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Question

1.     ABC limited has three production shops supplying a product

to five warehouses. The cost of production varies from shop to shop and cost of transportation from one shop to a warehouse also varies. Each shop has a specific production capacity and each warehouse has certain amount of requirement. The cost of transportation are given below:
 
 
Warehouse
 
I II III IV V Supply Shop A 6 4 4 7 5 100
B 5 6 7 4 8 125
C 3 4 6 3 4 175
Demand 60 80 85 105 70 400
The cost of manufacturing the product at different production shop is
Shop Variable cost Fixed cost
A 14 7,000
B 16 4,000
C 15 5,000

a)     Find the optimum quantity to be supplied from each shop to different warehouses at minimum total cost.

Step-by-step answer

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Transportation cost Matrix.JPG

MODI Solution.JPG

MODI Solution.JPG
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Subject: Accounting, Business

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