Linear Programming: Transportation Model

The transportation model is special linear programming technique. The general transportation
problem is concerned with distributing amounts of any commodity from any group of sources to any
group of destination or sinks.

This chapter will introduce two methods presented in different sections:

Section 10.1 Manual Methods
Section 10.2 Solver Method

Section 10.1 Manual Methods

Three methods will have to be completed to arrive at the final solution:
Method 1: Vogel Approximation Method (VAM)
Method 2: Modified Distribution (MODI) Method
Method 3: Stepping Stone Method

Example 10.1 Unilever’s Clear for Men Shampoo

Allan is the Vice President for Asia Pacific Region f Unilever’s Clear for Men Shampoo. He
supervises three factories (Hanoi, Manila, and Beijing) that supply three warehouses (Seoul, Sydney and
Tokyo) in the region. Hanoi can produce 300 cases, Manila can produce 500 cases, and Beijing can
produce up to 100 cases per week. Meanwhile, Seoul’s demand is 600 cases, Sydney’s demand is 400
cases, and Tokyo’s demand is 200 cases per week. The shipping cost per case from Hanoi to Seoul is $8,
to Sydney is $2, and to Tokyo is $10. The shipping cost per case from Manila to Seoul is $4, to Sydney is
$7, and to Tokyo is $3. The figures are summarized in table 10.1

How many cases will Allan ship from each three factories to each of three warehouses in the
region per week while minimizing shipping costs? Solve the problem using manual methods.

Table 10.1 Clear Shampoo

Cost/Case ($) Warehouse Capacity (cases)

Factory Seoul Sydney Tokyo
Hanoi 8 2 10 300
Manila 4 7 6 500
Beijing 5 9 3 1000
Demand (cases) 600 400 200 1,200/900

Step 1. Balance the table by creating a dummy factory (Table 10.2)

1. Compute the capacity of the dummy factory:

Capacity of dummy = total demand – total capacity

300 = 1,200-900

300 cases are not delivered to any of the warehouses per week
2. Assign 0 as the shipping cost from the dummy factory to each of the warehouse:

0 = shipping cost to Seoul per case

0 = shipping to Sydney per case
0 = shipping to Tokyo per case
 Table 10.2 Balanced Table

Cost/Case ($) Warehouse Capacity (cases)

Factory Seoul Sydney Tokyo
Hanoi 8 2 10 300
Manila 4 7 6 500
Beijing 5 9 3 1000
Dummy 0 0 0 300
Demand (cases) 600 400 200 1,200/900

Step 2. Do Vogel’s approximation Method 1 (Table 10.3)

1. Compute the best shipping cost per warehouses:

0 = (8, 4, 5, 0)
0 = (2, 7, 9, 0)
0 = (10, 6, 3, 0)

2. Compute the second best shipping cost per warehouse:

4 = (8, 4, 5)
2 = (2, 7, 9)
3 = (10, 6, 3)

3. Compute the best shipping per factory:

4 = 4-0
2 = 2–0
3 = 3–0

4. Compute the best shipping cost per factory

2 = (8, 2, 10)
4 = (4, 7, 6)
3 = (5, 9, 3)
0 = (0, 0, 0)
5. Compute the second best shipping cost per factory:
8 = (8, 10)
6 = (7, 6)
5 = (5, 9)
0 = (0, 0)

6. Compute the difference between the best and the second best shipping cost:
6 = 8 -2
2 = 6–4
2 = 5–3
0 = 0–0

7. Determine the maximum difference and the corresponding route with assignment:
6 = maximum (4, 2, 3, 6, 2, 2, 0)
= difference corresponding to Hanoi
2 = best shipping cost of Hanoi
= Hanoi to Sydney is the route with assignment
Table 10.3 Vogel Approximation Method (VAM) 1

Cost/Case ($) Warehouse Best Second best Difference

Factory Seoul Sydney Tokyo
Hanoi 8 2 10 2 8 6
Manila 4 7 6 4 6 2
Beijing 5 9 3 3 5 2
Dummy 0 0 0 0 0 0
Best 0 0 0 Maximum 6
Second best 4 2 3 Route with assignment
Difference 4 2 3 Hanoi – Sydney
Step 3. Assign the maximum possible cases to the route with assignment (table 10.4)
1. Compute the maximum assignment:

300 = minimum (300, 400)

= total capacity of Hanoi assignment

2. Close the assignment of Hanoi :

0 = assignment from Hanoi to Seoul
0 = assignment from Hanoi to Tokyo

Table 10.4 Hanoi – Sydney Assignment

Assignment (cases) Warehouse Capacity

Factory Seoul Sydney Tokyo
Hanoi 0 300 0 300
Manila 500
Beijing 100
Dummy 300
Demand 600 400 200 1,200

Step 4. Do Vogel’s Approximation Method 2 (Table 10.5)

1. Remove Hanoi from the table
2. Compute the best shipping cost per warehouse:
0 = minimum (4, 5, 0)
0 = minimum (7, 9, 0)
0 = minimum (6, 3, 0)

3. Compute the second best shipping per warehouse:

4 = minimum (4, 5)
7 = minimum (7, 9)
3 = minimum (6, 3)

4. Compute the difference between the best and the second best shipping cost:
4 = 4–0
7 = 7–0
3 = 3–0

5. Compute the best shipping cost per factory:

4 = (4, 7, 6)
3 = (5, 9, 3)
0 = (0, 0, 0)

6. Compute the second best shipping cost per factory:

6 = (7, 6)
5 = (5, 9)
0 = (0, 0)

7. Compute the difference between the best and the second best shipping cost:
2 = 6–4
2 = 5–3
0 = 0–0

8. Determine the maximum difference and route with corresponding assignment:

7 = maximum (4, 7, 3, 2, 2, 0)
= difference corresponding to Sydney
0 = best shipping cost of Sydney
= dummy to Sydney with corresponding assignment
 Table 10.5 VAM 2
Cost/case ($) Warehouse Best Second difference
Factory Seoul Sydney Tokyo best
Manila 4 7 6 4 6 2
Beijing 5 9 3 3 5 2
Dummy 0 0 0 0 0 0
Best 0 0 0 Maximum 7
Second best 4 7 3 Route with assignment
Difference 4 7 3 Dummy – Sydney

Step 5. Assign the maximum possible cases to the route with assignment (table 10.6)
1. Compute the maximum assignment
100 = minimum (300,, 400-300)
= remaining demand of Sydney assigned

2. Close the assignment of Sydney :

0 = assignment from Manila to Sydney
0 = assignment from Beijing to Sydney

Table 10.6 Dummy – Sydney Assignment

Assignment (cases) Warehouse Capacity
Factory Seoul Sydney Tokyo
Hanoi 300 0 300
Manila 0 500
Beijing 0 100
Dummy 100 300
Demand 600 400 200 1,200

Step 6. Do Vogel’s Approximation Method 3 (Table10.7)

1. Remove Sydney from the table

2. Compute the best shipping cost per warehouse:
0 = minimum (4, 5, 0)
0 = minimum (6, 3, 0)

3. Compute the second best shipping per warehouse:

4 = minimum (4, 5)
3 = minimum (6, 3)

4. Compute the difference between the best and the second best shipping cost:
4 = 4–0
3 = 3–0

5. Compute the best shipping cost per factory:

4 = (4, 6)
3 = (5, 3)
0 = (0, 0)

6. Compute the second best shipping cost per factory:

6 = (6)
5 = (5)
0 = (0)

7. Compute the difference between the best and the second best shipping cost:
2 = 6–4
2 = 5–3
0 = 0–0
 8. Determine the maximum difference and route with corresponding assignment:
4 = maximum (4, 3, 2, 2, 0)
= difference corresponding to Seoul
0 = best shipping cost of Seoul
= dummy to Seoul with corresponding assignment

Table 10.7 VAM 3

Cost/cases ($) Warehouse Best Second Difference
Factory Seoul Tokyo best
Manila 4 6 4 6 2
Beijing 5 3 3 5 2
Dummy 0 0 0 0 0
Best 0 0 Maximum 4
Second best 4 3 Route to assignment
Difference 4 3 Dummy – Seoul

Step 7. Assign the maximum possible cases to the route with assignment (Table 10.8)
1. Compute the maximum possible cases to the route with assignment (Table 10.8)
200 = minimum (300 – 100, 600)
= remaining capacity to dummy assigned

2. Close the assignment of Dummy:

0 = assignment for Dummy to Tokyo

Table 10.8 Dummy – Seoul Assignment

Assignment Warehouse
(cases) Capacity
Factory Seoul Sydney Tokyo
Hanoi 0 300 0 300
Manila 0 500
Beijing 0 100
Dummy 200 100 0 300
Demand 600 400 200 1,200

Step 8. Do Vogel’s Approximation Method 4 (Table 10.9)

1. Remove Dummy from the table
2. Compute the best shipping cost per warehouse:
4 = minimum (4, 5)
3 = minimum (6, 3)

3. Compute the second best shipping cost per warehouses:

5 = minimum (5)
6 = minimum (6)

4. Compute the difference between the best and the second best shipping cost:
1 = 5–4
3 = 6–3

5. Compute the best shipping cost per factory

4 = (4, 6)
3 = (5, 3)

6. Compute the second best shipping cost per factory:

6 = (6)
5 = (5)

7. Compute the difference between the best and the second best shipping cost:
2 = 6–4
2 = 5–3
 8. Determine the maximum difference and route with corresponding assignment
3 = (1, 3, 2,2)
= difference corresponding to Tokyo
3 = best shipping cost of Beijing
= Beijing to Tokyo is the route with corresponding assignment

Table 10.9 VAM 4

Cost/cases ($) Warehouse Best Second Difference
Factory Seoul Tokyo best
Manila 4 6 4 6 2
Beijing 5 3 3 5 2
Best 4 3 Maximum 3
Second best 5 6 Route with assignment
Difference 1 3 Beijing – Tokyo

Step 9. Assign the maximum possible cases to the route with assignment (Table 10.10)
1. Compute the maximum assignment
100 = minimum (100, 200)
= remaining capacity to Beijing assigned

2. Close the assignment of Beijing:

0 = assignment from Beijing to Seoul

Table 10.10 Beijing – Tokyo Assignment

Assignment Warehouse
(cases) Capacity
Factory Seoul Sydney Tokyo
Hanoi 0 300 0 300
Manila 0 500
Beijing 0 0 100 100
Dummy 200 100 0 300
Demand 600 400 200 1,200

Step 10. Assign the maximum possible cases to the remaining routes (Table 10.11)
400 = minimum (500, 600 – 200)
100 = minimum (500 – 400, 200 – 100)

Table 10.11 Final Assignment

Assignment Warehouse
(cases) Capacity
Factory Seoul Sydney Tokyo
Hanoi 0 300 0 300
Manila 400 0 100 500
Beijing 0 0 100 100
Dummy 200 100 0 300
Demand 600 400 200 1,200

Step 11. Determine the total cost of the final assignment (Table 10.12)
1. Multiply the quantity assignment from Hanoi (table 10.11) with the cost (table 10.2)
0 = 0(8)
600 = 300(2)
0 = 0(10)
600 = 0 + 600 + 0
= $600 total cost from Hanoi
 2. Multiply the quantity assignment from Manila (table 10.11) with the cost (table 10.2):
1,600 = 400(4)
0 = 0(7)
600 = 100(6)
2200 = 1,600 + 0 + 600
= $2,200 total cost from Manila

3. Multiply the quantity assignment from Beijing (table 10.11) with the cost (table 10.2)
0 = 0(5)
0 = 100(0)
300 = 100(3)

300 = 0 + 0 + 300
= $300 total cost from Beijing

4. Multiply the quantity assignment from Dummy (table 10.11) with the cost (table 10.2)
0 = 200(0)
0 = 100(0)
0 = 0(0)

0 = 0+0+0
= $0 total cost from Dummy

5. Add the costs per column

1,600 = 0 + 1,600 + 0 + 0
600 = 600 + 0 + 0 + 0
900 = 0 + 600 + 300 + 0

3,100 = 600 + 2200 + 300 + 0

= $3,100 total cost

Table 10.12 total Cost

Total Cost ($) Warehouse
Capacity
Factory Seoul Sydney Tokyo
Hanoi 0 600 0 600
Manila 1,600 0 600 2,200
Beijing 0 0 300 300
Dummy 200 0 0 0
Total 1,600 600 900 3,100

Step 12. Set up the Modified Distribution (MODI) method for the possible improvement of the
assignment (Table 10.13).
Enter the cost per unit of the nonzero assignment from Table 10.11:

C ij = cost per unit of row I ( Ri ¿ and the column j ¿ ¿)

C 12 = cost per unit of R1 and K 2
C 21 = cost per unit of R2 and K 1
C 23 = cost per unit of R2 and K 3
C 33 = cost per unit of R3 and K 3
C 41 = cost per unit of R4 and K 1
C 42 = cost per unit of R4 and K 2
 Table 10.13 MODI 1
Cost/case ($) Warehouse
Row R
Factory Seoul Sydney Tokyo
Hanoi C 12 R1
Manila C 21 C 23 R2
Beijing C 33 R3
Dummy C 41 C 42 R4
Column K K1 K2 K3 C=R + K

Step 13. Determine the values of Ri and K j (table 10.14)

1. Enter the costs from table 10.2 for those identified in table 10.13
2 = C 12
4 = C 216 = C 23
3 = C 33
0 = C 41
0 = C 42

2. Compute the values of Ri and K j:

C ij = Ri + K j
C 12 = R1 + K 2 2 = 0 + K2
2 = K 2

C 42 = R4 + K 2
0 = R4 + 2 substitute K 2
−2 = R4

C 41 = R4 + K 1
0 = -2 + K 1 substitute R4
2 = K1

C 21 = R2 + K 1
4 = R2 + 2 substitute K 1
2 = R2

C 23 = R2 + K 3
6 = 2 + K3 substitute R2
4 = K3

C 33 = R3 + K 3
3 = R3 + 4 substitute K 3
−1 = R3

Table 10.14 R and K values

Cost/case C Warehouse
Row R
Factory Seoul Sydney Tokyo
Hanoi 2 0
Manila 4 6 2
Beijing 3 -1
Dummy 0 0 -2
Column K 2 2 4 R1 = 0
Step 14. Setup the table for the determination of the index (table 10.15)
Enter values of the costs form table 10.2 for those with no values in table 10.14:

8 = C 11 10 = C 13
7 = C 22
5 = C 31
9 = C 32
0 = C 43

Table 10.15 Setup for Index (I) Computation

Cost/case C Warehouse
Row R
Factory Seoul Sydney Tokyo
Hanoi 8 10 0
Manila 7 2
Beijing 5 9 -1
Dummy 0 -2
Column K 2 2 4 Index I

Step 15. Determine the new route (Table 10.16).

1. Compute the index (I)
I ij = C ij - Ri - R j
6 = 8–0–2
6 = 10 – 0 – 4
3 = 7–2–2
4 = 5 – (-1) – 2
8 = 9 – (-1) – 2
−2 = 0 – (-2) – 4

2. Compute the minimum negative index:

-2 = minimum (6, 6, 3, 4, 8, -2)
= dummy to Tokyo is the new alternative assignment

Table 10.16 The New Route

Improvement Warehouse
Index
Factory Seoul Sydney Tokyo
Hanoi 6 6
Manila 3
Beijing 4 8
Dummy -2
Index I I=C–R–K
Minimum - ? Dummy - Tokyo

Step 16. The stepping Stone Method (Table 10.17)

1. From the previous assignment at table 10.11, find the route starting with Dummy-Tokyo and
alternately jumping to nonzero quantities in vertical or horizontal direction to end at the
starting route.
Dummy - Tokyo: 0(Start)
Manila - Tokyo: 100
Manila - Seoul: 400
Dummy - Seoul: 200
Dummy - Tokyo: 0(End)
 2. Alternately assign a + or – sign starting a + sign on the new assignment:
Dummy - Tokyo: +
Manila - Tokyo: -
Manila - Seoul: +
Dummy - Seoul: -
Dummy - Tokyo: +

Table 10.17 Stepping Stone Method

Closed Path Warehouse
Factory Seoul Sydney Tokyo
Hanoi
Manila + -
Beijing
Dummy - +
Step 17. Assign the maximum possible quantity (Table 10.18)
1. Determine the minimum value of the quantities with – sign:
100 = minimum (100, 200)

2. The minimum value is subtracted from those with – sign and added to those with + sign:
100 = 0 += 100
0 = 100 – 100
500 = 400 + 100
100 = 200 – 100

Table 10.18 Dummy – Tokyo Assignment

Assignment Warehouse
(cases) Capacity
Factory Seoul Sydney Tokyo
Hanoi 300 300
Manila 500 0 500
Beijing 0 100 100
Dummy 100 100 100 300
Demand 600 400 200 1,200

Step 18. Determine the total cost of the new assignment (Table 10.19)
1. Multiply the quantity assignment from Hanoi (Table 10.18) with the cost (Table 10.2)

0 = 0(8)
600 = 300(2)
0 = 0(10)

600 = 0 + 600 + 0
= $600 total cost from Hanoi

2. Multiply the quantity assignment from Manila (Table 10.18) with the cost (Table 10.2)

2000 = 500(4)
0 = 0(7)
0 = 0(6)

2000 = 2000 + 0 + 0
= $2,000 total cost from Manila

3. Multiply the quantity assignment from Beijing (table 10.18) with the cost (Table 10.2)

0 = 0(5)
0 = 0(9)
300 = 100(3)
300 = 0 + 0 300
 = $300 total cost from Beijing
4. Multiply the quantity assignment from Dummy (Table 10.18) with the cost (Tale 10.2)

0 = 100(0)
0 = 100(0)
0 = 100(0)

0 = 0+0=0
= $0 total cost from Dummy

5. Add the cost per column:

2000 = 0 + 2000 + 0 + 0
600 = 600 + 0 + 0 + 0
300 = 0 + 0 + 300 + 0

2000 = 600 + 2000 + 300 + 0

= $2,900 total cost

Table 10.19 Total Cost

Total cost Warehouse
Total
Factory Seoul Sydney Tokyo
Hanoi 0 600 0 600
Manila 2,000 0 0 2,000
Beijing 0 0 300 300
Dummy 0 0 0 0
Total 2,000 600 300 2,900

Thus, compared to the total cost of the original assignment in Table 10.12, the new
assignment gives a total cost which $200 cheaper than the previous assignment.
Step 19. Setup the Modified Distribution (MODI) method for the possible improvement of the
assignment (Table 10.20).

Enter the cost per unit of the nonzero assignment from Table 10.18:

C ij = cost per unit of row i ( Ri ¿ and the column j¿ ¿)

C 12 = cost per unit of R1 and K 2
C 21 = cost per unit of R2 and K 1
C 33 = cost per unit of R3 and K 3
C 41 = cost per unit of R4 and K 1
C 42 = cost per unit of R4 and K 2
C 43 = cost per unit of R4 and K 3

Table 10.20 (MODI) 2

Cost/case ($) Warehouse
Row R
Factory Seoul Sydney Tokyo
Hanoi C 12 R1
Manila C 21 R2
Beijing C 33 R3
Dummy C 41 C 42 C 43 R4
Column K K1 K2 K3 C=R + K
Step 20. Determine the values of Ri and K j (table 10.21)
1. Enter the costs from table 10.2 for those identified in table 20.20:
2 = C 12
4 = C 213 = C 33
0 = C 41
0 = C 42
0 = C 43

2. Compute the values of Ri and K j:

C ij = Ri + K j
C 12 = R1 + K 2 2 = 0 + K2 Let R1=0
2 = K2

C 42 = R4 + K 2
0 = R4 + 2 substitute K 2
−2 = R4

C 41 = R4 + K 1
0 = -2 + K 1 substitute R4
2 = K1

C 21 = R2 + K 1
4 = R2 + 2 substitute K 1
2 = R2

C 43 = R4 + K 3
0 = -2 + K 3 substitute R4
2 = K3

C 33 = R3 + K 3
3 = R3 + 2 substitute K 3
1 = R3

Table 20.21 R and K values

Cost/case C Warehouse
Row R
Factory Seoul Sydney Tokyo
Hanoi 2 0
Manila 4 2
Beijing 3 1
Dummy 0 0 0 -2
Column K 2 2 2 R1 = 0

Step 21. Setup the table for the determination of the index (table 20.22)
Enter values of the costs form table 10.2 for those with no values in table 20.21:

8 = C 11 10 = C 13
7 = C 22
5 = C 23
9 = C 31
 Table 20.22 Setup for Index (II) Computation

Cost/case C Warehouse
Row R
Factory Seoul Sydney Tokyo
Hanoi 8 10 0
Manila 7 6 2
Beijing 5 9 1
Dummy -2
Column K 2 2 2 Index I

Step 22. Determine the new route (Table 10.23).

1. Compute the index (I)
I ij = C ij - Ri - K j
6 = 8–0–2
8 = 10 – 0 - 2
3 = 7–2–2
2 = 6–2-2
2 = 5–1-2
6 = 9–1-2

2. Compute the minimum negative index:

None = minimum (6, 8, 3, 2, 2, 6)
= no minimum negative index so the assignment is optimal

Table 10.23 Improvement Index

Improvement Warehouse
Index
Factory Seoul Sydney Tokyo
Hanoi 6 8
Manila 3 2
Beijing 4 8
Dummy
Index I I=C–R–K
Minimum - ? None

Thus, Allan should ship 300 cases from Hanoi to Sydney per week, 500 cases from Manila to
Seoul, and 100 from Beijing to Tokyo at a total cost of $2,900. Each warehouse will receive a shipment
per week which is 100 cases short of the demand.

Section 10.2 Solver Method

Another method to solve transportation problems is the Solver method. This computerized
method is used with a spreadsheet:
1. Microsoft Excel’s Solver
2. Open Office Calc’s Solver
Example 10.2 Unilever’s Clear for Men Shampoo (II)

Solve Example 10.1 using the Solver Method. The figures are summarized in table 10.24

Table 10.24 Spreadsheet Setup

Row/Col B C D E F G
250 Cost/case ($) Warehouse Capacity
(cases)
251 Factory Seoul Sydney Tokyo
252 Hanoi 8 2 10 300
253 Manila 4 7 6 500
254 Beijing 5 9 3 100
255 Demand (cases) 600 400 200 1,200/900
256

Step 1. Balance the table by creating a Dummy factory (Table 10.25)

1. Compute the capacity of the Dummy factory:
G266 = sum(D267:F267)-sum (G263:G265)
300 = 1,200 - 900
= 300 cases are not delivered to any of the warehouses per week.

2. Assign 0 as the shipping cost from the Dummy factory to each of the warehouse:
D266 = 0
E266 = 0
F266 = 0

Table 10.25 Balanced Table

Row/col B C D E F G
261 Cost /(s) Warehouse Capacity
262 Factory Seoul Sydney Tokyo (cases)
263 Hanoi 8 2 10 300
264 Manila 4 7 6 500
265 Beijing 5 9 3 100
266 Dummy 0 0 0 300
267 Demand (cases) 600 400 200 1,200//1200
268

Step 2. Determine up on a spreadsheet as a Solver problem (Table 10.26)

1. Determine the variables from Hanoi:

D275 = number of cases shipped per week to Seoul
E275 = number of cases shipped per week to Sydney
F275 = number of cases shipped per week to Tokyo

2. Determine the variables from Manila:

D276 = number of cases shipped per week to Seoul.
E276 = number of cases shipped per week to Sydney
F276 = number of cases shipped per week to Tokyo

3. Determine the variables from Beijing

D277 = number of cases shipped to Seoul
E277 = number of cases shipped to Sydney
F277 = number of cases shipped to Tokyo

4. Determine the variables from Dummy

D278 = number of cases shipped to Seoul
 E278 = number of cases shipped to Sydney
F278 = number of cases shipped to Tokyo

5. Determine the formula for the total demand per warehouse:

D279 = (D275:D278)
E279 = (E275:E278)
F279 = (F275:F278)

6. Determine the formula for the total capacity per factory:

G275 =sum(D275:F275)
G276 =sum(D276:F276)
G277 =sum(D277:F277)
G278 =sum(D278:F278)

7. Determine the formula for the grand total

G279 =concatenate[sum(D279:F279),”/”,sum(G275:G278)]

Table 10.26 Initial solution Table

Row/col B C D E F G H I
273 Assignment Warehouse Total Sign capacity
(cases)
274 Factory Seoul Sydney Tokyo
275 Hanoi 0 = 300
276 Manila 0 = 500
277 Beijing 0 = 100
278 Dummy 0 = 300
279 Total 0 0 0 Demand/c
280 Sign = = = 0/0 apacity 1,200/1,
281 Demand 600 400 200 200

Step 3. Set up the total cost table (Table 10.27)

1. Enter the formula for the total cost of Hanoi:
D288 =D263(D275)
E288 =E263(E275)
F288 =F263(F275)
G288 =sum(D88:F288)

2. Enter the formula for the cost of Manila:

D289 =D264(D276)
E289 =E264(E276)
F289 =F264(F276)
G289 =sum(D289:F289)

3. Enter the formula for the total cost of Beijing

D290 =D265(D277)
E290 =E265(E277)
F290 =F265(F277)
G290 =sum(D290:F290)

4. Enter the formula for the total cost of Dummy

D291 =D266(D278)
E291 =E266(E278)
F291 =F266(F278)
G291 =sum(D291:F291)
 5. Enter the formula for the total cost:
D292 =sum(D288:D291)
E292 =sum(E288:E291)
F292 =sum(F288:F291)
G292 =sum(G288:G291)

Table 10.27 Initial Total Cost Table

Row/col B C D E F G
286 Total cost ($) Warehouse TOTAL
287 Factory Seoul Sydney Tokyo
288 Hanoi 0 0 0 0
289 Manila 0 0 0 0
290 Beijing 0 0 0 0
291 Dummy 0 0 0 0
292 Total 0 0 0 0

Step 4. Solve Table 10.26 using Solver Add-in (Table 10.28)

/Tools/Solver
*Set Target Sell: G292
*Equal To: Min
*By Changing Cells: D275:F278
Constraints: D279:F279=D281:F281
G275:G278=I275:I278

/Options
*Assume Linear Model
*Assume Noon-negative OK
/Solve /Answer Report

Table 10.28 Final Solution Table

Row/Co B C D E F G H I
l
273 Assignment Warehouse
(cases) Total Sign capacity
274 Factory Seoul Sydney Tokyo
275 Hanoi 0 300 0 300 = 300
276 Manila 500 0 0 500 = 500
277 Beijing 0 0 100 100 = 100
278 Dummy 100 100 100 300 = 300
279 Total 600 200 200 1,200/ Demand/ 1,200/1,200
280 Sign = = = 1,200 capacity
281 Demand 600 400 200

Step 5. Review the total cost (Table10.29).

Table 10.29 Final Total Cost Table

Row / Col B C D E F G
286 Total cost ($) Warehouse Total
287 Factory Seoul Sydney Tokyo
288 Hanoi 0 600 0 600
289 Manila 2,000 0 0 2,000
290 Beijing 0 0 300 300
291 Dummy 0 0 0 0
292 Total 2,000 600 300 2,900
Step 6. Analyze the Answer Report (Table 10.30)

G292 =2,900 ($2,900 is the total cost per week)

D275 =0 (0 cases is shipped from Hanoi to Seoul)

E275 =300 (300 cases is shipped from Hanoi to Sydney)
F275 =0 (0 cases shipped from Hanoi to Tokyo)

D276 =500 (500 cases is shipped from Manila to Seoul)

E276 =0 (0 cases is shipped from Manila to Sydney)
F276 =0 (0 cases is shipped from Manila to Tokyo)

D277 =0 (0 cases is shipped from Beijing to Seoul)

E277 =0 (0 cases is shipped from Beijing to Sydney)
F277 =100 (100 cases is shipped from Beijing to Tokyo)

D278 = 100(100 cases shipped from Dummy to Seoul)

E278 = 100(100 cases shipped from Dummy to Sydney)
F278 = 100(100 cases is shipped from Dummy to Tokyo)

The slack variables are all 0 because the = sign is used in the constraints.

Table 10.30 Answer Report

Microsoft 3xcel 9.0 Answer Report

Worksheet: [Quameth.xls]Chapter 10
Target cell (Min)
Cell Name Original Final /Tools
$G$29 Total Total 0 2900 /Solver
2 *Set Target Cell G292
Adjustable Cells *Equal to:Min
Cell Name Original Final *By Changing Cells: D275:F278
$D$275 Hanoi Seoul 0 0 *Constraints:
$E$275 Hanoi Sydney 0 300 D279:F279=D281:F281
$F$275 Hanoi Tokyo 0 0 G275:G278=I275:I278
$D$276 Manila Seoul 0 500 /Options
*Assume Linear Model
$E$276 Manila Sydney 0 0
*Assume Non-negative
$F$276 Manila Tokyo 0 0
OK
$D$277 Beijing Seoul 0 0
/Solve
$E$277 Beijing Sydney 0 0
/Answer Report
$F$277 Beijing Tokyo 0 100
$D$278 Dummy Seoul 0 100
$E$278 Dummy Sydney 0 100
$F$278 Dummy Tokyo 0 100
Constraints
Cell Name Value Formula Status Slack
$D$279 Total Seoul 600 $D$279=$D$281 Binding 0
$E$279 Total Sydney 400 $D$279=$D$281 Binding 0
$F$279 Total Tokyo 200 $D$279=$D$281 Binding 0
$G$275 Hanoi Total 300 $D$275=$D$275 Binding 0
$G$276 Manila Total 500 $D$276=$D$276 Binding 0
$G$277 Beijing Total 100 $D$277=$D$277 Binding 0
$G$278 Dummy Total 300 $D$278=$D$278 Binding 0

Thus, Allan should ship 300 cases from Hanoi to Sydney per week, 500 cases from Manila to
Seoul, and 100 cases form Beijing to Tokyo at a total cost of $2,900. Each warehouse will receive a
shipment per week which is 100 cases short of the demand. The result is the same with the answer of
Example 10.1.