Vogel''s approximation method (vam), Managerial Accounting

Assignment Help:

Vogel's Approximation Method (VAM)

This method is a heuristic and usually provides a better starting solution than the two methods described above. However, VAM generally yields an optimum, or close to optimum, starting solution.

The steps of the process are as shown below:

Step 1: 

Evaluate a penalty for each row (column) by subtracting the smallest cost element in the row (column) from the next smallest cost element in the same row (column).

Step 2:

Identify the row or column with the largest penalty, breaking ties arbitrarily. Assign as much as possible to the variable with the least cost in the chosen row or column. Regulate the demand and supply and cross-out the satisfied row or column. When a row and a column are fulfilled concurrently, only one of them is crossed out and the enduring row (column) is allocated a zero supply (demand). Row or column with zero demand or supply should not be used in computing future penalties—(in Step 3)

Step 3:

(a) When exactly one row or one column stays uncrossed out, stop.
(b) When only one row (column) with positive supply (demand) stays uncrossed out, determine the fundamental variables in the row (column) by the least-cost technique.
(c) If all uncrossed-out rows and columns have (assigned) zero supply and demand, determine the zero basic variables the least-cost method.  Stop.
(d) Or else, re-computed the penalties for the uncrossed-out rows and columns then go to step 2.
(e) Notice that the rows and columns with assigned zero supply and demand should not be used in computing these penalties.

2459_box3.jpg


The cost of the program is Shs 315 which happens to be optimal. The given version of VAM breaks ties between penalties arbitrarily.  However, breaking of ties may be crucial in rendering a good starting solution.


Related Discussions:- Vogel''s approximation method (vam)

Which of the following costs is an example of a cost, Which of the followin...

Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes?

Motives for holding inventories, MOTIVES FOR HOLDING INVENTORIES If pro...

MOTIVES FOR HOLDING INVENTORIES If production and delivery of goods were instantaneous, there would be no need for inventories. However in reality, the manufacturing and purcha

Determine the distribution cost and research cost, Determine the Distributi...

Determine the Distribution cost and Research cost Distribution cost: The cost of sequence of the operations which begin with making the packed product available for dispa

#, Describe the important role that the corporate level strategy has in rel...

Describe the important role that the corporate level strategy has in relation to the development of the business and functional strategy in a multi -business organization

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

Determine the companys bid, King Manufacturing has four categories of overh...

King Manufacturing has four categories of overhead. The four categories and expected overhead costs for each category for next year are as follows: Maintenance

Duffy tol and stamping, What are the objectives of excellence teams and min...

What are the objectives of excellence teams and minicompanies? Did the companies achieve these objectives?estion #Minimum 100 words accepted#

Advantages of marginal costing, Problem Marginal costing plays a major ...

Problem Marginal costing plays a major role in making certain decisions. It provides information to management regarding the behaviour of costs and the incidence of such costs

Cvp, THE BREAK EVEN POINT

THE BREAK EVEN POINT

Variances analysis , Variances Analysis Variances are the differences ...

Variances Analysis Variances are the differences between actual results and expected results. Expected results are the standard costs and standard revenues. Price, rate and

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