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Introduction

What is transportation

The purpose is to minimize the cost of shipping goods from one location to another
so that the
needs of each arrival area are met and each every shipping location operates within
its capacity.However, quantative analysis has been used for many other problems
other than the physical distribution of goods.
The methods for implementation for operation research of transporation model are
1) North west Corner method -
2) Least Cost method
3) Vogel's Approximation method

How it is implemented?

• North-West Corner Method: It is a simple and efficient method to obtain an


initial solution. This method does not take into account the cost of
transportation on any route of transportation.

• Least Cost Method: Since the objective is to minimize the total transportation
cost, we must try to transport through those routes where the unit
transportation cost is lowest. This method takes into account the minimum
unit cost of transportation for obtaining initial solution.

• Vogel’s Approximation Method (VAM): This method is a heuristic method and


is preferred over the two methods described above. In this method, each
allocation is made on the basis of the opportunity (penalty or extra) cost that
would have been incurred if allocation in certain cells with minimum unit
transportation cost were missed. In this method, allocations are made so that
the penalty cost is minimized. The advantage is that it gives an initial
solution which is nearer to an optimal solution or is the optimal solution itself.
BHARAT PETROLEUM LTD. (APRIL 1-7 ,1999)

DAT SOURC DESTINATI QTY QTY TRANSPORTATION


E E ON REQUESTED AVAILABLE COST
(IN BARRELS) (IN BARRELS) (FUEL+TRANSPORT)

01- Mumba
Apr i Pune 1500 1000 400000
02- Gandhinag
Apr Kochi ar 4500 4000 1400000
07- Mumba
Apr i Bhopal 3000 3000 9900000
01- Bina(M
Apr P) Pune 4500 3500 1295000
02- Mumba
Apr i Varodara 6500 6000 21600000
03- Bina(M
Apr P) Varodara 5000 4500 1530000
01- Mumba Gandhinag
Apr i ar 3300 3000 950000
07-
Apr Kochi Pune 4000 3500 1920000
02- Bina(M
Apr P) Bhopal 4000 3000 1200000
04-
Apr Kochi Bhopal 3500 3000 1140000
03- Mumba Gandhinag
Apr i ar 3000 3000 900000
05- Bina(M
Apr P) Nagpur 6000 5000 1750000
02-
Apr Kochi Nagpur 4500 4000 1520000
06-
Apr Kochi Varodhra 4000 3500 1120000
04- Mumba
Apr i Nagpur 5500 5000 1900000
05- Bina(M Gandhinag
Apr P) ar 3500 3000 900000
01-
Apr Kochi Nagpur 3000 2500 950000
06- Mumba
Apr i Pune 2200 2000 800000
03-
Apr Kochi Varodara 6500 6000 1920000
04- Bina(M
Apr P) Varodara 2000 1500 510000

Solution:

As we see that the data provided to us in a tabular form.


From here we decide what the sources & destinations are as well as the Demand &
supply accordingly.

We have 3 sources i.e Mumbai, Kochi & Bina and 5 destinations i.e Pune, Bhopal,
Varodara, Nagpur & Gandhinagar.

Q. How to calculate total demand?


Ans : the demand would be calculated as the sum of individual destination’s
requirement to the corresponding source.
For eg . PUNE : we check from what all places did pune request for the petrol & then
sum it i.e 12200.
Similarly for BHOPAL: 10500
VARODARA: 24000
GANDHINAGAR: 14300
NAGPUR: 19000

Q. How to calculate the total supply ?


Ans : the supply would be calculated as the sum of individual source’s availability to
the corresponding destination.
For eg . MUMBAI : we check at what all places did Mumbai provided with petrol &
then sum it i.e 23000 .
Similarly for KOCHI: 26500
BINA : 20500

Calculation of the transportation matrix :

We have been provided with the transportation cost.this cost includes fuel as well as
transport cost.
As we know we have 3 sources & 5 destinations , hence we will have 3 x 5 matrix.
We divide the transportation cost with the quantity available & place them with the
corresponding row & coloumn .at some places we see the repetition for demand &
supply, but here the cell value will remain the same as cost/barrel remains constant.
MATRIX:

S/D pune Bhopal Varodh Gandhina Nagpur SUPPL


ra gar Y

Mumba 400 330 360 300 380 23000


i
Kochi 350 380 320 350 380 26500
Bina 370 400 340 300 350 20500
DEMA 12200 10500 24000 14300 19000
ND

Total supply: 70000


Total demand : 80000

This is a case of unbalanced transportation problem, hence forth a dummy row will
be included to adjust the balance demand.

Source of data collected:


1. Taxmann Cost Management (CA-Final 2001)
2. Verified the data with Bharat Petroleum Petrol pump(F.C Road , Pune)

Methodology

1. Which algorithm is applied?


1) North west Corner method -
2) Least Cost method
3) Vogel's Approximation method

2. Which software is used?


TORA 7.0
3. Conclusion/Inference
4. Attach printed pages of raw data & result

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