Basic assumption of transportation model, Managerial Accounting

Assignment Help:

Basic Assumption of Transportation Model

The basic assumption of the model is that the transportation cost on a given route is directly proportional to the number of units transported. The "unit of transportation" will differ based on the "commodity" transported i.e. a truck load may be a better unit than single product units.

559_diagram1.jpg


m = Source
n = Destination

A source or destination is represented by a node. The line joining a source with a destination represents the route through which the commodity is transported.
The quantity of supply at source i is ai and the demand at destination j is bj. The "unit" transportation cost between source i and destination j is cij

Let xij represent the amount transported from i to destination j.

The LP Model symbolizing the transportation problem is given usually as:

1127_diagram2.jpg

     
 xij > 0 for all i and j

(1)   It stipulates that the sum of the shipments from a source cannot exceed its supply.
(2)   It requires that the sum of the shipments to a destination must satisfy its demand.

529_diagram3.jpg

The model explained above implies that the total supply


must at least equal the total demand if the total supply equal the total demand then it is called a balanced transportation model.  It differs from the above model in the fact that all constraints are equations.

1529_diagram5.jpg

 

In actual life, this is not essentially true. Though, a transportation model can always be balanced. The balancing, in addition to its usefulness in modeling certain practical situations is important for the development of a solution method that fully exploits the special structure of the transportation model.

 

 

 


Related Discussions:- Basic assumption of transportation model

What are the categories of zero base budgeting, Categories of zero base bud...

Categories of zero base budgeting The preceding discussion will reveal that zero base budgeting is based primarily on: 1) Development of decision units 2) Identification

Financial statement, how to i get financial report for my company Anuz Wpp

how to i get financial report for my company Anuz Wpp

Zero-base budgeting , Zero-Base Budgeting Zero-Base Budgeting (ZBB) wa...

Zero-Base Budgeting Zero-Base Budgeting (ZBB) was first developed and introduced for business by Peter A. Pyhrr. From this starting ZBB has been explored and adopted by many o

Role of the management accountant, Define role of Management Accountant ...

Define role of Management Accountant The main role of management accountant is defined below. Planner e.g. budgeting Information provider e.g. operating statement

Explain programmer budgeting according to burkhead, Explain Programmer budg...

Explain Programmer budgeting According to burkhead According to burkhead a program budget serves a different purpose than performance budget. A performance budget is useful fo

State direct material cost standard, State Direct material cost standard ...

State Direct material cost standard The determination of direct material cost standard would involve: a) Determination of quantity standards and b) Determination of pric

Inventory planning and control, INVENTORY PLANNING AND CONTROL The main...

INVENTORY PLANNING AND CONTROL The main goal of "inventory control" is to discover and maintain the optimum level of investment in all types of inventories, from raw materials

Estimate a demand function and forcast demand, Question 1: Assuming tha...

Question 1: Assuming that you are appointed consultant on economic matters for a company and you are asked to analyse the market structures in various sectors of the economy.

Transaction loans, These loans are given by the Banker for short periods fo...

These loans are given by the Banker for short periods for an exact activity like financing for a civil contract work. As the customer receives payment, the transaction will be repa

Hire purchase and leasing, This is a most familiar form of medium term fina...

This is a most familiar form of medium term financing in obtaining plant and vehicles, machinery etc. In hire purchase transactions, the purchaser of goods will obtain the possessi

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