QUANTITATIVE ANALYSIS FOR MANAGERS TRANSPORTATION MODEL. Learning Objectives. When you complete this chapter, you should be able to identify or define : Transportation modelling to explain or use: Northwest-corner method Least Cost method Vogel’s Approximation method
When you complete this chapter, you should
- Demand Not Equal to Supply
1. North-West Corner Method (NWCM)
A company has three factories F1, F2 and F3 with production capacity 100, 250 and 150 units per week respectively. These units are to be shipped to four warehouses W1, W2, W3 and W4 with requirement of 90, 160, 200 and 50 units per week respectively. The transportation costs (in Rs) per unit between factories and warehouses are given as follows:
Route Units per unit
From To shipped X cost (Rs) = Total Cost
Total Transportation cost = Rs 15, 020
Occupied shipping routes = (no. of rows +
no. of columns) – 1
= 3 + 4 –1
This cost is less than the cost determined by
NWCM. Therefore, this method is preferred over
This method is preferred over the other two methods
because the initial basic feasible solution obtained is
either optimal or very close to the optimal solution.
This method starts with an evaluation of
each of the unoccupied cells to decide
whether it would be economical to introduce
any of these cells into the current solution.
A company is spending Rs1000 on transportation of its units from three plants to four distribution centres. The availabilities and requirements of units with units cost of transportations are given as:
What can be the maximum saving for the company by optimum distribution?