COLLEGE OF BUSINESS & ECONOMICS

BAHIR DAR UNIVERSITY

The transportation and the assignment problems

Instructor: Anteneh Eshetu

Date: March 2017

Introduction

The transportation and the assignment models are special linear programming models. The
problems treated in these models can be formulated as linear programs and can be solved using
the simplex method. But, their special structure allows us to solve these models using more
efficient methods. Applications of the transportation and assignment problems tend to require a
very large number of constraints and variables, so a straightforward application of the simplex
method may demand heavily on computational effort. Fortunately, a key characteristic of these
problems is that most of the coefficients associated with the variables in the constraints are zeros,
and the relatively few nonzero coefficients appear in a distinctive pattern. As a result, it has been
possible to develop special algorithms that achieve dramatic computational savings by exploiting
this special structure of the problems. Therefore, it is important to become sufficiently familiar
with these special types of problems that you can recognize them when they arise and apply the
proper computational procedure. This chapter introduces the two models and their solution
techniques.

The Transportation problem

Consider the following problem. A certain product is manufactured in m plants located in different
places. The product is then sent to n different markets. The cost of transporting a unit of the
product from plant i to market j is Cij. In a given period, each plant can produce only a certain
maximum amount of the product and each market has a certain maximum amount of demand for
the product. The problem is to determine the transportation schedule that minimizes the total cost
of transporting the product from the different plants to the different markets while satisfying
demand and capacity constraints. This is a typical transportation problem. The more general
description of the model is presented below.

The model

There are m sources, and n destinations. The demand at destination j is 𝑑𝑗 and the supply amount
at source 𝑖 is 𝑆𝑖 . Letting Z be the total distribution (transportation) cost and xij (i = 1, 2, . . . , m; j

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= 1, 2, . . . , n) be the number of units to be distributed from source i to destination j, the linear
programming formulation of the transportation problem is

𝑚 𝑛
Minimize 𝑍 = 𝑖=1 𝑗 =1 𝑐�𝑖𝑗 𝑥𝑖𝑗

𝑚
Subject to 𝑖=1 𝑥𝑖𝑗 = 𝑑𝑗 𝑓𝑜𝑟 𝑗 = 1,2 … . , 𝑛

𝑛
𝑗=1 𝑥𝑖𝑗 = 𝑠𝑖 𝑓𝑜𝑟 𝑖 = 1,2 … . , 𝑚

and

𝑥𝑖𝑗 ≥ 0 𝑓𝑜𝑟 𝑎𝑙𝑙 𝑖 𝑎𝑛𝑑 𝑗

The first set of constraints is the demand constraints and the second set is the set of supply
constraints. The final constraints are the usual non negativity constraints.

The model is clearly a LP model that can be solved using the original simplex method.
Nonetheless, the transportation problem has a unique structure that enables us to use a more
efficient solution technique. Also note that though we described the model purely in terms of
moving goods from some locations to other locations, the model is more general than this. Many
problems other than transportation of goods can be modeled and solved as transportation
problems.

In tabular form, the transportation problem looks the one shown below:

𝑥11 𝑥12 … … … . . 𝑥1𝑛 𝑠1

𝑥21 𝑥22 … … … . . 𝑥2𝑛 𝑠2
. . . . .
. . . . .
𝑥𝑚1 𝑥𝑚2 . 𝑥𝑚𝑛 𝑠𝑚
𝑑 𝑑 . 𝑑 𝐷=𝑆

The only data needed to solve a transportation problem are the supplies, demands, and unit
transportation costs. These are the parameters of the model. All these parameters can be summarized
conveniently in a single parameter table as shown below.

Parameter table for the transportation problem

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𝑠𝑜𝑢𝑟𝑐𝑒𝑠/𝑑𝑒𝑠𝑡𝑖𝑛𝑎𝑡𝑖𝑜𝑛 1 2 … … … . . 𝑛 𝑠𝑢𝑝𝑝𝑙𝑦
1 𝑐11 𝑐12 … … … . . 𝑐1𝑛 𝑠1
2 𝑐21 𝑐22 … … … . . 𝑐2𝑛 𝑠2
. . . . . .
. . . . . .
𝑚 𝑐𝑚1 𝑐𝑚2 . 𝑐 𝑚𝑛 𝑠𝑚
𝑑𝑒𝑚𝑎𝑛𝑑 𝑑1 𝑑2 . 𝑑𝑛 𝐷 = 𝑆

The objective is to minimize the total cost of distributing the units. All the parameters of the
model are included in this parameter table. Any problem (whether involving transportation or not)
fits the model for a transportation problem if it can be described completely in terms of a parameter
table like the table above and it satisfies the assumptions underlying the model, as described below.

Properties

The following assumptions and properties characterize the transportation problem.

The requirements assumption: Each source has a fixed supply of units, where this entire supply
must be distributed to the destinations. (We let si denote the number of units being supplied by
source i, for i=1, 2, . . . , m.) Similarly, each destination has a fixed demand for units, where this
entire demand must be received from the sources. (We let dj denote the number of units being
received by destination j, for j =1, 2, . . . , n.)

This assumption that there is no leeway in the amounts to be sent or received means that there
needs to be a balance between the total supply from all sources and the total demand at all
destinations.

The feasible solutions property: A transportation problem will have feasible solutions if and
only if

𝑠𝑖 = 𝑑�𝑗

The cost assumption: The cost of distributing units from any particular source to any particular
destination is directly proportional to the number of units distributed. Therefore, this cost is just the
unit cost of distribution times the number of units distributed. (We let cij denote this unit cost for source i
and destination j.)

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 Integer solutions property: For transportation problems where every si and dj has an integer
value, all the basic variables (allocations) in every basic feasible (BF) solution (including an optimal
one) also have integer values.

Solving the transportation problem

The following is a summary of the steps and procedures used to solve a transportation problem.

Step 1: Initialization

Construct an initial basic feasible (BF) solution by using any of the four techniques - North West
corner method, minimum cell cost method, or Vogel’s approximation method, Russel’s approximation method-
briefly outlined below.

The Northwest corner method

The steps of the northwest corner method are summarized below

1. Allocate as much as possible to the cell in the upper left-hand corner, subject to the supply and
demand constraints (row and column requirements)
2. Allocate as much as possible to the next adjacent feasible cell
3. Repeat step 2 until all row/column requirements have been met

The minimum cost (least cost) cell method

The minimum cost cell method requires allocations to be made taking into account cost. The
method involves the following steps

1. Locate a cell with the smallest unit cost (if there are two or more such cells with equal unit cost,
choose one arbitrarily). Allocate as much as possible to the feasible cell with the minimum
transportation cost, and adjust the row/column requirements. The maximum that can be allocated
to a cell is always the minimum of remaining demand (column) and supply (row) constraints.
2. Repeat step 1 until all row/column requirements have been met by making allocations to each
consecutive cell with the next smallest cost.

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 Vogel’s approximation method

Vogel‘s approximation method (VAM) also is based on cost but in a way that also accounts for
opportunity costs. This method involves the following steps

1. Determine the penalty cost for each row and column by subtracting the smallest cost in the row or
column from the next smallest cost in the same row or column. That is, for each row and column
remaining under consideration, calculate its difference, which is defined as the arithmetic difference
between the smallest and next-to-the-smallest unit cost cij still remaining in that row or column. (If two unit costs
tie for being the smallest remaining in a row or column, then the difference is 0.)
2. Select the row or column with the highest penalty cost (Ties for the largest difference may be
broken arbitrarily.)
3. Allocate as much as possible to the feasible cell with the lowest transportation cost in the row or
column with the highest penalty cost. Ties can be broken arbitrarily.
4. Repeat steps 1, 2 and 3 until all row/column requirements have been met. Each time when the next
allocation is to be made, determine the row and column penalty cost after excluding the cell to
which allocations are already made or no allocations are possible because of row or column
constraint limits have been reached in previous allocations.

Russell’s approximation method (Optional)

Russell‘s approximation method can be summarized by the following three steps

1. For each source row i remaining under consideration, determine its ui, which is the largest unit cost
cij still remaining in that row. For each destination column j remaining under consideration,
determine its vj, which is the largest unit cost cij still remaining in that column.
2. For each variable xij not previously selected in these rows and columns, calculate kij = cij - ui - vj.
3. Select the variable having the largest (in absolute terms) negative value of ij. (Ties may be broken
arbitrarily.)

Because the minimum cost cell method, Russell‘s approximation method and Vogel‘s
approximation methods consider cost in determining an initial basic feasible solution, the solution
obtained by these methods is closer to the optimal solution than the one found by the Northwest
corner method, which is blind to cost considerations as it simply requires allocations to start from
the Northwest corner of the table, without regard to cost.

Step 2: Optimality test

To test the optimality of the basic solution obtained by using any one of the above methods, use
either of the two alternative approaches below.

The stepping stone solution method

The stepping stone method involves the following two steps

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1. Determine the stepping stone paths. Construct a closed loop that starts and ends at an empty cell.
The loop is constructed from horizontal and vertical segments (no diagonal line is allowed).
Except for the entering variable cell (the empty cell currently you evaluated) each corner of the
closed loop must coincide with a basic variable (an occupied cell). Note that exactly one loop
exists for each entering variable (currently an empty cell).
2. Determine the cost changes for each empty cell (marginal cost of increasing that cell by one unit).
Since an increase in a current empty cell leads to a cycle of increases and decreases in other
occupied cells, the net (marginal) cost is determined by considering the unit cost increments and
decreases that the cycle of changes results. If every empty cell has a net cost greater or equal to
zero, the current solution is optimal. So, stop. If there are one or more cells with a negative net
cost, then proceed to an iteration.

The modified distribution method (MODI)

The modified distribution method is especially a very good method when dealing with large
transportation problems. The following two steps give a condensed description of the main steps
of the MODI method.

1. Derive ui and vj by selecting a row having the largest number of allocations, setting its ui=0 (or any
number you like, though this is the common practice) , and then solving the set of equations cij= ui
+ vi for each (i, j) such that xij is basic.
2. Compute the cost change kij for each empty cell (current non basic cells) using kij= cij - ui – vj. If cij -
ui - vj ≥0 for every (i, j) such that xij is nonbasic, then the current solution is optimal, so stop.
Otherwise, go to an iteration.

Simplex method explanation of the MODI method (optional)

The MODI method uses multipliers to determine marginal costs and entering variables. This
method is well grounded in duality theory. Considering the transportation model as ordinary linear
program and following the logic of the simplex method helps uncover this.

Given the original transportation model

𝑚 𝑛
Minimize 𝑍 = 𝑖=1 𝑗 =1 𝑐�𝑖𝑗 𝑥𝑖𝑗

𝑚
Subject to 𝑖=1 𝑥𝑖𝑗 = 𝑑𝑗 𝑓𝑜𝑟 𝑗 = 1,2 … . , 𝑛

𝑛
𝑗=1 𝑥𝑖𝑗 = 𝑠𝑖 𝑓𝑜𝑟 �礤� = 1,2 … . , 𝑚

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and

𝑥𝑖𝑗 ≥ 0 𝑓𝑜𝑟 𝑎𝑙𝑙 𝑖 𝑎𝑛𝑑 𝑗

The dual problem can be written as

𝑚 𝑛
Maximize 𝑍 = 𝑖=1 𝑎�𝑖 𝑢𝑖 + 𝑗 =1 𝑏�𝑗 𝑣𝑗

Subject to 𝑢𝑖 + 𝑣𝑗 ≤ 𝑐𝑖𝑗 𝑎𝑙𝑙 𝑖, 𝑎𝑛𝑑 𝑗

𝑢𝑖 𝑎𝑛𝑑 𝑣𝑗 𝑢𝑛𝑟𝑒𝑠𝑡𝑟𝑖𝑐𝑡𝑒𝑑

Where

ai=supply amount at source i

di=demand amount at destination j

cij=unit transportation cost from source i to destination j

ui=dual variable of the constraint associated with source i

vj=dual variable of the constraint assocaited with destination j

In the simplex method, the 𝐶𝑗 − 𝑍𝑗 row is used to determine the entering variable and the value
of the 𝐶�𝑗 − 𝑍𝑗 row is obtained as the difference between the left and right sides of the
corresponding dual constraint- that is, 𝑢𝑖 + 𝑣𝑗 −𝑐𝑖𝑗 . However, we know that this quantity must
equal zero for each basic variable, which then produces the following result:

𝑢𝑖 + 𝑣𝑗 = 𝑐𝑖𝑗 , 𝑓𝑜𝑟 𝑒𝑎𝑐𝑕 𝑏𝑎𝑠𝑖𝑐 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑥 𝑖𝑗

There are 𝑚 + 𝑛 − 1 such equations whose solution (after assuming an arbitrary value 𝑢1 = 0)
yield the multipliers 𝑢𝑖 𝑎𝑛𝑑 �, 𝑣𝑗. Once these multipliers are computed, the entering variable is
determined from all the non basic variables as the one having the largest negative 𝑢𝑖 + 𝑣𝑗 −𝑐𝑖𝑗.
This is, however, the very approach that the modified distribution method discussed above uses.
The assignment of an arbitrary value to one of the dual variables (𝑖. 𝑒. , 𝑢1 = 0 ) may appear

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 inconsistent with the simplex method. But, one can simply see that if the objective function
coefficients in the primal or the right hand side values in the dual constraints (𝑐𝑖𝑗 ) need not be
unique. That is, if (𝑐𝑖𝑗 ) is changed to (𝑐𝑖𝑗 + 𝑘 ) for all 𝑖, 𝑗 where 𝑘 is a constant, then the optimal
values of 𝑥𝑖𝑗 will remain the same. Hence, the use of an arbitrary value for a dual variable is
implicitly equivalent to assuming that a specific constant 𝑘 is added to all 𝑐𝑖𝑗 ,

Step 3: Iteration

If negative marginal cost values are obtained for one or more cells when we with either of the two
techniques, our conclusion is that the current BF solution is not optimal. To find a new feasible
solution that improves on the previous BF solution, we will reallocate from the current basic
variables to the cell that has the highest absolute value net cost margin. The iteration stage of the
transportation algorithm can be summarized as follows.

1. Determine the entering basic variable: Select the nonbasic variable xij having the largest (in absolute
terms) negative value of kij=cij –ui-vj.
2. Determine the leaving basic variable: Identify the chain reaction required to retain feasibility when
the entering basic variable is increased. From the donor cells, select the basic variable having the
smallest value. Allocate as much as possible to the empty cell that will result in the greatest net
decrease in cost.
3. Determine the new BF solution: Add the value of the leaving basic variable to the allocation for
each recipient cell. Subtract this value from the allocation for each donor cell.

Step 4: Repeat steps 2 through 3 until all kij values are positive or zero (until an optimal solution is
obtained)

Example: A coffee processing company has processing plants located in Awassa, Gonder and
Addis Ababa. The weekly demands for raw coffee in the three plants are 100 quintals, 200quintals
and 120 quintals, respectively. Raw coffee is supplied from the company‘s three coffee growing
farms located in Jimma, Harar and Nekemte. The three coffee farms can supply 80 quintals, 160
qunitals and 180 quintals of raw coffee per week, respectively. Transportation costs per quintal
from the three coffee farms to the three processing plants are given in the table below.

Table: Transportation cost data

Farm Transportation costs per quintal
Processing Plant
Awassa Gonder Addis Abeba
Jimma 60 90 40
Harer 100 160 120
Nekemte 120 100 80

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 The company wants to determine a transportation schedule that minimizes total cost of
transporting coffee from the three farms to the three processing plants

a) Develop the problem as a transportation model

b) Find an initial basic feasible solution for the problem using 1) Northwest corner method, 2) Minimum cost cell
method and 3) Vogel’s approximation method and 4) Russell’s approximation method
c) Determine the optimal solution for the problem using 1) the stepping stone method and 2) the MODI method

Solution

Let‘s see how the four step procedure outlined above can be used to solve this problem. To do
this, we need to organize the relevant data for the problem in a parameter table which will contain
all the information that we need to solve the problem. The parameter table that displays the unit
cost in each route, the demand in each plant and the capacity of each coffee farm is shown below.

Initial Basic feasible solution: As noted above, we have different alternative methods to
determine an initial basic feasible solution. We will consider first the application of these methods
to obtain an IBF solution for our problem.

Unit transport Total capacity of

cost for the route Jimma farm

Total demand at
Awassa plant

The Northwest corner method: In the NW corner method, we begin by making allocation in the upper-
left corner cell of the table (Jimma-Awassa route). In determining the amount of allocation that
can be made in this cell, and also in subsequent allocations, the rule we follow is maintaining
feasibility. That is, our allocation should satisfy both the row and column constraints that the

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candidate cell affects. Therefore, first let‘s consider the row constraint (the capacity of the Jimma
farm) for the upper-left corner cell of the table shown above. The supply capacity of the Jimma
farm is only 80 quintals of coffee. Clearly, we can‘t allocate to the Jimma-Awassa cell more than
this supply capacity of the farm. Otherwise, we will not maintain feasibility. Thus, the maximum
that we can allocate in this cell is 80 quintals. But, our allocation should also be feasible for the
column constraint (demand at the Awassa plant). Considering the column constraint (demand at
the Awassa plant), the maximum allocation possible is 100 quintals of coffee. Of the row and
column constraints, the row constraint is even more restrictive. Though the demand at the Awassa
plant allows an allocation up to 100 quintals, the supply capacity of the Jimma farm can‘t be
exceeded if we want to maintain feasibility for both constraints. Allocating 80 quintals to this cell
violates neither constraint.

Therefore, we allocate the maximum allowed amount of 80 tons to the Awassa-Jimma route. After
this allocation is made, there remains no more additional capacity in the Jimma farm because all
the capacity of this farm is already used to satisfy the demand at the Awassa plant. So, onwards
now we can ignore the Gonder and Addis plants in the Jimma row. The only way we can move to
make the next allocation is in the south direction to the second row in the first column. In the
second row and the first column, we find the Harar-Awassa route. How much can we allocate to
this route? Again, the answer is as much as we can as far as neither constraint that is affected by
this variable is violated. So, let‘s follow the same reasoning as in the previous case to determine
the maximum feasible allocation that we can make in this cell. First, remember that the demand at
the Awassa plant that is not yet sent is 20 quintals since we already have sent 80 quintals from the
Jimma farm. Therefore, the column constraint restricts our maximum possible allocation to 20
units. Since the available capacity in the Harare farm is 160 quintals (the row constraint), and the
column constraint is the more restrictive one, we allocate 20 quintals to this route.

There is no more demand left to be satisfied at the Awassa plant. We already have sent 80 quintals
from the Jimma farm and 20 quintals from the Harar farm with a total of 100 quintals, exactly the
amount demanded at the Awassa plant. This means that we can‘t allocate any more from the

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Nekemete farm to the Awassa plant. Thus, our way to the third row in the first column is closed.
On the other hand, the Haraer farm still has a remaining capacity of 140 quintals of coffee that it
can supply to other plants. Thus, our next feasible move is in the right direction in the Harar row.
When we follow this path, we immediately find the Harar-Gonder route. Now, how much can we
allocate to this route? In the second column, the Gonder plant is still waiting for shipments of 200
quintals of coffee. Since the remaining capacity in the Harar farm is only 140 quintals, the
maximum that can be allocated in this cell is determined by the capacity of the Harar farm.
Therefore, we allocate 140 quintals to the Harar-Gonder route.

Now, the Harar farm has reached its capacity of 160 quintals of coffee (20 quintals to Awassa and
140 quintals to Gonder have been sent). Therefore, we can ignore the Harar-Addis route from
further consideration. The only direction that we can move now is to the third row in the Gonder
column. Since only 140 quintals of the total 200 quintals of demand in the Gonder plant has been
satisfied, we now consider sending the remaining 60 quintals from the Nekemete farm. Again, this
is the maximum that can be allocated in this cell because the Nekemte farm has more capacity
than 40 quintals. When we allocate 60 quintals to this route, we are left with a remaining capacity
of 120 quintals of coffee in the Nekemete farm. On the other hand, the 120 quintals of coffee
demanded at the Addis Abeba plant has not yet been sent. Since the Nekemete-Addis route is the
only remaining feasible allocation, we simply allocate 120 quintals to the Nekemte-Addis route.

This completes our search for an initial basic feasible solution using the North West corner
method. The table below summarizes the process we followed so far.

Table: Summary of determination of initial BF solution using NW corner

Allocation Allocated cell Amount allocated
1 Jimma-Awassa 80
2 Harer-Awassa 20
3 Harer-Gonder 140
4 Nekemte-Gonder 60
5 Nekemte-Addis 120

The solution so obtained is non degenerate because exactly five cells out of nine cells are made. As
noted earlier a solution is non degenerate if the number of allocated cells equals m+n-1 where m is
the number of rows, and n is the number of columns. For our example, we have 3 rows and 3
columns. Thus, using the above rule, the number of cells that must be allocated are determined as
follows

3+3-1=5

This is the same as the number of cells that we have allocated using the NW corner method
above.

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The minimum cost cell method: Let‘s now demonstrate the minimum cost cell method to find an initial
basic feasible solution. This method has the advantage that it considers cost in making allocations.
As a consequence, the initial BF solution obtained using this method is closer to the optimal
solution, especially when compared with the NW corner method, which, as we saw, doesn‘t
consider cost in making allocations. With the minimum cost cell method we start by making the
largest feasible allocation to the cell with the smallest unit transportation cost. Therefore, we need
to locate a cell with the minimum unit transportation cost. As shown in the table below, the
Jimma-Addis route with a unit transportation cost of Birr 40 is the minimum cost cell for our
example. Therefore, our first allocation will be made to this cell. As in the NW corner method,
here also maintaining feasibility is our criteria to determine the maximum allowable allocation to a
cell. Specifically, our allocation to the Jimma-Addis route should not exceed both the demand at
the Addis Abeba plant and the capacity of the Jimma farm. This means that we can allocate no
more than 80 quintals of coffee in this cell (the smaller of the two constraints is 80 quintals).
Hence, our allocation will be restricted to this amount. This allocation is indicated in the table
below.

Next we locate the next smallest unit cost cell from the remaining cells. The next smallest cost is
Birr 60 (Awassa-Jimma route). But, since the capacity of the Jimma farm has already been reached
in the first allocation, it is not allowed to make any more allocation in this row. Hence, we skip the
Awassa-Jimma route. In other words, the maximum we can allocate is zero quintals of coffee in
this cell. When we proceed to next smallest unit cost cell, we find the Nekemte-Addis route, with a
unit cost of Birr 80. Here, the row constraint allows allocation up to 180 quintals. Nonetheless, we
are restricted only to a maximum of 40 quintals because of the column constraint (the Addis plant
has already been sent 80 quintals from Jimma and only 40 quintals remain to be sent). Now, we
should allocate 40 quintals to the Nekemte-Addis cell. This will reduce the remaining shipment to
the Addis plant to zero.

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Continuing this way, our next smallest cost is Birr 90 (Jimma-Gonder route). Since no more
allocation can be made in the Jimma row (we have zero remaining capacity), we again skip this cell.
Next, we have two contenders with equal unit cost of transportation: Harar-Awassa, and
Nekemte-Gonder. We can choose either of these arbitrarily. But, since the latter route offers the
largest possible allocation, let‘s choose the Nekemete-Gonder route first. In this route, we can
allocate up to 140 quintal (40 quintals out of 180 quintals of capacity in the Nekemte farm has
already been allocated to the Addis plant). Let‘s allocate 140 quintals to this route. This will leave
us with zero remaining capacity in the Nekemte farm. Our next lowest cost cell with positive
allocation allowed is the Harar-Awassa route, with a unit cost of Birr 100. Both the row and
column constraints for this cell allow a maximum of 100 quintals of allocation. Hence, we allocate
this amount to the Harar-Awassa route. Finally, we remain with the only possible cell to which
allocation can be made (the Harar-Gonder route). Therefore, allocate the remaining 60 quintals to
this cell. The table below summarizes the allocations we make to this point.

This completes the task. We have obtained an initial basic feasible solution using the minimum
cost cell method. Again we have five occupied cells with all constraints satisfied.

Allocation Allocated cell Amount allocated Unit cost

1 Jimma-Addis 80 40
2 Jimma-Awassa Infeasible 60
3 Nekemte-Addis 40 80
4 Jimma-Gonder Infeasible 90
5 Nekemte-Gonder 140 100
6 Harar-Awassa 100 100
7 Nekemte-Awassa Infeasible 120
8 Harar-Addis Infeasible 120
9 Harar-Gonder 60 160

Vogel’s Approximation Method: Our third method to find an initial basic feasible solution is Vogel‘s
Approximation Method (VAM). In this method, like in the minimum cost cell method, we take
cost into consideration when we make allocations. The difference between the two methods lies in
the nature of cost that is taken into account. In the minimum cost cell method, we simply compare
the unit cost of each route and allocate first to the cell with the smallest cost. In this sense, we
simply consider the face value of unit cost in the problem. With VAM, we also consider the
opportunity cost of making an allocation in a given route, besides just the unit cost given in the
original problem. In fact, the opportunity costs are computed using the original cost figures and
final allocation decision is also based on these figures.

The basic idea is to determine the minimum opportunity cost (regret) that will be incurred if an
allocation is made to the second lowest cost cell in a row or column when one can instead allocate
to the lowest cost cell in that row or column. Look at the table below. If we decide to allocate to
the Jimma-Awassa cell instead of the Jimma-Addis cell, we will incur an additional cost of Birr 20.
This is the minimum opportunity cost of allocating from the Jimma farm to cells other than the

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Jimma-Addis cell. Similarly, the difference between the second lowest cost (120) and the first
lowest cost (100) in the second row gives us the minimum opportunity cost for this row equal to
20. The final row also has the same opportunity cost (100-80=20). We do the same calculation for
the columns also. For the first column the first lowest cost is 60 and the second lowest cost is 100.
The difference is 40. Similar calculations give us the opportunity costs 10 and 40 for the second
and third columns, respectively.

20

20 20 20 40

20 20

40 10 40

20 60 40

Having determined the opportunity costs for all rows and columns, we will first allocate to the
row/column with the highest opportunity cost. Either the first or the third column can be
arbitrarily chosen. We choose the third column and allocate to the cell with the lowest cost in that
column. This cell is the Jimma-Addis route with a unit cost of Birr 40. The maximum that can be
allocated to this cell is 80 quintals. This is therefore our first allocation. Next, we again determine
the opportunity costs for the remaining rows and columns. Note that the first row is no more
considered in this calculation because no additional feasible allocations are available in that row.
When we compute the opportunity costs after excluding the first row cells, we obtain the values in
the second level cells outside the main table. The highest opportunity cost is 60 in the second
column. The lowest cost cell from the remaining cells in this column is 100. So, we allocate 180
units in the Nekemte-Gonder route. Again we proceed by computing the new opportunity costs
after excluding the third row. Note that the column opportunity costs are zero after this stage. The
highest opportunity cost now is in the second row (20). The maximum that can be allocated
Harar-Addis route (which has the lowest cost in the second row at this stage) is 40 quintals. This
allocation is shown in the table. Again, when we compute the opportunity cost, the highest cost is
40 again for the second row. This time the lowest cost cell is the Harar-Awassa route with a

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maximum feasible allocation of 100 quintals, which allocation is also shown in the table. Finally,
the only remaining cell is the Harar-Gonder route, to which we allocate 20 units, the only
remaining units to be allocated. This completes the solution.

Optimality Test

After we obtain an initial basic feasible solution, the next order of business is to check whether the
initial basic feasible solution is optimal. If it is, we stop here. Otherwise, we proceed to iteration to
find a new basic feasible solution. For our problem, let‘s first note that the solution obtained using
VAM is optimal, whereas the solution obtained using the minimum cost cell method and the NW
corner method are suboptimal. To illustrate the evaluation of optimality, let‘s continue from the IB
solution obtained using the Minimum cost method.

With the stepping stone method, we need to form a closed path that starts and ends in an empty
cell with its vertices located in an occupied cell. Lets us denote the net cost of increasing a current
non basic variable (empty cell) by ä𝑖𝑗 where i indicates the row and j indicates the column that the
cell is located in the table. For each empty cell we first form a closed path and determine this net
cost coefficient. For our IBF solution obtained using the minimum cost cell method (replicated
above), there are four empty cells (11, 12, 23, 31 where the numbers indicate row and column of
the cells respectively for each cell). For each of these empty cells, the closed paths, the net costs
and cell numbers are shown in the table below.

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 Cell Net cost Net cost Closed path
coefficient
11 ä11 =60-40+80-140+160-100=20 11-13-33-32-22-21-11
12 ä12 =90-40+80-100=30 12-13-33-32-22-12
23 ä23 =120-80+100-160=-20 23-33-32-22-23
31 ä31 =120-100+160-100=80 31-21-22-32-31

The net costs determined above suggest that the solution obtained using the minimum cost cell
method is not optimal because we have a negative net cost value (-20) for cell 23. Since the other
cells all have positive net cost value, we will therefore increase cell 23 by the maximum possible
amount. This is determine by the allocated amount in cells 22 and 33 whose allocation will be
reduced when we increase the amount in cell 23. Of the two cells, cell 33 has the minmum amount
of 40 units allocated. Since reduction beyond 40 units will result in an infeasible solution, we will
reduce by 40 units from both cells 22 and 33. To compensate for this we will add 40 units to cell
23 and cell 32. This will keep the constraint requirements satisfied. After this reallocation is made,
we obtain the following new basic feasible solution.

Again we need to determine if the above solution is optimal. To do this we once more identify
empty cells, determine a closed path for each empty cell and the net costs associated with each
empty cell. These calculations are shown in the table below.

Cell Net cost Net cost Closed path

coefficient
11 ä11 =60-40+120-100=40 11-13-23-21-11
12 ä12 =90-40+120-160=10 12-13-32-22-12
31 ä31 =120-100+160-100=80 31-21-22-32-31
23 ä33 =80-120+160-100=20 33-23-22-32-33

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 Now, since no empty cell has negative net cost value, then we conclude that the solution above is
optimal. The total cost of transportation is determined by summing the product of the allocations
and the respective unit costs of each of the allocated cells (the basic variables in the final solution
of the model.)

Tc=40*80+ 100*100+160*20+120*40+100*180

= Birr 39200

***To be continued……………..

Example: The transportation model can be applied not just to determine optimal quantity of
shipments between geographical locations. Other applications of the model are also possible. One
example is production scheduling. The following example provides an illustration.

A company produces a seasonal product that has demand during the months March to June. The
demand for the four months is estimated to be 100,200, 180 and 300 units, respectively. The
company uses part time labor to manufacture the products and, accordingly, its production
capacity varies monthly. The company can produce 50, 180, 280, and 270 units in March through
June, respectively. Because demand and production capacity don‘t match, a current month‘s
demand may be satisfied in one of three ways:

1. Current month‘s production: in which case the production cost per unit is 40 birr.
2. Surplus production in an earlier month: this incurs a holding cost of birr 0.5 per unit per month
3. Surplus production in a later month (backordering): a penalty cost of birr 2 is incurred per unit per
month for delay

The company wants to determine an optimal production schedule given the data above.

a) Develop a transportation model for the problem

b) Develop an initial basic feasible solution using each of the three methods discussed in this section (North-West corner
method, minimum cost cell method, and Vogel’s approximation method)
c) Determine the optimal production schedule for the four months using the MODI method

Additional cases in the transportation Problem

Some of the additional cases in the transportation problem are discussed below. These include
transportation problem with unbalanced demand and supply, routes that are not acceptable
(prohibited), degeneracy of basic feasible solution, and problems with maximization objective
function.

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Case 1: Unacceptable /prohibited routes

If shipment from source 𝑖 to destination 𝑗 is prohibited, the Big-M method can be used. We
simply assign a large positive cost value in the (𝑖, 𝑗) cell, the route that is prohibited.

Since the algorithm of the transportation problem is minimizing cost, this cell will not be a basic
variable because of its undesirable penalty cost.

Example: Steel mills in three cities produce the following amounts of steel

Location Weekly production(tons)

A 150
B 210
C 320

These mills supply steel to four cities where manufacturing plants have the following demand

Location Weekly demand (tons)

I 130
II 130
III 180
IV 240

Shipping costs per ton of steel are as follows

From To
I II III IV
A 14 9 16 18
B 11 8 7 16
C 16 12 10 22

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 Because of a truckers‘ strike, shipments are presently prohibited from city B to plant III.

a) Set up the transportation tableau for this problem

b) Determine the initial solution using the minimum cost cell method
c) Solve this model using Stepping stone method
d) Suppose in the above problem truckers have agreed to suspend their strike, and the route from city B to Plant III is
opened before steel is transported to plants. Will this change the optimal solution obtained above?

Case 2: Unbalanced demand and supply

Remember one of the properties of the transportation problem discussed at the beginning of this
chapter. The feasible solutions property says that for the transportation algorithm to generate a
basic feasible solution it is necessary that total supply and total demand are balanced. But this may
not be necessarily satisfied in actual situations. It is possible that total supply exceeds total demand
or vice versa. In some real problems, the supplies actually represent maximum amounts (rather
than fixed amounts) to be distributed. Similarly, in other cases, the demands represent maximum
amounts (rather than fixed amounts) to be received. Such problems do not quite fit the model for
a transportation problem because they violate the requirements assumption. However, it is possible to
reformulate these problems so that they then fit this model by introducing a dummy destination or a
dummy source to take up the slack between the actual amounts and maximum amounts being
distributed. Let‘s see each case in turn.

Case 2a: When total supply exceeds total demand

When total supply exceeds total demand, an additional column (dummy demand center) will be
added to the transportation table to absorb the excess supply. The new column will have a total
column value equal to the amount by which the amount total supply exceeds total demand.

Since the new demand center is just a fiction (or a mathematical trick, if you like) that does not
exist in reality, no real shipments will actually be made. Since no real shipment of goods is to be
made to this artificial center, no real money is spent for transportation. Therefore the unit
transportation costs for the cells in this dummy column are set equal to zero.

Example: A road construction company has contracted to construct three asphalt roads in three
sub cities of Addis Abeba: Arada, Kaliti, and Kirkos sub cities. The weekly demand for cement at
each of these project sites are 450 quintals, 290 quintals and 260 quintals, respectively. The
company‘s cement stock is stored in three stores located in three other sub cities in Addis- Kolfe ,
Bole, and Lideta sub cities. The maximum weekly capacity of the stores is 600 quintals, 400quintals
and 120 quintals of cement, respectively.

19 | P a g e
 Transportation costs per quintal of cement from each store to each project site are given in the
table below

Table: transportation cost data for the problem

Stores Transportation cost/ quintal of cement
Project site
Arada Kalitit Kirkos
Kolfe-Keranio 25 32 20

Bole 24 18 17

Lideta 16 14 12

a) Set up the initial basic feasible solution for this problem using Vogel’s approximation method
b) Solve the problem using the MODI method.

Case 2b: When total demand exceeds total supply

When total demand exceeds total supply a dummy row (additional supply center) will be added to
compensate for the excess demand quantity. Unit transportation cost for cells in the dummy row
will be zeroes because no actual units are transported in these routes.

Example: A concrete company transports concrete from three plants to three construction sites.
The supply capacities of the three plants, the demand requirements at the three sites, and the
transportation costs per ton are as follows.

Plants Construction site Supply

A B C
I 25 32 20 100
II 24 18 17 70
III 16 14 12 80
Demand 150 70 60

a) Set up the initial basic feasible solution for the problem using the Northwest corner method
b) Solve the problem using the stepping stone method.

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 Example: A company has four plants and four markets. An industrial product produced in the four
plants is distributed to the four warehouses. The supply capacities of the four plants, the demand
requirements at the four markets, and the transportation costs per unit of the product are as
follows

Plants Market Supply

A B C D
I 8 5 6 11 200
II 15 10 12 10 120
III 3 9 10 7 360
IV 11 14 6 9 120
Demand 350 150 160 200

a) Set up the initial basic feasible solution for the problem using the Vogel’s approximation method
b) Solve the problem using the MODI method.
c) Suppose in the above problem plant IV was suddenly hit by lightening and is out of function. What is the optimal
transportation schedule under this situation?

Case 3: Multiple optima

With the simplex algorithm discussed in the previous chapters you have seen that when non basic
variables in the final solution have a Cj-Zj value equal to zero it indicates that the non basic
variable with this value can be entered in to the basis without changing the optimal amount for the
objective function. Similarly, in the optimal transportation table if evaluation of unoccupied cells
results an opportunity cost (or kij=0) equal to zero it implies the existence of an alternate solution
that will give the same optimal transportation cost. Simply put, if unoccupied cell in an optimal
solution has opportunity cost of zero an alternative solution can be formed with another set of
allocations without increasing total transportation cost.

Example: Tobacco is stored in warehouses in four cities at the end of each growing season

Location Capacity (tons)

A 90
B 50
C 80
D 60
Total 280

These warehouses supply the following amounts of tobacco to cigarette companies in three cities

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 Location Capacity (tons)
1 120
2 100
3 110
Total 330

The railroad shipping costs per ton of tobacco are shown below. Because of railroad construction,
shipments are presently not allowed from A to 1.

From To
1 2 3
A 7 10 5
B 12 9 4
C 7 3 11
D 9 5 7

a) Set up the transportation tableau for this problem

b) Determine the initial solution using minimum cost cell method
c) Solve the model using MODI
d) Are there multiple optimal solutions? Explain. If there are alternative solutions identify them

Case 4: Degeneracy

A transportation table is said to be degenerate when the number of allocated cells in independent
positions is less than m+ n –1. In such cases it is impossible to evaluate unoccupied cells for
improvement. This is because we can‘t form a closed path (loop), with the stepping stone method,
and we can‘t determine the values of the index numbers (uj and vj), in the case of the MODI
method. Note again that a transportation table is non-degenerate if the number of occupied cells is
equal to a unit less than the number of rows plus the number of columns (ignoring total demand
row and total supply column). That is when,

Number of occupied cells = m+ n –1

Where m= number of rows

n= number of columns

To resolve degeneracy at the initial solution, we have to allocate to one or more unoccupied cells,
if necessary, a very small quantity Δ, called delta, whose value is so closer to zero (such as 0.001)

22 | P a g e
that it affects neither the supply constraint, nor the demand constraint, to which it is allocated, and
nor the total cost of transportation. The delta (Δ) value should be added to unoccupied cells so as
to make the determination of index numbers possible (specifically, when the MODI method is
used). When the final optimal solution is reached, the delta can be removed from the table.

Example: The following table is a hypothetical parameter table for a transportation problem in
which goods are transported from plants A, B, C to warehouses P, Q, R.

Plants Warehouses Supply

P Q R
A 5 3 7 10

B 4 5 8 20

C 7 6 4 30

Demand 10 15 35 S=D=60

Use the Northwest corner method to obtain an initial solution to the problem.

Case 5: Maximization transportation problem

Before concluding this chapter it is important to note that the transportation algorithm discussed
so far can be as much use for maximization problems as for minimization problems. How can we
get an optimal solution using the transportation algorithm? Converting the original table in to an
opportunity cost table, which is equivalent to a minimization problem, can do this. Thus, when a
transportation problem has a maximization objective function, first identify the cell with the
largest unit profit/revenue in the entire table and convert unit profits/revenues in each of the cells
in to opportunity costs by subtracting each from the maximum unit profit/revenue. The rationale
here is that the difference between the largest profit/revenue value and each of the revenue/profit
in the transportation cells represents the amount of unit profit/revenue that would be lost if a
product is transported to each of the other cells other than the cell that has the largest unit profit.
When this is applied to determine an opportunity cost table, the cell with the largest
revenue/profit will have a zero opportunity cost. Hence, now the objective is minimizing loss
resulting from allocations to cells other than the cell with the largest unit profit/revenue. Once the
original table is converted into an opportunity cost table we can proceed with the procedures used
to solve a minimization problem.

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 Example: The National Parks Service is receiving four bids for logging at three pine forests in
Arkansas. The three locations include 10000, 20000 and 30000 acres. A single bidder can bid for at
most 50% of the total acreage available. The bids per acre at the three locations are given in the
table below.

Location
Bidder 1 2 3
1 520 210 570
2 - 510 495
3 650 - 240
4 180 430 710

Bidder 2 doesn‘t wish to bid on location 1 and bidder 3 can‘t bid on location 2.

a) Formulate the problem as a transportation problem

b) Determine an initial basic feasible solution using North-West corner method
c) Determine the acreage that should be assigned to each of the four bidders (use MODI)

Case 5: Transshipment: The more general transportation model

In the standard transportation model we considered the possibility of only direct shipments
between sources and destinations. But, sometimes it may be the case that intermediate shipments
may have to be made before goods are sent to final destination centers. It may be cheaper to ship
through transient/intermediate nodes before reaching the final destination, for instance. Solving
these types of problems poses no special challenge. The transportation algorithm can be used to
solve these types of problems once the right adjustments are made in developing the parameter
table.

Example: A company has three plants where a product is manufactured. The final product is sold
in three markets. The company has two general options to transport the product from the three
plants to the market centers. The first option is to directly ship product from plants to markets
using rail transport. The second option is to ship the product first to a port from which the
product is shipped by sea. The unit costs of shipping using these alternatives are shown in the
table below. Demand for the product in the three markets is: 300, 110, and 112 in market I,
market II, and market III, respectively. The total production capacity of the plants is: 122, 200, and
200 at plant I, plant II, and plant III, respectively.

Markets
Plants/sources Port Market I Market II Market III
Plant I 12 22 24 21

24 | P a g e
 Plant II 14 19 17 22
Plant III 11 27 26 20
Port 0 11 15 12

Determine the optimal schedule of transporting the product to the three market centers.

Try to see if you can solve this problem as a transportation problem. The key to do this is to note
that since the Port is a transshipment center, it is simultaneously a source and a destination with
net demand/net supply=0. Thus, simply determine the sum of the demand at the final
destinations, the supplies from the other sources and assign the highest value of the two as the
supply/demand of the transshipment center (the Port, in this example). Then assign a unit
transportation cost of large positive number (the Big-M method is around again) to the cell at the
intersection of the row Port and Column Port (this simply means that shipment from port to port
is unacceptable).

Exercises

Problem 1: PM computer services produces personal computers from component parts it buys on
the open market. The company can produce a maximum of 300 personal computers per month.
PM wants to determine its production schedule for the first six months of the New Year. The cost
to produce a personal computer in January will be 1200. However, PM knows the cost of
component parts will decline each month such that the overall cost to produce a PC will be 5%
less each month. The cost of holding in inventory is 15 per unit per month. Following is the
demand for the company‘s computers per month.

Month Demand Month Demand

January 180 April 210
February 260 May 400
March 340 June 320

Determine a production schedule for PM that will minimize total cost.

Suppose in the above problem the demand for personal computers increased each month as
follows:

Month Demand Month Demand

January 410 April 620
February 320 May 430
March 500 June 380

25 | P a g e
 In addition to regular production capacity of 300 units per month, PM computers services can also
produce an additional 200 computers per month using over time. Overtime production adds 20%
to the cost of a personal computer.

a) Formulate the problem as a transportation problem

b) Determine a production schedule for PM that will minimize total cost.

Problem 2: A caterer is booked to cater a banquet each evening for the next 6 days. He requires
100,130,150, 140, 135,115 clean napkins for the six day evenings, respectively. He may send dirty
napkins to the laundry, which has two speeds of service—fast and slow. The napkins sent to the
fast service will be ready for the next day‘s banquet; those sent to the slow service will be ready for
the banquet two days later. Fast and slow service cost 6 birr and 4 birr per napkin, respectively.
The caterer may also purchase new napkins at any time at cost 12. He wishes to minimize the total
cost of supplying fresh napkins.

a) Formulate the problem as a transportation problem.

b) Solve the problem using the transportation algorithm

Problem 3: Tom would like 3 pints of home brew today and an additional 4 pints of home brew
tomorrow. Dick is willing to sell a maximum of 5 pints total at a price of $3.00 per pint today and
$2.70 per pint tomorrow. Harry is willing to sell a maximum of 4 pints total at a price of $2.90 per
pint today and $2.80 per pint tomorrow. Tom wishes to know what his purchases should be to
minimize his cost while satisfying his thirst requirements.
a) Formulate a linear programming model for this problem, and construct the initial simplex tableau
b) Formulate this problem as a transportation problem by constructing the appropriate parameter table.
c) Obtain an optimal solution

Problem 4: A contractor, Susan Meyer, has to haul gravel to three building sites. She can purchase as
much as 18 tons at a gravel pit in the north of the city and 14 tons at one in the south. She needs
10, 5, and 10 tons at sites 1, 2, and 3, respectively. The purchase price per ton at each gravel pit
and the hauling cost per ton are given in the table below.

Pit Hauling cost per ton at site Price per

1 2 3 ton
North $30 $60 $50 $100
South $60 $30 $40 $120

Susan wishes to determine how much to haul from each pit to each site to minimize the total cost
for purchasing and hauling gravel.

26 | P a g e
a) Formulate a linear programming model for this problem. Using the Big M method, construct the initial simplex
tableau ready to apply the simplex method (but do not actually solve).
b) Now formulate this problem as a transportation problem by constructing the appropriate parameter table. Compare
the size of this table (and the corresponding transportation simplex tableau) used by the transportation simplex
method with the size of the simplex tableaux from part (a) that would be needed by the simplex method.
c) Susan Meyer notices that she can supply sites 1 and 2 completely from the north pit and site 3 completely from the
south pit. Use the optimality test (but no iterations) of the transportation simplex method to check whether the
corresponding BF solution is optimal.
d) Starting with the northwest corner rule, interactively apply the transportation simplex method to solve the problem as
formulated in part (b).
e) As usual, let cij denote the unit cost associated with source I and destination j as given in the parameter table
constructed in part (b). For the optimal solution obtained in part (d), suppose that the value of cij for each basic
variable xij is fixed at the value given in the parameter table, but that the value of cij for each nonbasic variable xij
possibly can be altered through bargaining because the site manager wants to pick up the business. Use sensitivity
analysis to determine the allowable range to stay optimal for each of the latter cij, and explain how this information
is useful to the contractor.

Problem 5: The Childfair Company has three plants producing child push chairs that are to be
shipped to four distribution centers. Plants 1, 2, and 3 produce 12, 17, and 11 shipments per
month, respectively. Each distribution center needs to receive 10 shipments per month. The
distance from each plant to the respective distributing centers is given below:

Plant Distance (miles)

Distribution center
1 2 3 4
A 800 1300 400 700
B 1100 1400 600 1000
C 600 1200 800 900

The freight cost for each shipment is $100 plus 50 cents per mile. How much should be shipped
from each plant to each of the distribution centers to minimize the total shipping cost?

a) Formulate this problem as a transportation problem by constructing the appropriate parameter table.
b) Obtain an optimal solution.

Problem 6: Mekelit and Meraf, two senior management students at BDU, have been working
together on a transportation problem they have been given by their operations research instructor.
Working on the problem together, they were able to obtain the solution shown in the table below.
The numbers inside the boxes are unit transportation costs in the respective routes. The current
basic variables are associated with a positive number of allocations shown in the basic cells. The
allocations satisfy all the constraint requirements.

27 | P a g e
 Sources Destinations
1 2 3
A 6 8 10
150
B 7 175 11 11

C 4 25 5 100 12 150

Mekelit and Meraf can‘t agree whether this is an optimal solution for the problem. Mekleit says
that this is not an optimal solution. Meraf argues that this is an optimal solution and she also
contends that as long as the transportation cost from source B to destination 1 is between 7 and
14 birr, the current solution will remain optimal.

If the two girls ask for your advice to help them settle their debate, what would be your conclusion and how would
you evaluate whether the solution shown above is optimal or not. Do you agree with Meraf’s conclusion regarding the
effect of changing cost in the route from B to 1?

Problem 7: Mebreku, who is the operations department head of a large flour company, has been
working on a transportation model to help him arrange an efficient transportation schedule to
transport the company‘s products from the four plants located in four different locations to the
four distribution centers of the company located in different regions in Ethiopia. He has
developed the appropriate cost estimates for each plant-distribution center route and has obtained
relevant data about the capacity of the plants and the demand in the four distribution centers. The
data are shown in the table below.

Based on these data, he wants to determine the most cost effective way of transporting the
product from the four plants to the four distribution centers. What would be the optimal
transportation schedule?

Table: Cost of transportation

Plant Cost per ton (in thousands) Maximum
Distribution center capacity
A B C D
1 10 3 4 6 170
2 2 6 7 9 140
3 9 5 3 5 150
4 4 12 1 3 300
400 110 200 50

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 But, after he solved the problem and determined an optimal transportation schedule, Mebreku was
hard hit by the whole mess of unexpected events. He has received the following information:

1. The route from plant 2 to distribution center B is currently closed because of road maintenance
work in that route.
2. Due to escalating oil prices, the transportation cost per unit has increased by 50 birr per unit in all
the routes
3. Because of recent turmoil in the town where distribution center D is located, the distribution center
can‘t perform its regular function and no goods can be received from the company‘s plants.

Mebreku is highly upset by all these unexpected changes. He is sure that the transportation
schedule he already determined to be optimal can no more be useful and a new model should be
developed and solved.

What are your recommendations? What is the effect of the mentioned changes in the optimal solution
determined with the original data? What would be the new optimal solution? How would total transportation
cost respond to the changes mentioned?

The assignment problem

The assignment problem is a special form of transportation where all supply and demand values
equal one. The assignment problem is a linear programming problem where assignees are being
assigned to perform tasks. For example, the assignees might be employees who need to be given
work assignments. Assigning people to jobs is a common application of the assignment problem.
However, the assignees need not be people. They also could be machines, or vehicles, or plants, or
even time slots to be assigned tasks.

Assumptions

To fit the definition of an assignment problem, problems need to be formulated in a way that
satisfies the following assumptions.

1. The number of assignees and the number of tasks are the same. (This number is denoted by n.)
2. Each assignee is to be assigned to exactly one task.
3. Each task is to be performed by exactly one assignee.
4. There is a cost cij associated with assignee i (i =1, 2, . . . , n) performing task j ( j =1, 2, . . . , n).

29 | P a g e
5. The objective is to determine how all n assignments should be made to minimize the total cost.

Any problem satisfying all these assumptions can be solved extremely efficiently by algorithms
designed specifically for the assignment problem.

The model

The mathematical model for the assignment problem uses the following decision variables:

1 𝑖𝑓 𝑎𝑠𝑠𝑖𝑔𝑛𝑒 𝑖 𝑝𝑒𝑟𝑓𝑜𝑟𝑚𝑠 𝑡𝑎𝑠𝑘 𝑗

𝑥 𝑖𝑗 =
0 𝑖𝑓 𝑛𝑜𝑡

for i = 1, 2, . . . , n and j= 1, 2, . . . , n. Thus, each xij is a binary variable (it has value 0 or 1). That is,
it is a yes/no variable, the yes/no decision is: Should assignee i perform task j?

By letting Z denote the total cost, the assignment model is

𝑚 𝑛
Minimize 𝑍 = 𝑖=1 𝑗 =1 𝑐�𝑖𝑗 𝑥𝑖𝑗

𝑛
Subject to 𝑗=1 𝑥𝑖𝑗 = 1 𝑓𝑜𝑟 𝑖 = 1,2 … . , 𝑚

𝑚
𝑖=1 𝑥𝑖𝑗 = 1 𝑓𝑜𝑟 𝑗 = 1,2 … . , 𝑛

and

𝑥𝑖𝑗 ≥ 0 𝑓𝑜𝑟 𝑎𝑙𝑙 �𝑖 𝑎𝑛𝑑 𝑗

𝑥𝑖�𝑗 binary for all i and j

and n=m

The first set of functional constraints specifies that each assignee is to perform exactly one task,
whereas the second set requires each task to be performed by exactly one assignee. If we delete the

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parenthetical restriction that the xij be binary, the model clearly is a special type of linear
programming problem and so can be readily solved. Fortunately, for reasons about to unfold, we
can delete this restriction.

In fact, the assignment problem is just a special type of transportation problem where the sources
now are assignees and the destinations now are tasks and where

Number of sources m = number of destinations n,

Every supply si= 1

Every demand dj= 1

The general assignment model with n workers and n jobs is represented in the table below. The
element Cij represents the cost assigning worker i to job j.

Jobs

1 2 ……….. 𝑛
1 𝑐11 𝑐12 … … … . . 𝑐1𝑛 1
2 𝑐21 𝑐22 … … … . . 𝑐2𝑛 1
Workers . . . . . .
. . . . . .
𝑛 𝑐𝑛1 𝑐𝑛2 . 𝑐 𝑛𝑛
1
1 1 . 1 𝑛=𝑛

Integer solutions property: Now focus on the integer solutions property in the subsection on the
transportation problem model. Because si and dj are integers now, this property implies that every
BF solution (including an optimal one) is an integer solution for an assignment problem. The
functional constraints of the assignment problem model prevent any variable from being greater
than 1, and the non-negativity constraints prevent values less than 0. Therefore, by deleting the
binary restriction to enable us to solve an assignment problem as a linear programming problem,
the resulting BF solutions obtained (including the final optimal solution) automatically will satisfy
the binary restriction anyway.

Solving the assignment problem

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 An efficient specialized algorithm to solve the assignment problem is a method known as the
Hungarian method. This method involves the following steps

1. Develop an opportunity cost table (Initial solution)

 Row reduction: For each row i (i=1,2,…n) in the assignment parameter table (the cost table)
subtract from all the elements in a row the smallest value element in the row. This gives us the
new table:
𝑪𝒊𝒋 (𝟏) = 𝒄𝒊𝒋 − 𝒎𝒊𝒏 𝒄𝒊𝒋
𝒋
Where i represent the row and j represents the column
 Column reduction: In the new table, C(1)ij, subtract from all the elements in a column the smallest
value element in the column. The resulting table is

𝑪𝒊𝒋 (𝟐) = 𝒄𝒊𝒋 (𝟏) − 𝒎𝒊𝒏 𝒄𝒊𝒋 (𝟏)

𝒋

2. (Optimality test)In the completed opportunity cost table (C (2)ij), seek a solution in which the total
cost (total time) has a null value, that is, an assignment in which all the C(2)ij elements of the
solution are zeros. To this end, cross out all zeros, using the minimum number of horizontal
and/or vertical lines. To do this, first consider the row, or one of the rows, containing the fewest
zeros. Draw a box around one of the zeros in this line and then cross out the other zeros in the
same line and column as the one that is encased (box is drawn around this zero). From among the
remaining rows seek the one with the fewest zeros and repeat the same procedure, continuing
until you can no longer encase any zeros. The number of encased elements is the minimum
number of lines required to cover all the zeros. Denote the number of lines (or encased elements)
by k. If fewer than n lines (that is, k<n) can cover all the zeros (where n=the number of rows or
columns of the table) then it means the solution is not optimal. If n lines are required to cover all the
zeros the tableau contains the optimal solution and n unique assignments can be made.
3. (Iteration) If k<n lines can cover all the zeros in the initial solution, then a) identify the smallest
number from uncovered elements, b) subtract the minimum uncrossed value from all other
uncrossed values, and c) add this same smallest value to elements found at the intersection of two
lines (vertical and horizontal). Leave all other values unchanged. Repeat this step until an optimal
solution is obtained (k=n)
4. If optimal solution is obtained, make assignments. While making assignments, start with a
row/column that contains the fewest zeros. In this row/column, encase one of the zeros, and
eliminate the row and column that contain this element. Continue this until n independent
assignments are made.

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Example: The Bahir Dar City administration wants to employ four of the town‘s cobblestone road
construction cooperatives to pave three roads with cobblestones in the town. The administration
is determined that all the four cooperatives should get work to do. The administration has told the
managers of the three cooperatives to submit secret bids for each of the four roads. The bids
submitted by the four cooperatives are shown in the table below.

Table: Bids submitted by Cooperatives (‗00000)

Bidders Roads

A B C D
I 8 7 8 9
II 9 6 7 10
III 10 8 7 12
IV 11 10 9 7

The town‘s administration wants to assign each cooperative to one of the roads in a cost
minimizing way. Which cooperative should be assigned to which road?

Solution

Step 1: Determine opportunity cost table

Row reduction: the first thing to do is to subtract the smallest value in row i (i=1,2, 3 & 4) from all
elements in that row. The minimum value in each of the three rows is indicated in the last column
(to the right) in the table below.

Bidders Roads Minimum

A B C D cost in row i
I 8 7 8 9 7
II 9 6 7 10 6
III 10 8 7 12 7
IV 11 10 9 7 7

Subtracting the corresponding smallest cost from each row element i give us the table below.

Bidders Roads

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 A B C D
I 1 0 1 2
II 3 0 1 4
III 3 1 0 5
III 4 3 2 0
Min column value 1 0 0 0

Column reduction: starting from the last table that we obtained after row reduction, we next perform
column reduction. This is done by subtracting the smallest element in column (j=1,2 & 3) from all
elements in that column. Doing this will result the table shown below.

Bidders Roads

A B C D
I 0 0 1 2
II 2 0 1 4
III 2 1 0 5
III 3 3 2 0

Step 2: Optimality test

The rule to determine the optimality of the solution obtained above is to determine the minimum
number of lines (vertical, horizontal or a combination of both) required to cover all the zeros in
the last table. If the minimum number of lines is less than n (4 in our case), the solution is not
optimal. If the minimum number of lines required to cover all zeros is n, the solution is optimal
and n independent assignments can be made. As you can verify it, the minimum number of lines
required to cover the zeros in the above table are four. Hence, we can conclude that the solution is
optimal. So we stop here. The optimal assignment of bidders to roads and the costs associated are
shown in the table below.

Bidder Road Cost (‘00000)

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 I A 8
II B 6
III C 7
III D 7
Total cost 28

Here, let‘s consider a simple guideline to determine the minimum number of lines required to
cover the zeros. The rule is briefly described as follows

a) Mark a cross ( x ) next to each row that does not contain an encased zero
b) Similarly, mark each column containing non-encased zeros in one or more of the marked rows
c) Mark each row that has an encased zero in a marked column.
d) Repeat (b) and (c) until there are no more rows or columns to be marked

This procedure will enable us to obtain the minimal number of lines and columns containing all
the encased or crossed-out zeros. What we do after marking rows and columns as outlined above
is draw vertical lines through marked columns and horizontal lines through unmarked rows. These
lines are the minimum number of lines required to cover all the zeros in the table.

To illustrate this, consider the table shown below. First we mark the first row because it has no
encased zeros. Then we mark the second column which contains a non-encased zero in a marked
row (first row). Next, we mark the second row because it has an encased zero in a marked column
(column 2). Since no any other column that contains a non-encased zero in a marked row, we
stop. At this step, we draw lines through the unmarked rows and the marked columns. This results
in the lines shown in the table. These lines cover all the zeros in the table.

Bidders Roads

A B C D
I 1 0 1 2 x
II 2 1 4 x
III 2 1 5
0
III 0 0 2
0
x
0

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 Additional cases in the assignment problem

Case 1: Unbalanced problem

Like the transportation problem, an assignment model can be unbalanced when supply exceeds
demand or demand exceeds supply. The following rules are used to handle these types of
problems.

1. If supply (workers) exceeds demand (jobs), a dummy column is added to the assignment tableau
to balance the model. The dummy column cells will have zero costs.
2. If demand (jobs) exceeds supply (workers), a dummy row is added to the assignment tableau to
balance the model. The dummy row cells will have zero costs.

Example: For the whole African game to be held next year the Ethiopian athletics team is to take
part in a 4 x 100 relay competition. In this competition four runners, each running 100 meters,
represent a team in the contest. The Ethiopian relay team has included 5 runners of whom 1 will
be on the bench (reserve list) in the final contest. The five runners are Bedilu, Bewketu, Tsegye,
Million, and Gezahang. The manager of the Ethiopian relay team, Ato Gerum, has tried to
determine who should run which quarter of the relay so as to finish the contest at the shortest
possible time and join the medalist list, if possible. He has gathered the following information on
the performance of each of the five runners on each turn of 100 meter.

Table: The average time (in seconds) each runner takes to finish each quarter
Runner 1st Quarter 2nd Quarter 3rd quarter 4th quarter
Bedilu 11 12 12 13

Bewketu 13 10 11 11
Tsegye 11.5 12 12.5 10.8
Million 13.2 10 11 10.9
Gezahang 10.6 11 12 10

a) Formulate the problem as an assignment problem

b) Determine a schedule that assigns each runner to each quarter so that the relay team finishes the contest at the
minimum possible time.
c) What is the minimum possible time the Ethiopian team finishes the relay competition.
d) Of the five runners, who will be in the reserve list?

Case 2: Prohibited assignment

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 Just as prohibited routes can occur in the transportation problem, prohibited assignments can
occur in the assignment problem. The following rule is applied in this case: A prohibited
assignment is given a large relative cost of M so that it will never be selected.

Example: For the whole African game to be held next year the Ethiopian athletics team is to take
part, among others, on a 4 x 100 relay competition. As known, in this competition four runners,
each running 100 meters, represent a team in the contest. As such, the Ethiopian relay team has
included 5 runners of which 1 will be on the bench (reserve list) in the final competition. The five
runners are Bedilu, Bewketu, Tsegye, Million, and Gezahang. The manager of the Ethiopian relay
team, Ato Girum, has tried to determine who should run which quarter of the relay so as to finish
the contest at the shortest possible time and join the medalist list, if possible. He has gathered the
following information on the performance of each of the five runners on each turn of 100 meter.

Table: The average time (in seconds) each runner takes to finish each quarter
Runner 1st Quarter 2nd Quarter 3rd quarter 4th quarter
Bedilu 11 12 12 13

Bewketu 13 10 11 11
Tsegye 11.5 12 12.5 10.8
Million 13.2 10 11 10.9
Gezahang 10.6 11 12 10

1. Suppose that Ato Girum has the experience that whenever Gezahang, one of the team members, has taken either the
1st or the 4th turn the Ethiopian team will be in the medalist list. Hence unless he faced health problem Gezahang is
in the final runners list and runs only either the 1st or 4th turns. What is the optimal assignment of the athletes?
2. Assume on the final date of the competition Gezahang was reported sick and can’t run with the team. Will the above
schedule change? If yes determine the new schedule.

Case 3: Multiple optima

An assignment problem may have multiple optimal solutions, where there are two or more
alternative assignment schedules that give the same minimum total cost value.

Example: In a certain city, the city‘s traffic police have four patrol offices. When a traffic problem
arises in any part of the city, a patrol from one of the four offices has to be sent to the problem
site. Suppose the traffic police in the city were called on to duty in four different sites in the city at
the same time. The distance from each patrol office to each problem site is given below

I II III IV
A 21 9 18 16

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 B 11 19 13 20
C 17 10 14 17
D 6 6 10 12

From which office should patrols be assigned to each of the different problem sites to minimize
the total distance travelled by the patrols?

Case 4: Maximization

The assignment algorithm can be applied to solve problems with maximization objective function.
Solving maximization problem requires conversion of the original revenue data into an
opportunity cost table after which the usual minimization solution method is used. Therefore, first
subtract each column value from the largest value in the column. This gives the opportunity cost
of not assigning to the task in that column the agent who can produce the highest result if
assigned to that task. Once an opportunity cost table is developed in this way, the problem can be
solved as if it is a minimization problem. Or, an alternative way is just to follow just the same
procedure that is used in the transportation model. Identify the largest value in the original profit
table, subtract from this value all the other values and obtain a new table. This again gives an
opportunity cost table which can be solved as a minimization problem.

Example: A company has four sales agents who will be assigned to sell the company‘s products to
four different customer groups. Due to the unique marketing skills required to sell the company‘s
products to each type of customer, the four sales agents, depending on the match of their skills to
the type of customer, generate different amounts of revenue from different customer groups. The
table below shows estimated sales that each sales agent is expected to generate with each customer
group:

Agents Customer groups

A B C D
I 20 10 40 60
II 28 18 30 48
III 32 14 38 60
IV 20 22 42 61

Determine an assignment schedule to maximize total sales generated.

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 Exercises

Problem 1: The coach of the Dirdawa men‘s swim team is preparing for the 2004 National swim
meet to be held in Addis Abeba. He must choose the four swimmers he will assign to the 800-
meter medley realy team. The medley relay consists of four strokes, the backstroke, breaststroke,
butterfly, and freestyle. The coach has computed the average times (in minutes) each of his top six
swimmers has achieved in each of the four strokes for 200 meters in previous swim meets during
the season as follows.

Stroke (minute)
Swimmer Backstroke Breaststroke Butterfly Freestyle
Addisu 2.56 3.07 2.9 2.26
Belay 2.63 3.01 3.12 2.35
Chala 2.71 2.95 2.96 2.29
Debebe 2.6 2.87 3.08 2.41
Gebru 2.68 2.97 3.16 2.25
Feleke 2.75 3.1 2.93 2.38

Addisu knows that his best performance is in Backstroke and he is sure that his coach will choose
him to that stroke. Similarly, Belay deems that he must be chosen for Freestyle without any single
doubt.

a) Determine the medley relay team that will represent Dire Dawa in the medley National relay swim meet.
b) Will Addisu and Belay get assigned to the stroke that they expected to be assigned? What does this suggest for
the general assignment model and optimization in general?
c) What is the total expected relay time for the coach?
d) If Addisu is unable to partake in the swim meeting because of health problem, who will replace him? What will
be the new expected relay time for the coach?

Problem2: The head of a college is considering using an assignment model to assign instructors to
courses for the coming semester with the objective being to maximize the overall quality of
education students obtain from the courses. There are six courses to be delivered in the semester.
There are seven instructors in the college who can deliver the courses. The head of the college has
obtained data on students‘ evaluation of the instructors on these courses in previous years, the
instructors‘ preference rankings, and so on. Based on these data the head has developed weighed
score for each instructor on each course as shown in the table below.

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 Instructor Course
A B C D E F
1 80 90 70 60 70 78
2 72 76 74 80 84 81
3 66 78 71 69 82 81
4 63 69 87 82 84 88
5 81 74 74 69 88 94
6 60 67 78 89 89 92
7 91 86 84 60 80 86

The head of the college wants to determine an assignment schedule that will give the largest
overall weighted score which is taken as rough indicator of quality of education. Which instructor
should be assigned to which course? Are there alternative ways of assignment that give the same
overall weighted score?

Problem 3: Meskerem, Mekdes, Mebratu, and Mesay are graduating class management students at
Bahir Dar University. As part of the degree program in management, they are required to write an
original senior essay. They have chosen a topic titled ―The Use of Operations research models to
support decision making in the Ethiopian banking and insurance sectors‖ for their senior project
work. Even if all of them have to collaborate to complete the project, they still know that each has
to be assigned a specific task for which he/she will take major responsibility. In view of this, they
have identified four major tasks required to successfully complete their senior project. The four
tasks are data collection and organization, data analysis, literature research and organization,
compilation of the project report. Each of the four students feels more comfortable being
responsible for one of these tasks than the other tasks. After discussing the matter with their
advisor, their advisor has told each of them to submit a secret bid which includes a student‘s
ranking of her/his ability to carry out each of the tasks. Each student assigns herself a score to
each task by allocating a weight out of a total of 100 marks for the four tasks. This information
then is used to develop a model that will help the advisor to assign each student responsible for
each task in such a way that the overall expected quality of the project is maximized. The other day
the advisor has received the following bids from the four students.

Student Bids
Data collection & Data analysis Literature Report
Organization research & compilation
organization
Meskerem 55 30 10 5
Mekdes 40 10 20 30
Mebratu 10 30 40 20
Mesay 30 0 20 50

The instructor wants to determine the optimal way to assign each student to each responsibility.

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a) Determine an optimal assignment schedule for the problem
b) Who will be assigned to which responsibility?

References

Hillier, Frederick S., Gerald J. Lieberman (2001). Introduction to Operations Research. New York: McGraw-Hill:

Kaufman, A; R Faure. (1968) Introduction to Operations Research. (Volume 47) (Richard Bellman Ed., Henry C
Sneyd, Trans) New York.

Luenberger, David G; & Yinyu Ye. (2008). Linear and Nonlinear Programming. (3rd ed). New York: Springer
Science+Business Media, LLC:

Taha, Hamdy A (2007) Operations Research: an introduction. (8th ed). New Jersey: Pearson Education, Inc:

Taylor III, Bernard W. (1996). Introduction to Management Science. (5th ed) New Jersey: Prentice Hall:.

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