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)

Business application, Conceptual understanding: defining in identifying rel...

Conceptual understanding: defining in identifying relevant information Business application - Dave burgers is in the fast food restaurant business. One component of it's market

Advantages-disadvantages-standard costing, The advantages and disadvantages...

The advantages and disadvantages of standard costing The benefits for controlling having a standard costing system in operation can be summed up as follows; Cautiously pl

MOH Cost Help, During the year the company worked a total of 145,900 machin...

During the year the company worked a total of 145,900 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,305,346. What is the amount of underapplied o

Define briefly about pricing decision, Pricing decision Price may be de...

Pricing decision Price may be defined as the exchange of goods or services in terms of money. Without price firm can survive in the society. If money is not there exchange of g

Cash forecasting and budgeting, A cash budget is one of the main important ...

A cash budget is one of the main important devices to plan and control cash payments and receipts. In preparation of a cash budget the subsequent points are considered. Cred

Characterize the short run production function of a firm, Question 1: (...

Question 1: (a) ‘The car industry is characterized by broad products differentiation' Analyse the long run situation of a car producer, commenting on profitability and efficien

Learning curve theory, LEARNING CURVE THEORY The first time a new opera...

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

Show the process of pricing during introduction, Q. Show the process of Pri...

Q. Show the process of Pricing during introduction? Pricing during introduction: in pricing a new product generally two kinds of strategies are suggested viz. a) Skimming p

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