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Transportation Problem-Solution
Solution of the Transportation Problem:
The fundamental steps of the transportation method are:
Step 1: Determine a preliminary basic feasible solution.
Step 2: Determine an entering variable from among the non-basic variables. If all such variables satisfy the optimality condition (of the simplex method), Stop; otherwise, go to Step 3.
Step 3: Determine a leaving variable (using the feasibility condition) from among the variables of the current basic solution; then find the new basic answer. Return to Step 2.
The vehicle of explanation is the table shown below. The unit transportation cost cij is in shillings. The supply and demand are given in number of units.
Why might managers favour this ABC system instead of the older system that allocated all MOH costs on the basis of direct? labour?
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