

1 100
80 20

4 2 6

2 90 10 100
-

200
80 90 30
200

TC =80(5)+20(3) + 90(2) + 10(6) = 700

 Stepping Stone Method
A B C
5 9 3
+ -
1 100 1B
80 20
+ -

4 2 6 1B +9 1C -3

100 2C +6 2B -2
2 90 10 ____ ____
+15 -5
- +

+10
200
80 90 30
200
 Stepping Stone Method
A B C
5 9 3
- +
1 100 2A
80 20
+ -

4 2 6 2A +4 1A -5

100 1C +2 2C ____
-6
2 90 10 ____
+5 -11
+ -

-4
200
80 90 30
200
 Stepping Stone Method
A B C
5 9 3
- +
1 100 2A
80 20
+ -

4 2 6 2A +4 1A -5

100 1C +2 2C ____
-6
2 90 10 ____
+5 -11
+ -

-4
200
80 90 30
200
 Stepping Stone Method
A B C
5 9 3

1 100
70 30

4 2 6

2 10 90 100

200
80 90 30
200
 Stepping Stone Method
A B C
5 9 3
- +
1 100 1B
70 30
+ -

4 2 6 1B +9 1A -5

100 2A +4 2B ____
-2
2 10 90 ____
+ - +13 -7

+6
200
80 90 30
200
 Stepping Stone Method
A B C
5 9 3
+ -
1 100 2C
70 30
+ -

4 2 6 1A +5 1C -3

100 2A +6 2B ____
-4
2 10 90 ____
- +11 -7
+

+4
200
80 90 30
200
 Stepping Stone Method
A B C
5 9 3

1 100
70 30

4 2 6

2 10 90 100

200
80 90 30
200

TC =70(5)+30(3) + 10(4) + 90(2) = 660 SOLUTION IS OPTIMAL

Least Cost Method (Intuitive Method)

• Start from the cell with the least cost. Then

work your way to the other cells always
considering the least transportation cost.

• Compute the cost of transport and improve

using any of the two methods in no. 4.
 Intuitive Method

A B C
5 9 3

1 100

4 2 6

2 100

200
80 90 30
200
 Intuitive Method

A B C
5 9 3

1 100

4 2 6
10
2 100
90

200
80 90 30
200
 Intuitive Method

A B C
5 9 3
70
1 30 100

4 2 6
10
2 100
90

200
80 90 30
200
 Intuitive Method

A B C
5 9 3
70
1 30 100

4 2 6
10
2 100
10 90

200
80 90 30
200
 Intuitive Method

A B C
5 9 3
70
1 70 30 100

4 2 6
10
2 100
10 90

200
80 90 30
200

Completed Cells = R + C - 1 = 2 + 3 - 1 = 4 TC =70(5)+30(3) + 10(4) + 90(2) = 660

 MODI Method

5 3 3

A B C
Index
5 9 3

0 1 70 30 100

4 2 6

-1 2 100
10 90

200
80 90 30
200

Cell Cost - ( Row Index + Column Index )

 MODI Method
5 3 3

A B C
Index
5 9 3

0 1 70 30 100
1B: 9 - ( 0 + 3 ) = + 6

4 2 6

-1 2 100 2C: 6 - (-1 + 3 ) = + 4

10 90

200
80 90 30
200

SOLUTION IS OPTIMAL
 VAM - Vogel Approximation Method

Based on the concept of minimizing opportunity

cost.

The opportunity cost of a given row or column is

the difference between the lowest cost and the
second lowest cost alternative.
Procedure :

1. For each row an column, select the lowest and

second lowest alternatives from those not
already allocated and calculate the opportunity
cost.
2. Scan the opportunity cost figures and identify
the row or columns with the largest opportunity
cost.
3. Allocate as many units as possible to this row
or column in the square with the least cost.
VAM - Vogel Approximation Method

A B C

9 8 5
W 25

6 8 4

X 35

7 6 9

Y 40

100
30 25 45
100
VAM - Vogel Approximation Method

A B C
9 8 5
W 25 25
6 8 4
X 35
7 6 9
Y 40

100
30 25 45 100

Row/Column 2nd Lowest Cost - Lowest Cost = Opportunity Cost

Row W 8 5 3 Largest
Row X 6 4 2
Row Y 7 6 1
Column A 7 6 1
Column B 8 6 2
Column C 5 4 1
VAM - Vogel Approximation Method

A B C
9 8 5
W 25 25
6 8 4
X 20 35
7 6 9
Y 40

100
30 25 45 100

Row/Column 2nd Lowest Cost - Lowest Cost = Opportunity Cost

Row X 6 4 2
Row Y 7 6 1
Column A 7 6 1
Column B 8 6 2
Column C 9 4 5 Largest
VAM - Vogel Approximation Method

A B C
9 8 5
W 25 25
6 8 4
X 20 35
7 6 9
Y 25 40

100
30 25 45 100

Row/Column 2nd Lowest Cost - Lowest Cost = Opportunity Cost

Row X 8 6 2 Largest
Row Y 7 6 1
Column A 7 6 1
Column B 8 6 2 Largest
VAM - Vogel Approximation Method

A B C
9 8 5
W 25 25
6 8 4
X 15 20 35
7 6 9
Y 15 25 40

100
30 25 45 100
Thank You!
 7 6 5

A B C
9 8 5
0 W 25 25
6 8 4
-1
X 15 20 35
7 6 9
0 Y 15 25 40

100
30 25 45 100

WA: 9 - ( 0 + 7 ) = + 2 XB: 8 - ( -1 + 6 ) = + 3

WB: 8 - ( 0 + 6 ) = + 2 YC: 9 - ( 0 + 5 ) = + 4

TC =25 (5)+15(6) + 20(4) + 15(7) + 25(6) = 550

 A B C
9 8 5
W 25 25
6 8 4
X 15 20 35
7 6 9
Y 15 25 40

100
30 25 45 100
 A B C
+ 9 8 5
W 25 25
6 8 4
X 15 20 35
+
7 6 9
Y 15 25 40

100
30 25 45 100
 A B C
9 8 5
W 25 25
6 8 4
X 15 + 20 35
7 6 9
Y 15 25 40
+
100
30 25 45 100
 A B C
9 8 5
W 25 25
6 8 4
+
X 15 20 35
7 6 9
Y 15 25 40
+
100
30 25 45 100
 A B C
9 + 8 5
W 25 25
6 8 4
X 15 20 35
+
7 6 9
Y 15 25 40
+
100
30 25 45 100