OPTIMIZATION OPERATIONAL RESEARCH

GROUP PROJECT

TITLE : TRANSPORTATION PROBLEM

 NORTHWEST CORNER RULE
 STEPPING STONE METHOD

NAME : BOK CANG YEONG AW140195

TEY QING XIANG AW140153
CHOONG CHE WEI AW 140198
LOW ZHEN SHENG AW 140204
GOH JUN YONG AW140218

FACULTY : FACULTY OF APPLIED SCIENCE AND .

TECHNOLOGY

SECTION : 1

LECTURER : DR SITI NOOR ASYIKIN BINTI MOHD

RAZALI

MARKS
1.0 Introduction
Transportation problem is also called as a network flow problem. A transportation
model is built to deal with several points of sources and number of points of destination.
The constraints are the capacity of goods from each resource and requirements from each
destination. Normally, there are two types of objectives which are minimizing the total
transportation cost or maximizing the profit.
In this project, the Northwest Corner Rule and Stepping-Stone Method are used to
solve two transportation problems. Northwest Corner Rule is used to find the initial
feasible solution. The assign of the units are started from the upper left corner. However,
the initial feasible solution that is developed by Northwest Corner Rule is not the optimal
solution. Hence, the Stepping-Stone Method is needed to obtain the optimal solution.
That is one important rule in Stepping-Stone Method which the problem of
degeneracy cannot appear in the transportation table. Degeneracy is meaning that the
number of occupied squares is not equal with one less than the sum of the number of
rows plus the number of columns. Lastly, the Stepping-Stone Method works by testing
each unused squares in the transportation table after Northwest Corner Rule. The
objective of Northwest Corner Rule is to test what would happen to the total cost if one
unit of the product were shipped on an unused route.
2.0 Transportation Problem Using Northwest Corner Rule and
Stepping Stone Method
Example 1
The Global Trade Company ships pine flooring to three building supply houses from its
mils in Pineville, Oak Ridge, and Mapletown. Determine the best transportation schedule
for the data given in the table. Use the northwest corner rule and stepping-stone method
to find the optimal solution
Supply house Supply house Supply house Mill Capacity
1, S1($) 2, S2 ($) 3, S3 ($)
Pineville, 3 3 2 25
Oak Ridge 4 2 3 40
Mapletown 3 2 3 30
Supply House 30 30 35 95
Demand

Approach 1: Manual Calculation

Find Solution of Transportation Problem using North-West Corner
method
Total no. of supply constraints: 3
Total no. of demand constraints: 3
Beginning in the upper left hand corner, we assign 25 units from Pineville to supply
house 1. This exhaust the supply from Pineville but leaves supply house 1, 5 units short.
We can move to the second row in the same column.
Supply house Supply house Supply house Mill Capacity
1, S1($) 2, S2 ($) 3, S3 ($)
Pineville 25 3 3 2 25
Oak Ridge 4 2 3 40
Mapletown 3 2 3 30
Supply House 30 30 35 95
Demand
2. Assign 5 units from Oak Ridge to supply house 1. This meets Supply house 1’s
demand. Oak Ridge has 35 units remaining, so we move to the right to the next column
od second row.
Supply house Supply house Supply house Mill Capacity
1, S1($) 2, S2 ($) 3, S3 ($)
Pineville 25 3 3 2 25
Oak Ridge 5 4 2 3 40
Mapletown 3 2 3 30
Supply House 30 30 35 95
Demand

3. Assign 30 units from Oak Ridge to Supply house 2. This meet the supply house 2’s
demand. The Oak Ridge leave have 5 units available.
Supply house Supply house Supply house Mill Capacity
1, S1($) 2, S2 ($) 3, S3 ($)
Pineville 25 3 3 2 25
Oak Ridge 5 4 30 2 3 40
Mapletown 3 2 3 30
Supply House 30 30 35 95
Demand

4. Assign 5 units from Oak Ridge to supply house 3. The mapletown have 30 unit of Mill
capacity available.
Supply house Supply house Supply house Mill Capacity
1, S1($) 2, S2 ($) 3, S3 ($)
Pineville 25 3 3 2 25
Oak Ridge 5 4 30 2 5 3 40
Mapletown 3 2 3 30
Supply House 30 30 35 95
Demand
5. Assign 30 unit from mapletown to supply house 3 to made the supply house’s demand
is met.
Supply house Supply house Supply house Mill Capacity
1, S1($) 2, S2 ($) 3, S3 ($)
Pineville 25 3 3 2 25
Oak Ridge 5 4 30 2 5 3 40
Mapletown 3 2 30 3 30
Supply House 30 30 35 95
Demand

Initial feasible solution is

Supply house Supply house Supply house Mill Capacity
1, S1($) 2, S2 ($) 3, S3 ($)
Pineville 25 3 3 2 25
Oak Ridge 5 4 30 2 5 3 40
Mapletown 3 2 30 3 30
Supply House 30 30 35 95
Demand

The minimum total transportation cost `= (3 x 25) + (4 x 5) + (2 x 30) + (3 x 5) + (3 x 30)

= $260. Here, the number of allocated cells = 5 is equal to m + n - 1 = 3 + 3 - 1 = 5. Thus,
this solution is non-degenerate.
Optimality test using stepping stone method

Supply house Supply house Supply house Mill Capacity

1, S1($) 2, S2 ($) 3, S3 ($)
Pineville, P 25 3 3 2 25
Oak Ridge, O 5 4 30 2 5 3 40
Mapletown, M 3 2 30 3 30
Supply House 30 30 35 95
Demand

Iteration-1 of optimality test

1. Create closed loop for unoccupied cells, we get
Unoccupied cell Closed path Net cost change
I P,S 2 P, S2- P. S1+ O, S1- O, S2 3-3+4-2=2

I P,S 3 P,S3- P, S1+ O, S1- O, S3 2-3+4-3=0

I M , S1 M, S1- M, S3+ O, S3- O, S1 3 - 3 + 3 - 4 = -1

I M ,S 2 M, S2- M, S3+ O, S3- O, S2 2-3+3-2=0

2. So opening the Mapletown- Supply house 1 route will lower our transportation
cost and it is negative value (-1). Thus, we select the unoccupied cell having the
highest negative net cost change.
Closed path and plus/minus allocation for current unoccupied cell M, S1

Supply house Supply house Supply house Mill Capacity

1, S1($) 2, S2 ($) 3, S3 ($)
Pineville, P 25 3 3 2 25
Oak Ridge, O 5 (-) 4 30 2 5 (+) 3 40
Mapletown, M (+) 3 2 30 (-) 3 30
Supply House 30 30 35 95
Demand

3. Minimum allocated value among all negative position (-) on closed path = 5. Thus
subtract 5 from all (-) and add it to all (+)

Supply house Supply house Supply house Mill Capacity

1, S1($) 2, S2 ($) 3, S3 ($)
Pineville, P 25 3 3 2 25
Oak Ridge, O 4 30 2 10 3 40
Mapletown, M 5 3 2 25 3 30
Supply House 30 30 35 95
Demand

4. Repeat the step 1 to 3, until an optimal solution is obtained.

Iteration-2 of optimality test

1. Create closed loop for unoccupied cells, we get

Unoccupied cell Closed path Net cost change
I P,S 2 3-3+3-3+3-2=
P, S2 – P, S1+ M, S1 – M, S3+ O, S3- O,S2
1
I P,S 3 P, S3- P, S1+ M, S1- M, S3 2 - 3 + 3 - 3 = -1
IO ,S1 O, S1- M, S1+ M, S3- O, S3 4-3+3-3=1
I M ,S 2 M, S2 – M,S3+ O, S3- O, S2 2 -3+3-2=0

2. So opening the Pineville - Supply house 3 route will lower our transportation cost
and it is negative value (-1). Thus, we select the unoccupied cell having the
highest negative net cost change.
Closed path and plus/minus allocation for current unoccupied cell P, S3

Supply house Supply house Supply house Mill Capacity

1, S1($) 2, S2 ($) 3, S3 ($)
Pineville, P 25(-) 3 3 (+) 2 25
Oak Ridge, O 4 30 2 10 3 40
Mapletown, M 5(+) 3 2 25 (-) 3 30
Supply House 30 30 35 95
Demand

3. Minimum allocated value among all negative position (-) on closed path = 25.
Thus subtract 25 from all (-) and add it to all (+)

Supply house Supply house Supply house Mill Capacity

1, S1($) 2, S2 ($) 3, S3 ($)
Pineville, P 3 3 25 2 25
Oak Ridge, O 4 30 2 10 3 40
Mapletown, M 30 3 2 3 30
Supply House 30 30 35 95
Demand

4. Repeat the step 1 to 3, until an optimal solution is obtained.

Here, the number of allocated cells = 4, which is one less than to m + n - 1 = 3 + 3 - 1

= 5. So, this solution is degenerate. The quantity 0 is assigned to, which has the
minimum transportation cost = 2.
Supply house Supply house Supply house Mill Capacity
1, S1($) 2, S2 ($) 3, S3 ($)
Pineville, P 3 3 25 2 25
Oak Ridge, O 4 30 2 10 3 40
Mapletown, M 30 3 0 2 3 30
Supply House 30 30 35 95
Demand
Iteration-3 of optimality test

Create closed loop for unoccupied cells, we get

Unoccupied cell Closed path Net cost change

I P,S1 P, S1 – P, S3+ O, S3 – O, S2+ M, S2- M,S1 3 - 2 + 3 - 2 + 2 - 3 = 1
I P,S 3 P, S2- P, S3+ O, S3- O, S2 3-2+3-2=2
IO ,S1 O, S1- O, S2+ M, S2- M, S1 4-2+2-3=1
I M ,S 2 M, S3 – M,S2+ O, S2- O, S3 3-2+2-3=0

Since all net cost change great and equal to 0. So final optimal solution is arrived.
Supply house Supply house Supply house Mill Capacity
1, S1($) 2, S2 ($) 3, S3 ($)
Pineville, P 3 3 25 2 25
Oak Ridge, O 4 30 2 10 3 40
Mapletown, M 30 3 0 2 3 30
Supply House 30 30 35 95
Demand

The minimum total transportation cost = (2 x 25) + (2 x 30) + (3 x 10) + (3 x 30) = $ 230
There is one improvement index = 0 which is an indication of multiple optimal solutions.
Approach 2: Excel Solution

From the computer computation, the total product output is $230.

Comparing maximization problem using Manual Calculation and Computer

Computation

The output of manual calculation and computer computation are the same which the
minimum shipping cost is $230.
Example 2
The ICARE Company has three plants located throughout a state with production
capacity 50, 75 and 25 gallons. Each day the firm must furnish its four retail shops R1,
R2, R3, & R4 with at least 20, 20, 50, and 60 gallons respectively. The transportation
costs (in $.) are given below.
Retail
R1 ($) R2 ($) R3 ($) R4 ($) Supply
Company

P1 3 5 7 6 50
P2 2 5 8 2 75
P3 3 6 9 2 25
Demand 20 20 50 60 150

The economic problem is to distribute the available product to different retail shops in
such a way so that the total transportation cost is minimum?

Approach 1: Manual Calculation

Find Solution of Transportation Problem using North-West Corner method
Total no. of supply constraints: 3
Total no. of demand constraints: 4
1: Beginning in upper left hand corner, we assign 20 units from P1 to R1. This exhaust
the supply from R1 but leaves P1 with 30 units. We move to the second column in the
same row.
Retail
R1 ($) R2 ($) R3 ($) R4 ($) Supply
Company

P1 20 3 5 7 6 50
P2 2 5 8 2 75
P3 3 6 9 2 25
Demand 20 20 50 60 150
2: Assign 20 units from P1 to R2. This meet the R2’s demand. P1 has 10 units remaining
so we move to the right to the next column in the same row.
Retail
R1 ($) R2 ($) R3 ($) R4 ($) Supply
Company

P1 20 3 20 5 7 6 50
P2 2 5 8 2 75
P3 3 6 9 2 25
Demand 20 20 50 60 150

3: Assign 10 units from P1 to R3. P1 supply now been exhausted but R3 still 40 units
short. We move down to the second row in the R3 column.
Retail
R1 ($) R2 ($) R3 ($) R4 ($) Supply
Company

P1 20 3 20 5 10 7 6 50
P2 2 5 8 2 75
P3 3 6 9 2 25
Demand 20 20 50 60 150

4: Assign 40 units from P2 to R3. This fulfils R3’s demand and P2 still has 35 units
available.
Retail
R1 ($) R2 ($) R3 ($) R4 ($) Supply
Company

P1 20 3 20 5 10 7 6 50
P2 2 5 40 8 2 75
P3 3 6 9 2 25
Demand 20 20 50 60 150

5: Assign 35 units from P2 to R4. P2 supply now been exhausted but R4 still 25 units
short. We move down to the third row in the R4 column.
 Retail
R1 ($) R2 ($) R3 ($) R4 ($) Supply
Company

P1 20 3 20 5 10 7 6 50
P2 2 5 40 8 35 2 75
P3 3 6 9 2 25
Demand 20 20 50 60 150

6: Assign 25 units from P3 to R4. This exhausts P3’s supply and R4’s demand. The
initial shipment schedule is now complete.
Retail
R1 ($) R2 ($) R3 ($) R4 ($) Supply
Company

P1 20 3 20 5 10 7 6 50
P2 2 5 40 8 35 2 75
P3 3 6 9 25 2 25
Demand 20 20 50 60 150

Conclusion:

ROUTE UNITS PER UNIT TOTAL COST

FROM TO SHIPPED COST ($) ($)
P1 R1 20 3 60
P1 R2 20 5 100
P1 R3 10 7 70
P2 R3 40 8 320
P2 R4 35 2 70
P3 R4 25 2 50
670

The minimum total transportation cost = (20 x 3) + (20 x 5) + (10 x 7) + (40 x 8) + (35 x
2) + (25 x 2) = $670. Here, the number of allocated cells = 6 is equal to m + n - 1 = 3 + 4
- 1 = 6. Thus, this solution is non-degenerate.
Optimality test using stepping stone method

Retail
R1 ($) R2 ($) R3 ($) R4 ($) Supply
Company

P1 20 3 20 5 10 7 6 50
P2 2 5 40 8 35 2 75
P3 3 6 9 25 2 25
Demand 20 20 50 60 150

Iteration-1 of optimality test

1. Create closed loop for unoccupied cells, we get

Unoccupied cell Closed path Net cost change

𝑃1 𝑅4 𝑃1 𝑅4 →𝑃1 𝑅3 → 𝑃2 𝑅3 →𝑃2 𝑅4 6-7+8-2=5

𝑃2 𝑅1 𝑃2 𝑅1 →𝑃2 𝑅3 → 𝑃1 𝑅3 →𝑃1 𝑅1 2 - 8 + 7 - 3 = -2

𝑃2 𝑅2 𝑃2 𝑅2 →𝑃2 𝑅3 → 𝑃1 𝑅3 →𝑃1 𝑅2 5 - 8 + 7 - 5 = -1

𝑃3 𝑅1 𝑃3 𝑅1 →𝑃3 𝑅4 → 𝑃2 𝑅4 →𝑃2 𝑅3 → 𝑃1 𝑅3 →𝑃1 𝑅1 3 - 2 + 2 - 8 + 7 - 3 = -1

𝑃3 𝑅2 𝑃3 𝑅2 →𝑃3 𝑅4 → 𝑃2 𝑅4 →𝑃2 𝑅3 → 𝑃1 𝑅3 →𝑃1 𝑅2 6-2+2-8+7-5=0

𝑃3 𝑅3 𝑃3 𝑅3 →𝑃3 𝑅4 → 𝑃2 𝑅4 →𝑃2 𝑅3 9-2+2-8=1

2. So opening the P2-R1 route will lower our transportation cost and it is negative
value (-2). Thus, we select the unoccupied cell having the highest negative net
cost change.
Closed path and plus/minus allocation for current unoccupied cell P2-R1

Retail
R1 ($) R2 ($) R3 ($) R4 ($) Supply
Company

P1 20 (-) 3 20 5 10 (+) 7 6 50
 P2 (+) 2 5 40 (-) 8 35 2 75
P3 3 6 9 25 2 25
Demand 20 20 50 60 150

3. Minimum allocated value among all negative position (-) on closed path = 20.
Thus subtract 20 from all (-) and add it to all (+)

Retail
R1 ($) R2 ($) R3 ($) R4 ($) Supply
Company

P1 3 20 5 30 7 6 50
P2 20 2 5 20 8 35 2 75
P3 3 6 9 25 2 25
Demand 20 20 50 60 150

4. Repeat the step 1 to 3, until an optimal solution is obtained.

Iteration-2 of optimality test

1. Create closed loop for unoccupied cells, we get

Unoccupied cell Closed path Net cost change

𝑃1 𝑅1 𝑃1 𝑅1 →𝑃1 𝑅3 → 𝑃2 𝑅3 →𝑃2 𝑅1 3-7+8-2=2

𝑃1 𝑅4 𝑃1 𝑅4 →𝑃1 𝑅3 → 𝑃2 𝑅3 →𝑃2 𝑅4 6-7+8-2=5

𝑃2 𝑅2 𝑃2 𝑅2 →𝑃2 𝑅3 → 𝑃1 𝑅3 →𝑃1 𝑅2 5 - 8 + 7 - 5 = -1

𝑃3 𝑅1 𝑃3 𝑅1 →𝑃3 𝑅4 → 𝑃2 𝑅4 →𝑃2 𝑅1 3-2+2-2=1

𝑃3 𝑅2 𝑃3 𝑅2 →𝑃3 𝑅4 → 𝑃2 𝑅4 →𝑃2 𝑅3 → 𝑃1 𝑅3 →𝑃1 𝑅2 6-2+2-8+7-5=0

𝑃3 𝑅3 𝑃3 𝑅3 →𝑃3 𝑅4 → 𝑃2 𝑅4 →𝑃2 𝑅3 9-2+2-8=1

2. So opening the P2-R2 route will lower our transportation cost and it is negative
value (-1). Thus, we select the unoccupied cell having the highest negative net
cost change.
Closed path and plus/minus allocation for current unoccupied cell P2-R2

Retail
R1 ($) R2 ($) R3 ($) R4 ($) Supply
Company

P1 3 20 (-) 5 30 (+) 7 6 50
P2 20 2 (+) 5 20 (-) 8 35 2 75
P3 3 6 9 25 2 25
Demand 20 20 50 60 150

3. Minimum allocated value among all negative position (-) on closed path = 20.
Thus subtract 20 from all (-) and add it to all (+)

Retail
R1 ($) R2 ($) R3 ($) R4 ($) Supply
Company

P1 3 5 50 7 6 50
P2 20 2 20 5 8 35 2 75
P3 3 6 9 25 2 25
Demand 20 20 50 60 150

4. Repeat the step 1 to 3, until an optimal solution is obtained.

Here, the number of allocated cells = 5, which is one less than to m + n - 1 = 3 + 4 - 1
= 6. So, this solution is degenerate. The quantity 0 is assigned to a position as to
allow all stepping-stone paths to be closed which is P2-R3.
Retail
R1 ($) R2 ($) R3 ($) R4 ($) Supply
Company

P1 3 5 50 7 6 50
P2 20 2 20 5 0 8 35 2 75
P3 3 6 9 25 2 25
Demand 20 20 50 60 150
Iteration-3 of optimality test
;’’’;’;
1. Create closed loop for unoccupied cells, we get

Unoccupied cell Closed path Net cost change

𝑃1 𝑅1 𝑃1 𝑅1 →𝑃2 𝑅1 → 𝑃2 𝑅3 →𝑃1 𝑅3 3–2+8-7=2

𝑃1 𝑅2 𝑃1 𝑅2 →𝑃2 𝑅2 → 𝑃2 𝑅3 →𝑃1 𝑅3 5-5+8-7=1

𝑃1 𝑅4 𝑃1 𝑅4 →𝑃1 𝑅3 → 𝑃2 𝑅3 →𝑃2 𝑅4 6-7+8-2=5

𝑃3 𝑅1 𝑃3 𝑅1 →𝑃3 𝑅4 → 𝑃2 𝑅4 →𝑃2 𝑅1 3-2+2-2=1

𝑃3 𝑅2 𝑃3 𝑅2 →𝑃3 𝑅4 → 𝑃2 𝑅4 →𝑃2 𝑅2 6-2+2-5=1

𝑃3 𝑅3 𝑃3 𝑅3 → 𝑃3 𝑅4 → 𝑃2 𝑅4 →𝑃2 𝑅3 9–2+2–8=1

This indicates that the problem has achieved the optimal solution. The minimum total
transportation cost = (20 x 2) + (20 x 5) + (50 x 7) + (35 x 2) + (25 x 2) = $610

Approach 2: Excel Solution

From the computer computation, the total product output is $610.

Comparing maximization problem using Manual Calculation and Computer

Computation

From the output of manual calculation and computer computation, both the results are the
same which is $610.
3.0 Conclusion

Transportation problem deals with the distribution of goods from several points of
supply (sources) to a number of points of demand (destinations). Usually we are given
the capacity of goods at each source and the requirements at each destination. Typically
the objective is to minimize total transportation and production costs.
In this project, Northwest Corner Rule is used to find the initial feasible solution
and Stepping Stone Method is used to find optimal solution. The North-West Corner Rule
is a method adopted to compute the initial feasible solution of the transportation problem.
The name North-west corner is given to this method because the basic variables are
selected from the extreme left corner. Stepping Stone Method is an iterative technique for
moving from an initial feasible solution to an optimal feasible solution. There are two
distinct parts to the process, testing the current solution to determine if improvement is
possible and making changes to the current solution to obtain an improved solution. This
process continues until the optimal solution is reached.
In conclusion, the major advantage of the north–west corner rule method is that it
is very simple and easy to apply. Its major disadvantage is that it is not sensitive to costs
and consequently yields poor initial solutions. Therefore, Stepping Stone Method is for
finding the optimal solution of a transportation problem.