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

Transportation model-linear programming, Transportation model In the obvi...

Transportation model In the obvious sense, the model deals with the determination of a minimum cost plan for transporting a single commodity from a number of sources (e.g. factor

Determine the objectives of ratio analysis, Objectives of ratio analysis ...

Objectives of ratio analysis 1) Measuring the profitability: we can measure the profitability of the business by calculation gross profit net profit expenses ratio and other.

Transfer pricing-performance evaluation, Transfer Pricing and Performance E...

Transfer Pricing and Performance Evaluation Transfer pricing is simple in concept and yet complex in implementation. It provides a divisional output valuation where output from

Standerd costing, Ask queThe standard cost of chemical mixture ~ PQ’ is as ...

Ask queThe standard cost of chemical mixture ~ PQ’ is as follows: 40% of material P @ Rs. 400 per kg. 60% of material Q @ Rs. 600 per kg. A standard loss of 10% is normally anticip

Cash and treasury management, Cash is a significant current asset for the o...

Cash is a significant current asset for the operations of business. Cash is the fundamental input that maintains business running smoothly and continuously. In excess of cash and l

Commercial paper, The CP introduced in the Indian financial market, for the...

The CP introduced in the Indian financial market, for the recommendations of the Vaghul Committee has turn into a well-liked debt instrument of the corporate world. Commercial Pape

Definition of activities based costing, Definition of Activities based cost...

Definition of Activities based costing Activity based costing is a system that focuses on activities as the fundamental cost objects and uses the costs of these activities as b

How much must you deposit each year to reach your goal, Right now you are 2...

Right now you are 20 years old and you have decided that you want to have $2,000,000 in the bank when you turn 65 years old. How much must you deposit each year to reach your goal

Advantages-limitations-dynamic programming, Advantages and Limitations of D...

Advantages and Limitations of Dynamic Programming Advantages: (1) In certain types of problems such as inventory control management, Chemical Engineering design, dynamic

Adjusted profit and loss method, Under this method, approximated profit is ...

Under this method, approximated profit is calculated depends on transactions of the ensuing period. Afterward, decrease or increase in working capital is determined adjusting the e

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