Vogel’s Approximation Method in transportation costing

VAM entails the following steps:
Step 1: For each row of the transportation table identify the smallest and next smallest costs. Find the difference between the two costs and display it to the right of that row as “Difference” (Diff.). Likewise, find such a difference for each column and display it below that column. In case two cells contain the same least
cost then the difference will be taken as zero.

Step 2: From amongst these row and column differences, select the one with the largest difference. Allocate the maximum possible to the least cost cell in the selected column or row. If there occurs a tie amongst the largest differences, the choice may be made for a row or column which has least cost. In case there is a tie in cost cell also, choice may be made for a row or column by which maximum requirement is exhausted. Match that column or row containing this cell whose totals have been exhausted so that this column or row is ignored in further consideration.

Step 3: Recompute the column and row differences for the reduced transportation table and go to step 2. Repeat the procedure until all the column and row totals are exhausted.
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