Transportation model table, Managerial Accounting

Assignment Help:

Transportation model Table

A more compact method for representing the transportation model than the linear equations is to use what we call the transportation tableau. It is a matrix form with its rows symbolizing the sources and its columns the destinations. The cost element cij are summarized in the northeast corner of the matrix cell (i,j). This will be the basis for the development of a special simplex-based method for solving the transportation problem.

In some cases, the problem could be unbalanced because the total supply does not equal the total demand.

Where demand exceeds supply, a fictitious or dummy source (plant) can be added with its capacity equal to the difference. The cost of shipping will be 0. Physically, the amount shipped to a destination from a dummy plant will represent the shortage quantity at that destination. We may look at the situation differently, however, by saying that a penalty cost is incurred for every unsatisfied demand unit at the destination centers.  In this case the unit transportation cost will equal the unit penalty costs at the various destinations.

In a similar manner, if the supply exceeds the demand, we can add a fictitious or dummy destination that will absorb the difference. Any quantity shipped from a plant to a dummy destination represents a surplus quantity at that plant. The associated unit transportation cost is zero. However, we can charge a storage cost for holding these commodities at the plant, in which case the unit transportation cost will equal the unit storage cost.

At times we can find cells where we cannot allocate any unit due to physical constraints. In that case the transportation cost should be shown as M—being M a very high cost.


Related Discussions:- Transportation model table

Activity based costing, Activity Based Costing (ABC) differs from Absorptio...

Activity Based Costing (ABC) differs from Absorption Costing (AC) in the manner in which overheads are charged to units. ABC charges overheads to units based on their proportion

What are the objectives of budgetary control, What are the Objectives of bu...

What are the Objectives of budgetary control 1) Planning : planning is an important managerial function. it helps to decide in advance, what to do how to do it when to do it a

Features of a queue, Features of a queue A calling population – ref...

Features of a queue A calling population – refers to the number of potential customers. This number may be considered finite or infinite. An infinite calling population is

Accounting profit, Accounting Profit is a company's sum total earnings, com...

Accounting Profit is a company's sum total earnings, computed according to Generally Accepted Accounting Principles (GAAP), and involves the explicit costs of operating business, l

Explain why the preparation of the budget, Question: (a) The demand for...

Question: (a) The demand for the output of a certain company is very elastic and modern plant recently installed is capable of greatly increased production. Output at present

Gather data about alternatives, Gather Data about Alternatives When pot...

Gather Data about Alternatives When potential areas of activity are specified, management must assess the potential growth rate of the activities, the capability of the company

Positioning, Positioning An essential part of the planning process is p...

Positioning An essential part of the planning process is positioning the organization to attain its goals. Positioning is a wide concept and depends on gathering and evaluating

Financial statement, how to i get financial report for my company Anuz Wpp

how to i get financial report for my company Anuz Wpp

Marginal costing, marginal costing decision making assignment questions

marginal costing decision making assignment questions

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd