Instructional Goals:

At the end of the lesson, the students must be able to:

• Define a transportation problem and list the
assumptions.
• Formulate the problem in a transportation matrix.
• Demonstrate how to find the initial feasible solution.
• Apply the stepping stone method and the MODI
method.
 What is
Distribution
Model?
Distribution model

• A special type of LP problem in the

area of physical distribution of goods
and services coming from several
supply locations that are to be
delivered to demand centers.
Two types of Distribution Problems

• Transportation Problem
• Assignment Problem
 What is
Transportation
Problem?
Transportation problem

• Its structure involves

shipment from a number of
source to a number of
destinations.
Transportation problem
• Its objective is to determine the
most efficient routes from the
supply centers that would meet the
required quantity of goods and
services of all destination centers
relative to the availability of limited
supply.
1941
Frank Lauren
1947
Hitchcock presented
the simplest form of Tjalling Charles
1953
transportation model Koopmans further
in his study “The develop the Abraham Charles
1955
Distribution of a transportation model and William Wager
Product from in his article Cooper developed The MODI (Modified
Several Sources to “Optimum Utilization the stepping stone Distribution) method
Numerous of the Transportation method. was developed.
Localities” System”
Characteristics and Assumptions
• The main objective of the
transportation model is to
determine the suppliers and
destinations.
Characteristics and Assumptions
Supply Sources
Certain sources have limited
available quantity of one
commodity.
Characteristics and Assumptions
Demand
The demand comes from
several destinations, such as
warehouses, distribution
centers, shops, etc.
Characteristics and Assumptions
Quantities
The quantities available at
each source and the demands
of each destination is constant.
Characteristics and Assumptions
Shipping Cost
The shipping cost is based on
per unit cost of the commodity
from the source to each
destination. It is usually based on
the distance between two points.
Characteristics and Assumptions
It is assumed that there will be
no shipments between sources or
between destinations as they will
require special adjustment to the
transportation model.
Characteristics and Assumptions
Demand and supply
quantities are presented in
whole numbers.
Sample problem
Mr. Danny Atienza is the owner of Cement
Exchange, a cement composites manufacturer
with three plant locations. Cement – bonded
composites are important construction materials
that are made of hydrated cement paste that binds
wood or fibers to make precast for building
components. Cement exchange is currently a top
manufacturer of cement composites and has been
exclusive supplier to four major distributors in
Metro Manila.
Sample problem
The total monthly purchase of each of the four
distributors are 1500, 2000, 2400, and 3500 boxes. The
four distributors may receive deliveries from any of
the three manufacturing plants. However, there are
limitations to the production capacity of each plant:
Plant A – 3, 000
Plant B – 2, 700
Plant C – 3, 700
Sample problem
Mr. Atienza would like to reduce the logistics expenses
by proper scheduling of shipments to the four distributors.
The company’s chief accountant submitted an estimate of the
per box/ unit shipping cost from each plant to each
distributor. The shipping costs are in Philippine currency:
DISTRIBUTORS
PLANTS
1 2 3 4
Plant A 15 18 22 26
Plant B 21 25 16 23
Plant C 14 19 20 24
 DISTRIBUTORS
PLANTS
1 2 3 4
Plant A 15 18 22 26
Plant B 21 25 16 23
Plant C 14 19 20 24
 DISTRIBUTORS
PLANTS
1 2 3 4
Plant A 15 18 22 26
Plant B 21 25 16 23
Plant C 14 19 20 24
Decision Variables:
xa1 = number of boxes shipped from plant A to distributor 1
 DISTRIBUTORS
PLANTS
1 2 3 4
Plant A 15 18 22 26
Plant B 21 25 16 23
Plant C 14 19 20 24
Decision Variables:
xa1 = number of boxes shipped from plant A to distributor 1
xa2 = number of boxes shipped from plant A to distributor 2
xa3 = number of boxes shipped from plant A to distributor 3
xa4 = number of boxes shipped from plant A to distributor 4
xb1 = number of boxes shipped from plant B to distributor 1
xb2 = number of boxes shipped from plant B to distributor 2
xb3 = number of boxes shipped from plant B to distributor 3
xb4 = number of boxes shipped from plant B to distributor 4
xc1 = number of boxes shipped from plant C to distributor 1
xc2 = number of boxes shipped from plant C to distributor 2
xc3 = number of boxes shipped from plant C to distributor 3
xc4 = number of boxes shipped from plant C to distributor 4
 DISTRIBUTORS
PLANTS
1 2 3 4
Plant A 15 18 22 26
Plant B 21 25 16 23
Plant C 14 19 20 24
Decision Variables: The goal of the chairman is to minimize the total
xa1 = number of boxes shipped from plant A to distributor 1
xa2 = number of boxes shipped from plant A to distributor 2
shipping cost. The transportation is computed by
xa3 = number of boxes shipped from plant A to distributor 3 multiplying the amount shipped over each route by the
xa4 = number of boxes shipped from plant A to distributor 4 per unit shipping cost for that route, and these costs
xb1 = number of boxes shipped from plant B to distributor 1 are summed up to get the total transportation cost.
xb2 = number of boxes shipped from plant B to distributor 2
xb3 = number of boxes shipped from plant B to distributor 3
xb4 = number of boxes shipped from plant B to distributor 4
xc1 = number of boxes shipped from plant C to distributor 1
xc2 = number of boxes shipped from plant C to distributor 2
xc3 = number of boxes shipped from plant C to distributor 3
xc4 = number of boxes shipped from plant C to distributor 4
 DISTRIBUTORS
PLANTS
1 2 3 4
Plant A 15 18 22 26
Plant B 21 25 16 23
Plant C 14 19 20 24
Decision Variables: The goal of the chairman is to minimize the total
xa1 = number of boxes shipped from plant A to distributor 1
xa2 = number of boxes shipped from plant A to distributor 2
shipping cost. The transportation is computed by
xa3 = number of boxes shipped from plant A to distributor 3 multiplying the amount shipped over each route by the
xa4 = number of boxes shipped from plant A to distributor 4 per unit shipping cost for that route, and these costs
xb1 = number of boxes shipped from plant B to distributor 1 are summed up to get the total transportation cost.
xb2 = number of boxes shipped from plant B to distributor 2
xb3 = number of boxes shipped from plant B to distributor 3 Objective Function:
xb4 = number of boxes shipped from plant B to distributor 4 Minimum C = 15xa1 + 18xa2 + 22xa3 + 26xa4 +
xc1 = number of boxes shipped from plant C to distributor 1
xc2 = number of boxes shipped from plant C to distributor 2 21xb1 + 25xb2 + 16xb3 + 23xb4 +
xc3 = number of boxes shipped from plant C to distributor 3 14xc1 + 19xc2 + 20xc3 + 24xc4
xc4 = number of boxes shipped from plant C to distributor 4
 The total monthly
purchase of each of the
four distributors are
1500, 2000, 2400, and
DISTRIBUTORS 3500 boxes. However,
PLANTS
1 2 3 4 there are limitations to
Plant A 15 18 22 26 the production
capacity of each plant:
Plant B 21 25 16 23
Plant A – 3, 000
Plant C 14 19 20 24
Plant B – 2, 700
Plant C – 3, 700
Decision Variables:
xa1 = number of boxes shipped from plant A to distributor 1 Constraints per distributors Constraints per plant
xa2 = number of boxes shipped from plant A to distributor 2
xa3 = number of boxes shipped from plant A to distributor 3 xa1 + xb1 + xc1 = 1, 500 xa1 + xa2 + xa3 + xa4 = 3, 000
xa4 = number of boxes shipped from plant A to distributor 4
xb1 = number of boxes shipped from plant B to distributor 1
xb2 = number of boxes shipped from plant B to distributor 2
xa2 + xb2 + xc2 = 2, 000 xb1 + xb2 + xb3 + xb4 = 2, 700
xb3 = number of boxes shipped from plant B to distributor 3
xb4 = number of boxes shipped from plant B to distributor 4
xc1 = number of boxes shipped from plant C to distributor 1
xa3 + xb3 + xc3 = 2, 400 xc1 + xc2 + xc3 + xc4 = 3, 700
xc2 = number of boxes shipped from plant C to distributor 2
xc3 = number of boxes shipped from plant C to distributor 3
xc4 = number of boxes shipped from plant C to distributor 4
xa4 + xb4 + xc4 = 3, 500
Structure of the Transportation Problem
The transportation problems are
presented in tabular form to make it easier
to apply and understand the
transportation algorithm. The following
are the rules on how to construct a
transportation table:
 Structure of the Transportation Problem
1. Each row in the transportation table contains the source of
supply, while each column is for the demand or destination point.
DISTRIBUTORS
Supply
1 2 3 4
Plant A

Plant B

Plant C
Structure of the Transportation Problem
2. The total available supply is written on the right
side of the table’s main body.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply

Plant A

Plant B

Plant C
Structure of the Transportation Problem
2. The total available supply is written on the right
side of the table’s main body.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply

Plant A 3000

Plant B 2700

Plant C 3700
 Structure of the Transportation Problem
3. The total requirements of each destination are given on the
lowest row of the main body of the table.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply

Plant A 3000

Plant B 2700

Plant C 3700

Requirements
 Structure of the Transportation Problem
3. The total requirements of each destination are given on the
lowest row of the main body of the table.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply

Plant A 3000

Plant B 2700

Plant C 3700

Requirements 1500 2000 2400 3500 9400

 Structure of the Transportation Problem
4. Cells in the main body of the table should correspond to
the decision variables.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply

Plant A 3000

Plant B 2700

Plant C 3700

Requirements 1500 2000 2400 3500 9400

 Structure of the Transportation Problem
4. Cells in the main body of the table should correspond to
the decision variables.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply

Plant A xa1 xa2 xa3 xa4 3000

Plant B xb1 xb2 xb3 xb4 2700

Plant C xc1 xc2 xc3 xc4 3700

Requirements 1500 2000 2400 3500 9400

 Structure of the Transportation Problem
5. At the corner of each table cell, the boxed – in value contains the
objective function coefficient of the decision variable.

DISTRIBUTORS Available
Supply
1 2 3 4 Supply

Plant A xa1 xa2 xa3 xa4 3000

Plant B xb1 xb2 xb3 xb4 2700

Plant C xc1 xc2 xc3 xc4 3700

Requirements 1500 2000 2400 3500 9400

 Structure of the Transportation Problem
5. At the corner of each table cell, the boxed – in value contains the
objective function coefficient of the decision variable.

DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A xa1 xa2 xa3 xa4 3000
21 25 16 23
Plant B xb1 xb2 xb3 xb4 2700
14 19 20 24
Plant C xc1 xc2 xc3 xc4 3700

Requirements 1500 2000 2400 3500 9400

Transportation Algorithm

Arrange the problem Is the

Obtain the initial Determine new
in the transportation solution If no
feasible solution optimal? solution
table.

If yes
Final
Solution
Obtaining the Initial Solution
After arranging the data in a transportation table, the
next step is to find an initial feasible solution that does
not violate the constraint. There are three methods to
obtain the initial solution to a transportation problem:
• Northwest Corner Method (NWC)

• Minimum Cost Method (MCM)

• Vogel’s Approximation Method (VAM)

Northwest Corner Method (NWC)

This is the most simple and logical

method of finding the initial solution. The
procedure begins by allocating units to the
upper left-hand corner and ends in the
lower right corner of the transportation
table.
 Northwest Corner Method (NWC)
Start in the upper left – hand corner cell (northwest corner) of the main
body of the table by putting the largest value that satisfies the supply
constraint and demand constraint.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 3000
21 25 16 23
Plant B 2700
14 19 20 24
Plant C 3700

Requirements 1500 2000 2400 3500 9400

 Northwest Corner Method (NWC)
Start in the upper left – hand corner cell (northwest corner) of the main
body of the table by putting the largest value that satisfies the supply
constraint and demand constraint.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 1500 3000
21 25 16 23
Plant B 2700
14 19 20 24
Plant C 3700

Requirements 1500 2000 2400 3500 9400

 Northwest Corner Method (NWC)
Once the supply constraint is satisfied, go to step 3. If not, move one
cell to the right in the same row. Place in the cell the largest value that
does not exceed both supply and demand constraints.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 1500 3000
21 25 16 23
Plant B 2700
14 19 20 24
Plant C 3700

Requirements 1500 2000 2400 3500 9400

 Northwest Corner Method (NWC)
Once the supply constraint is satisfied, go to step 3. If not, move one
cell to the right in the same row. Place in the cell the largest value that
does not exceed both supply and demand constraints.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 1500 3000
21 25 16 23
Plant B 2700
14 19 20 24
Plant C 3700

Requirements 1500 2000 2400 3500 9400

 Northwest Corner Method (NWC)
Once the supply constraint is satisfied, go to step 3. If not, move one
cell to the right in the same row. Place in the cell the largest value that
does not exceed both supply and demand constraints.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 1500 1500 3000
21 25 16 23
Plant B 2700
14 19 20 24
Plant C 3700

Requirements 1500 2000 2400 3500 9400

 Northwest Corner Method (NWC)
Once the entire supply in a particular row has been used up, move down to
the next cell located in the same column. Place in that cell the largest value
that does not exceed the demand. All values previously entered must be
considered.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 1500 1500 3000
21 25 16 23
Plant B 2700
14 19 20 24
Plant C 3700

Requirements 1500 2000 2400 3500 9400

 Northwest Corner Method (NWC)
Once the entire supply in a particular row has been used up, move down to
the next cell located in the same column. Place in that cell the largest value
that does not exceed the demand. All values previously entered must be
considered.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 1500 1500 3000
21 25 16 23
Plant B 500 2700
14 19 20 24
Plant C 3700

Requirements 1500 2000 2400 3500 9400

 Northwest Corner Method (NWC)
Once the entire supply in a particular row has been used up, move down to
the next cell located in the same column. Place in that cell the largest value
that does not exceed the demand. All values previously entered must be
considered.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 1500 1500 3000
21 25 16 23
Plant B 500 2700
14 19 20 24
Plant C 3700

Requirements 1500 2000 2400 3500 9400

 Northwest Corner Method (NWC)
Return to step 2 and 3 until all rows and columns are used up.

DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 1500 1500 3000
21 25 16 23
Plant B 500 2700
14 19 20 24
Plant C 3700

Requirements 1500 2000 2400 3500 9400

 Northwest Corner Method (NWC)
Return to step 2 and 3 until all rows and columns are used up.

DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 1500 1500 3000
21 25 16 23
Plant B 500 2200 2700
14 19 20 24
Plant C 200 3500 3700

Requirements 1500 2000 2400 3500 9400

 Northwest Corner Method (NWC)
Compute for the value of the objective function by multiplying the
value of each cell by the objective function coefficient “boxed – in”
value.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 1500 1500 3000
21 25 16 23
Plant B 500 2200 2700
14 19 20 24
Plant C 200 3500 3700

Requirements 1500 2000 2400 3500 9400

Northwest Corner Method (NWC)
Compute for the value of the objective function by multiplying the
value of each cell by the objective function coefficient “boxed – in”
value.
Supply-Demand Quantity Shipped Shipping Cost Total Cost

xa1 1500 15 22, 500

xa2 1500 18 27, 000

xb2 500 25 12, 500

xb3 2200 16 35, 200

xc3 200 20 4, 000

Xc4 3500 24 84, 000

Total Transportation Cost 185, 200

Minimum Cost Method (MCM)
It is a systematized procedure that is easy
to use and yields an initial solution that is
close to the optimal solution in small
problems. The allocation is made to the
cell with the most possible lowest cost or
the highest profit in a maximization case.
Minimum Cost Method (MCM)
Find the cell with the lowest unit cost.
Should there be a tie, choose randomly.
Place in this cell a value that exceeds
neither supply nor demand constraint.
Repeat this procedure until all supplies
and demands have been allocated.
 Minimum Cost Method (MCM)
Find the lowest shipment cost.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 3000
21 25 16 23
Plant B 2700
14 19 20 24
Plant C 3700

Requirements 1500 2000 2400 3500 9400

 Minimum Cost Method (MCM)
Find the lowest shipment cost.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 3000
21 25 16 23
Plant B 2700
14 19 20 24
Plant C 1500 3700

Requirements 1500 2000 2400 3500 9400

 Minimum Cost Method (MCM)
Find the next lowest shipment cost until we
satisfy the supply and demand constraints.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 3000
21 25 16 23
Plant B 2700
14 19 20 24
Plant C 1500 3700

Requirements 1500 2000 2400 3500 9400

 Minimum Cost Method (MCM)
Find the next lowest shipment cost until we
satisfy the supply and demand constraints.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 3000
21 25 16 23
Plant B 2700
14 19 20 24
Plant C 1500 3700

Requirements 1500 2000 2400 3500 9400

 Minimum Cost Method (MCM)
Find the next lowest shipment cost until we
satisfy the supply and demand constraints.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 3000
21 25 16 23
Plant B 2400 2700
14 19 20 24
Plant C 1500 3700

Requirements 1500 2000 2400 3500 9400

 Minimum Cost Method (MCM)
Find the next lowest shipment cost until we
satisfy the supply and demand constraints.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 3000
21 25 16 23
Plant B 2400 2700
14 19 20 24
Plant C 1500 3700

Requirements 1500 2000 2400 3500 9400

 Minimum Cost Method (MCM)
Find the next lowest shipment cost until we
satisfy the supply and demand constraints.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 2000 3000
21 25 16 23
Plant B 2400 2700
14 19 20 24
Plant C 1500 3700

Requirements 1500 2000 2400 3500 9400

 Minimum Cost Method (MCM)
Find the next lowest shipment cost until we
satisfy the supply and demand constraints.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 2000 3000
21 25 16 23
Plant B 2400 2700
14 19 20 24
Plant C 1500 3700

Requirements 1500 2000 2400 3500 9400

 Minimum Cost Method (MCM)
Find the next lowest shipment cost until we
satisfy the supply and demand constraints.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 2000 3000
21 25 16 23
Plant B 2400 300 2700
14 19 20 24
Plant C 1500 3700

Requirements 1500 2000 2400 3500 9400

 Minimum Cost Method (MCM)
Find the next lowest shipment cost until we
satisfy the supply and demand constraints.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 2000 3000
21 25 16 23
Plant B 2400 300 2700
14 19 20 24
Plant C 1500 2200 3700

Requirements 1500 2000 2400 3500 9400

 Minimum Cost Method (MCM)
Find the next lowest shipment cost until we
satisfy the supply and demand constraints.
DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 2000 1000 3000
21 25 16 23
Plant B 2400 300 2700
14 19 20 24
Plant C 1500 2200 3700

Requirements 1500 2000 2400 3500 9400

Minimum Cost Method (MCM)
Compute for the value of the objective function by multiplying the
value of each cell by the objective function coefficient “boxed – in”
value.
Supply-Demand Quantity Shipped Shipping Cost Total Cost

Xc1 1500 14 21, 000

xa2 2000 18 36, 000

xb3 2400 16 38, 400

Xb4 300 23 6, 900

Xc4 2200 24 52, 800

Xa4 1000 26 26, 000

Total Transportation Cost 181, 100

Vogel’s Approximation Method (VAM)
An algorithm that obtains the initial
feasible solution by determining the
penalty cost of not using the lowest
cost rule. This methods results in an
optimal or near optimal as an initial
solution
 Vogel’s Approximation Method (VAM)
Subtract the lowest and the second lowest values in each row and
column. Select the row and column with the largest opportunity cost.

DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 3000
21 25 16 23
Plant B 2700
14 19 20 24
Plant C 3700

Requirements 1500 2000 2400 3500 9400

Vogel’s Approximation Method (VAM)
Subtract the lowest and the second lowest values in each row and
column. Select the row and column with the largest opportunity cost.
Row/ Column 2nd Lowest Cost 1st Lowest Cost Opportunity Cost

Row 1 18 15 3 Since Row 2 and 3

have the highest
Row 2 21 16 5
opportunity cost at
Row 3 19 14 5 5, we can choose
any of the two
Column 1 15 14 1 values.

Column 2 19 18 1

Column 3 20 16 4

Column 4 24 23 1
 Vogel’s Approximation Method (VAM)
Put the largest value that satisfies the supply constraints on the cell with the
lowest cost located on the row/ column with the highest opportunity cost.

DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 3000
21 25 16 23
Plant B 2700
14 19 20 24
Plant C 3700

Requirements 1500 2000 2400 3500 9400

 Vogel’s Approximation Method (VAM)
Put the largest value that satisfies the supply constraints on the cell with the
lowest cost located on the row/ column with the highest opportunity cost.

DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 3000
21 25 16 23
Plant B 2400 2700
14 19 20 24
Plant C 3700

Requirements 1500 2000 2400 3500 9400

 Vogel’s Approximation Method (VAM)
Remove rows with no available supply and columns with no unsatisfied
demand.

DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 3000
21 25 16 23
Plant B 2400 2700
14 19 20 24
Plant C 3700

Requirements 1500 2000 2400 3500 9400

 Vogel’s Approximation Method (VAM)
Remove rows with no available supply and columns with no unsatisfied
demand.
DISTRIBUTORS Availabl Row/ 2nd Lowest 1st Lowest Opportunity
Supply e Column Cost Cost Cost
1 2 3 4 Supply Row 1 18 15 3
15 18 22 26 Row 2 23 21 2
Plant A
3000
Row 3 19 14 5
Plant B 21 25 16 23
2400 2700 Column 1 15 14 1
Plant C 14 19 20 24
Column 2 19 18 1
3700
Require Column 4 24 23 1
ments 1500 2000 2400 3500 9400
 Vogel’s Approximation Method (VAM)
Remove rows with no available supply and columns with no unsatisfied
demand.
DISTRIBUTORS Availabl Row/ 2nd Lowest 1st Lowest Opportunity
Supply e Column Cost Cost Cost
1 2 3 4 Supply Row 1 18 15 3
15 18 22 26 Row 2 23 21 2
Plant A
3000
Row 3 19 24 5
Plant B 21 25 16 23
2400 2700 Column 1 15 14 1
Plant C 14 19 20 24
Column 2 19 18 1
1500 3700
Require Column 4 24 23 1
ments 1500 2000 2400 3500 9400
 Vogel’s Approximation Method (VAM)
Remove rows with no available supply and columns with no unsatisfied
demand.
DISTRIBUTORS Availabl Row/ 2nd Lowest 1st Lowest Opportunity
Supply e Column Cost Cost Cost
1 2 3 4 Supply Row 1 18 15 3
15 18 22 26 Row 2 23 21 2
Plant A
3000
Row 3 19 24 5
Plant B 21 25 16 23
2400 2700 Column 1 15 14 1
Plant C 14 19 20 24
Column 2 19 18 1
1500 3700
Require Column 4 24 23 1
ments 1500 2000 2400 3500 9400
 Vogel’s Approximation Method (VAM)
Remove rows with no available supply and columns with no unsatisfied
demand.
DISTRIBUTORS Availabl Row/ 2nd Lowest 1st Lowest Opportunity
Supply e Column Cost Cost Cost
1 2 3 4 Supply Row 1 26 18 8
15 18 22 26 Row 2 25 23 2
Plant A
3000
Row 3 24 19 5
Plant B 21 25 16 23
2400 2700 Column 2 19 18 1
Plant C 14 19 20 24
Column 4 24 23 1
1500 3700
Require
ments 1500 2000 2400 3500 9400
 Vogel’s Approximation Method (VAM)
Remove rows with no available supply and columns with no unsatisfied
demand.
DISTRIBUTORS Availabl Row/ 2nd Lowest 1st Lowest Opportunity
Supply e Column Cost Cost Cost
1 2 3 4 Supply Row 1 26 18 8
15 18 22 26 Row 2 25 23 2
Plant A
3000
Row 3 24 19 5
Plant B 21 25 16 23
2400 2700 Column 2 19 18 1
Plant C 14 19 20 24
Column 4 24 23 1
1500 3700
Require
ments 1500 2000 2400 3500 9400
 Vogel’s Approximation Method (VAM)
Remove rows with no available supply and columns with no unsatisfied
demand.
DISTRIBUTORS Availabl Row/ 2nd Lowest 1st Lowest Opportunity
Supply e Column Cost Cost Cost
1 2 3 4 Supply Row 1 26 18 8
15 18 22 26 Row 2 25 23 2
Plant A
2000 3000
Row 3 24 19 5
Plant B 21 25 16 23
2400 2700 Column 2 19 18 1
Plant C 14 19 20 24
Column 4 24 23 1
1500 3700
Require
ments 1500 2000 2400 3500 9400
 Vogel’s Approximation Method (VAM)
Remove rows with no available supply and columns with no unsatisfied
demand.
DISTRIBUTORS Availabl Row/ 2nd Lowest 1st Lowest Opportunity
Supply e Column Cost Cost Cost
1 2 3 4 Supply Row 1 26 18 8
15 18 22 26 Row 2 25 23 2
Plant A
2000 3000
Row 3 24 19 5
Plant B 21 25 16 23
2400 2700 Column 2 19 18 1
Plant C 14 19 20 24
Column 4 24 23 1
1500 3700
Require
ments 1500 2000 2400 3500 9400
 Vogel’s Approximation Method (VAM)
Remove rows with no available supply and columns with no unsatisfied
demand.
DISTRIBUTORS Availabl
Supply e
1 2 3 4 Supply
15 18 22 26
Plant A
2000 1000 3000
Plant B 21 25 16 23
2400 300 2700
Plant C 14 19 20 24
1500 2200 3700
Require
ments 1500 2000 2400 3500 9400
 Vogel’s Approximation Method (VAM)
Remove rows with no available supply and columns with no unsatisfied
demand.
Supply- Quantity Shipping Total Cost
DISTRIBUTORS Availabl
Demand Shipped Cost
Supply e
Supply Xc1 1500 14 21, 000
1 2 3 4
15 18 22 26 xa2 2000 18 36, 000
Plant A
2000 1000 3000 xb3 2400 16 38, 400
Plant B 21 25 16 23
Xb4 300 23 6, 900
2400 300 2700
Plant C 14 19 20 24 Xc4 2200 24 52, 800
1500 2200 3700
Xa4 1000 26 26, 000
Require
ments 1500 2000 2400 3500 9400 Total Transportation Cost 181, 100
Obtaining the Optimal Solution

Our goal is to evaluate the net

contribution of the routes that were not
used. We need to determine how much
will be the increase or decrease in the
objective function if any of the unused
cells will be included in the route.
Obtaining the Optimal Solution

There are two alternative

procedures that are used to evaluate
the used routes:
1. Stepping Stone Method (SSM)
2. Modified Distribution (MODI)
Stepping Stone Method (SSM)

The easiest to visualize and

understand. Its purpose is to
determine the effect of the total
shipping cost should one unit of goods
are to be delivered through unused
routes.
 Stepping Stone Method (SSM)
Evaluate the net contribution of unused route.

DISTRIBUTORS Available
Supply
1 2 3 4 Supply
15 18 22 26
Plant A 1500 1500 3000
21 25 16 23
Plant B 500 2200 2700
14 19 20 24
Plant C 200 3500 3700

Requirements 1500 2000 2400 3500 9400

 Stepping Stone Method (SSM)
Evaluate the net contribution of unused route.
Availa Adjustments Cost
DISTRIBUTORS
Suppl ble Cell a3 +22
y 1 2 3 4 Suppl Cell b3 -16
y Cell b2 +25
15 - 18 + 22 26
Plant A 1500 1500 3000 Cell a2 -13
21 + 25 - 16 23
Plant B 500 2200 2700
Net Contribution +13

Plant C 14 19 20 24
200 3500 3700
Requir
ements 1500 2000 2400 3500 9400
 Stepping Stone Method (SSM)
Evaluate the net contribution of unused route.
Availa Adjustments Cost
DISTRIBUTORS
Suppl ble Cell a4 +26
y 1 2 3 4 Suppl Cell c4 -24
y Cell c3 +20
15 - 18 22 + 26
Plant A 1500 1500 3000 Cell b3 -16
21 + 25 - 16 23
Plant B 500 2200 2700
Cell b2 +25

+ - Cell a2 -18
Plant C 14 19 20 24
200 3500 3700 Net Contribution +13
Requir
ements 1500 2000 2400 3500 9400
 Stepping Stone Method (SSM)
Evaluate the net contribution of unused route.
Availa Adjustments Cost
DISTRIBUTORS
Suppl ble Cell b4 +23
y 1 2 3 4 Suppl Cell c4 -24
y Cell c3 +20
15 18 22 26
Plant A 1500 1500 3000 Cell b3 -16
21 25 - 16 + 23
Plant B 500 2200 2700
Net Contribution +3

14 19 + 20 - 24
Plant C 200 3500 3700
Requir
ements 1500 2000 2400 3500 9400
 Stepping Stone Method (SSM)
Evaluate the net contribution of unused route.
Availa Adjustments Cost
DISTRIBUTORS
Suppl ble Cell c2 +19
y 1 2 3 4 Suppl Cell c3 -20
y Cell b3 +16
15 18 22 26
Plant A 1500 1500 3000 Bell b2 -25
21 - 25 + 16 23
Plant B 500 2200 2700
Net Contribution -10

14 + 19 - 20 24
Plant C 200 3500 3700
Requir
ements 1500 2000 2400 3500 9400
 Stepping Stone Method (SSM)
Evaluate the net contribution of unused route.
Availa Adjustments Cost
DISTRIBUTORS
Suppl ble Cell b1 +21
y 1 2 3 4 Suppl Cell a1 -15
y Cell a2 +18
- 15 18 22 26
Plant A 1500
+
1500 3000 Cell b2 -25
+ 21 - 25 16 23
Plant B 500 2200 2700
Net Contribution -1

Plant C 14 19 20 24
200 3500 3700
Requir
ements 1500 2000 2400 3500 9400
 Stepping Stone Method (SSM)
Evaluate the net contribution of unused route.
Availa Adjustments Cost
DISTRIBUTORS
Suppl ble Cell c1 +14
y 1 2 3 4 Suppl Cell a1 -15
y Cell a2 +18
- 15 + 18 22 26
Plant A 1500 1500 3000 Cell b2 -25
21 - 25 16 23
Plant B + Cell b3 +16
500 2200 2700
- Cell c3 -20
Plant C + 14 19 20 24
200 3500 3700 Net Contribution -12
Requir
ements 1500 2000 2400 3500 9400
 Stepping Stone Method (SSM)
Test for optimality.
Availa Adjustments Cost
DISTRIBUTORS
Suppl ble Cell a3 +13
y 1 2 3 4 Suppl Cell a4 +13
y Cell b1 -1
15 18 +13 22 +13 26
Plant A 1500 1500 3000 Cell b4 +3
-1 21 25 16 +3 23
Plant B 500 2200 2700
Cell c1 -12

Cell c2 -10
Plant C -12 14 -10 19 20 24
200 3500 3700 Net Contribution +6
Requir
ements 1500 2000 2400 3500 9400
Stepping Stone Method (SSM)
Select New route.
Select the route with the DISTRIBUTORS Availa
smallest or most negative Suppl ble
net contribution for y 1 2 3 4 Suppl
y
minimization case. 15 18 +13 22 +13 26
Plant A 1500 1500 3000
-1 21 25 16 +3 23
Plant B 500 2200 2700
Plant C -12 14 -10 19 20 24
200 3500 3700
Requir
ements 1500 2000 2400 3500 9400
Stepping Stone Method (SSM)
Select New route.
Select the route with the DISTRIBUTORS Availa
smallest or most negative Suppl ble
net contribution for y 1 2 3 4 Suppl
y
minimization case. 15 18 +13 22 +13 26
Plant A 1500 1500 3000
-1 21 25 16 +3 23
Plant B 500 2200 2700
Plant C -12 14 -10 19 20 24
200 3500 3700
Requir
ements 1500 2000 2400 3500 9400
Stepping Stone Method (SSM)
Determine the quantity
of goods to ship over DISTRIBUTORS Availa
the selected route. Suppl
y
ble
Suppl
1 2 3 4
The highest value to be 15 18 +13 22 +13 26
y

assigned is equal to the Plant A 1500 1500 3000

negative corner of the Plant B -1 21
500
25
2200
16 +3 23
2700
closed path that has the Plant C -12 14 -10 19
200
20
3500
24
3700
lowest value. Requir
ements 1500 2000 2400 3500 9400
Stepping Stone Method (SSM)
Determine the quantity DISTRIBUTORS Availa
of goods to ship over Suppl ble
the selected route. y 1 2 3 4 Suppl
y
The highest value to be Plant A -
1500
15 +
1500
18 22 26
3000
assigned is equal to the Plant B 21 -
500
25 +
2200
16 23
2700
negative corner of the Plant C + 14 19 - 20 24
200 3500 3700
closed path that has the Requir
lowest value. ements 1500 2000 2400 3500 9400
Stepping Stone Method (SSM)
Determine the quantity DISTRIBUTORS Availa
of goods to ship over Suppl ble
the selected route. y 1 2 3 4 Suppl
y
The highest value to be Plant A -200
1500
15 +200 18
1500
22 26
3000
assigned is equal to the Plant B 21 -200
500
25 +200 16
2200
23
2700
negative corner of the Plant C +200 14 19 -200 20 24
200 3500 3700
closed path that has the Requir
lowest value. ements 1500 2000 2400 3500 9400
Stepping Stone Method (SSM)
Develop a new solution. DISTRIBUTORS Availa
Suppl ble
y 1 2 3 4 Suppl
y
15 18 22 26
Plant A 1300 1700 3000
Plant B 21 25 16 23
300 2400 2700
Plant C 14 19 20 24
200 0 3500 3700
Requir
ements 1500 2000 2400 3500 9400
Stepping Stone Method (SSM)
Develop a new solution.
Supply- Quantity Shipping Total Cost
Demand Shipped Cost
DISTRIBUTORS Xa1 1300 15 19, 500
Available
Supply
Supply xa2 1700 18 30, 600
1 2 3 4
Xb2 300 25 7, 500
15 18 22 26
Plant A 1300 1700 3000 Xb3 2400 16 38, 400

Plant B 21 25 16 23 Xc1 200 14 2, 800

300 2400 2700
Xc4 3500 24 84, 000
Plant C 14 19 20 24
200 0 3500 3700 Total Transportation Cost 182, 800
Requir
ements 1500 2000 2400 3500 9400
ACTIVITY

• Find the optimal solution of the

problem using the stepping stone
method. Continue the solution until
no negative value in the evaluation of
unused routes.