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How do you solve the least cost method?

Raymond

How do you solve the least cost method?

  1. Step 1: Balance the problem.
  2. Step 2: Select the lowest cost from the entire matrix and allocate the minimum of supply or demand.
  3. Step 3: Remove the row or column whose supply or demand is fulfilled and prepare a new matrix.
  4. Step 4: Repeat the procedure until all the allocations are over.

How is least cost problem solved in transportation problem define?

Definition: The Least Cost Method is another method used to obtain the initial feasible solution for the transportation problem. Here, the allocation begins with the cell which has the minimum cost. The lower cost cells are chosen over the higher-cost cell with the objective to have the least cost of transportation.

What is minimum cost method?

Using the minimum cost method, the route that has the lowest transportation cost is filled first, and each successively lower cost cell is filled in from available supply until all demand has been satisfied. This method provides the lowest possible transportation costs.

What is least cost combination?

The principle of least cost combination states that if two factor inputs are considered for a given output the least cost combination will be such where their inverse price ratio is equal to their marginal rate of substitution.

What is LCM & VAM?

North West Corner Method (NWCM) , Least Cost Method (LCM) and Vogel’s Approximation Method (VAM) are the classical methods for solving transportation problems and are well discussed in all the operation research books. NWCM was introduced by Charnes in 1953, VAM was introduced by Reinfeld and Vogel in1958, LCM.

What are the first two steps of least cost schedule?

Method: Least Cost Method (LCM) Step 1: Find the cell with the least(minimum) cost in the transportation table. Step 2: Allocate the maximum feasible quantity to this cell. Step:3: Eliminate the row or column where an allocation is made.

How can we solve the transportation problem?

To solve a transportation problem, the following information must be given:

  1. m= The number of sources.
  2. n= The number of destinations.
  3. The total quantity available at each source.
  4. The total quantity required at each destination.
  5. The cost of transportation of one unit of the commodity from each source to each destination.

What is the least cost rule?

The least‑cost rule. States that costs are minimized where the marginal product per dollar’s worth of each resource used is the same. (Example: MP of labor/labor price = MP of capital/capital price).

What is the least cost point of a firm?

Since the firm’s goal is to maximise profit, the optimum input combination for producing a particular quantity of its product would be one that would produce the output at the minimum possible cost. The optimum input combination in this case is known as the least cost combination of inputs.

Who introduced least cost method?

F.L. Hitchcock
The first systematic procedure in solving the TP was developed by F.L. Hitchcock [1] in 1941 and referred as Least Cost Method (LCM), which consists in allocating as much as possible in the lowest cost cell of the TP in making allocation in every stage.

How many ways can a problem in transportation model be solved?

three
A transportation problem can be solved in three steps: creating a transportation matrix, finding an initial feasible solution, and checking whether the solution is optimal.

How to understand least cost method?

To understand Least Cost Method we will go through the numerical provided as follows (the same numerical we used in North West Corner Method | Method to Solve Transportation Problem | Transportation Model) : A mobile phone manufacturing company has three branches located in three different regions, say Jaipur, Udaipur and Mumbai.

Which method provides the lowest possible transportation costs?

Using the minimum cost method, the route that has the lowest transportation cost is filled first, and each successively lower cost cell is filled in from available supply until all demand has been satisfied. This method provides the lowest possible transportation costs.

What is the minimum-cost method?

Lucinda has taught business and information technology courses, has a PhD in Education, and a master’s degree in business education. The minimum-cost method attempts to reduce costs of distribution by targeting specific areas of the process with lower costs than others.

How to find the cell with the least cost in Excel?

Choose any at random say (O3, D2). Allocate this cell with a minimum among the supply from the respective row and the demand of the respective column. Cancel the row or column with zero value. Now the cell with the least cost is (O3, D3).