CMA Final · Strategic Cost Management · Transportation
A cement firm ships from plants P1, P2, P3 (supply 40, 30, 30 tonnes) to markets D1, D2, D3 (demand 30, 40, 30 tonnes). Unit costs in rupees are P1: 4, 9, 6; P2: 5, 3, 10; P3: 8, 2, 12. Using Vogel's Approximation Method, what is the first allocation?
The largest Vogel penalty is 6, for plant P3 (its two lowest costs are 2 and 8). Its cheapest cell is P3-D2, so that cell is allocated first. The quantity is the smaller of supply 30 and demand 40, which is 30 tonnes.
- A30 tonnes to P3-D2Correct
- B30 tonnes to P1-D1
- C40 tonnes to P3-D2
- D30 tonnes to P2-D2
Explanation
Row penalties are P1: 6-4=2, P2: 5-3=2, P3: 8-2=6. Column penalties are D1: 5-4=1, D2: 3-2=1, D3: 10-6=4. The largest penalty is 6 in row P3, whose cheapest cell is P3-D2 (cost 2). The allocation is min(30, 40) = 30 tonnes. Allocating 40 ignores the P3 supply limit.
Did you get it right without looking?
One question tells you little. A timed set on Transportation shows your real accuracy, how long you take and where you lose marks.
More Transportation questions
- A transportation problem has 3 sources and 4 destinations. An initial feasible solution by the North-West Corner method has only 5 occupied …
- A transportation problem has two sources and three destinations. Unit costs in rupees are S1: 8, 6, 10 and S2: 9, 7, 5 for D1, D2, D3. The c…
- A transport planner at a Pune distribution firm has a balanced transportation problem with 3 godowns (origins) and 4 retail hubs (destinatio…
- A firm has three plants (A, B, C) and three markets (D1, D2, D3). Unit costs (Rs) are A: 8, 5, 9; B: 6, 10, 7; C: 11, 12, 13. Under Vogel's …
- A firm wants to maximise profit in a transportation problem. The highest unit profit in the matrix is ₹30. To solve it using the minimisatio…