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

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.

Posted Date: 12/7/2012 7:37:02 AM | Location : United States







Related Discussions:- Vogel''s approximation method (vam), Assignment Help, Ask Question on Vogel''s approximation method (vam), Get Answer, Expert's Help, Vogel''s approximation method (vam) Discussions

Write discussion on Vogel''s approximation method (vam)
Your posts are moderated
Related Questions
Correlation coefficient (r) Correlation coefficient measures the degree of association between two variables such as the cost and the activity level. r = nΣxy   -  Σx  Σy

Question 1: (a) Use indifference curves to distinguish between income and substitution effects. (b) Hence, using the above techniques explain why the demand curve slope down

question 3.5A Trial balance sheet,income statement, owner''s equity and balance sheet

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


Cash to debt service ratio  Cash to debt service ratio also known as debt cash flow coverage ratio is an improvement over the interest coverage ratio and is calculated. The

The decisions about long-term investment are depends on judgments on future cash flows, the improbability of such cash flows and the opportunity cost also of the funds to be invest

Please help me with these problems Merry -Go -Around (MGR) a clothing retailer located primarily in shopping malls, was founded in 1968. By the early 1990s, the company had gon

LEARNING CURVE THEORY The first time a new operation is performed both workers and operating procedures are untried but as the operation is replaced the workers becomes more fa

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