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

Case study, yolande tzar came to norethen ireland

yolande tzar came to norethen ireland

Imposed budgets- budgetary styles, Imposed Budgets In this approach to ...

Imposed Budgets In this approach to budgeting, top management prepares a budget with little or no help from operating personnel, which is then obligatory upon the employees who

Determine the scope and areas of cost reduction, Determine the Scope and ar...

Determine the Scope and areas of cost reduction Scope and areas of cost reduction the scope of cost reduction is so wide that it is not practicable to develop fully the areas i

Independence of observations, Independence of observations An important...

Independence of observations An important assumption for the simple linear regression model is the independence of errors. In many time series models, this assumption is violat

Scorecard, Scorecard The traditional approach to the monitoring organiz...

Scorecard The traditional approach to the monitoring organizational performance has focused on the financial measures and the outcomes. Increasingly, companies are realizing th

Case of variable quantity-discounts structures, The case of variable quanti...

The case of variable quantity discounts In practice, suppliers may offer different discounts for different quantities purchased. For illustration:    Segment        Quantity

Determine the creditors turnover ratio, Creditors turnover ratio ( or payab...

Creditors turnover ratio ( or payables turnover ratio) Meaning: this ratio establishes a relation ship between net credit purchases and average trade creditors. Objective

Just-in time inventory management-jit production , Just-in Time (JIT) Inven...

Just-in Time (JIT) Inventory management JIT is a system whose purpose is to generate or to purchase products or components as they are required by customers or for use rather

Transition probabilities, Transition probabilities These are the probab...

Transition probabilities These are the probabilities of moving from one state to another in the next time period. Usually they are written in the form of a probability matrix.

Cost, What are the limation of semi variable cost and how to overcome it?

What are the limation of semi variable cost and how to overcome it?

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