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

Illustration of standard error of estimate , Illustration of Standard error...

Illustration of Standard error of estimate The production manager of XYZ Company is concerned about the apparent fluctuation in efficiency and wants to determine how labour cos

Financial planning programs, Financial planning programs Such programs ...

Financial planning programs Such programs differ in complexity. Some simple programs can include only those variables discussed while other more complicated ones can include an

What is solvency ratios, Explain Solvency ratios The term solvency refe...

Explain Solvency ratios The term solvency refers of the ability of a concern to meet its long term obligations. The long term indebtedness of a firm include debenture holders,

Explain the cost according to controllability, Explain the cost According t...

Explain the cost According to controllability: Controllable cost: this is a cost which can be inclined by the action of a specified member of an undertaking. The organization

Transfer pricing with third party consequences, Transfer pricing with third...

Transfer pricing with third party consequences Transfer prices are used not only for internal record keeping and performance evaluation purposes. There are several settings

Amount transferred from wip to finished goods, HGT Company initialized the ...

HGT Company initialized the accounting period with the following beginning balances:          During the accounting period, the company purchased $60,000 of raw materials and ended

Invoice discounting or factoring, If a company creates sales to a number of...

If a company creates sales to a number of customers on credit terms this will have to wait for two or still three months before its debtors pay that they owe. It means that the deb

What are the advantages of zero base budgeting, Advantages of zero base bud...

Advantages of zero base budgeting 1) it provides a basis for evaluating decision packages on the basis of benefit considerations 2) it reduces inefficiency and achieves high

Cost behavior, Echeverria SA is an Argentinian manufacturing company whose ...

Echeverria SA is an Argentinian manufacturing company whose total factory overhead costs fluctuate somewhat from year to year according to the number of machine-hours worked in its

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