Transportation model table, Managerial Accounting

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.

Posted Date: 12/7/2012 7:26:50 AM | Location : United States







Related Discussions:- Transportation model table, Assignment Help, Ask Question on Transportation model table, Get Answer, Expert's Help, Transportation model table Discussions

Write discussion on Transportation model table
Your posts are moderated
Related Questions
What does it mean when we say consistency is the central feature of economic rationality?

What are the features of performance budgeting The main features of performance budgeting are:  a)  Classification into functions activities or programmers.  b)  Specifyi

When forming a company, the options are sole proprietor, partnership, and corporation. Most choose corporation. Why is the corporate form seen to be best? What rights do the stockh

GRAPHICAL METHOD Graphical methods can be used in games with no saddle points and having pay off m X 2 or 2 X n matrix. The aim is to substitute a much simpler 2 X 2 matrix for

Risk : Risk includes circumstances or events that may or may not take place though whose probability of occurrence can be predicted from the past records. In this atmosphere, t

Kaizen and management Management has two major components: 1) Maintenance 2) Improvement. The aim of  the maintenance function is to maintain current technological man

Interest coverage ratio (or debt service ratio)  Meaning: this ratio establishes a relationship among net profits before interest and taxes and interest on long debt. Obj

Use of Budgetary controls Budgetary controls are used for the following reasons: 1) To state the objectives of the organization as a whole. 2) To reveal the extent by whi

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

Explain the practical application of differential costing with examples