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Least Cost Method:
i) Before starting the process of allocation ensure that the total of availability and demand is equal. The least cost method starts by making the first allocation in the cell whose shipping cost (or transportation cost) per unit is lowest.
ii) This lowest cost cell is loaded or filled as much as possible in view of the origin capacity of its row and the destination requirements of its column.
iii) We move to the next lowest cost cell and make an allocation in view of the remaining capacity and requirement of its row and column. In case there is a tie for the lowest cost cell during any allocation, we can exercise our judgment and we arbitrarily choose cell for allocation.
iv) The above procedure is repeated till all row requirements are satisfied.
i) Before starting the process of allocation ensure that the total of availability and demand is equal. The least cost method starts by making the first allocation in the cell whose shipping cost (or transportation cost) per unit is lowest.
ii) This lowest cost cell is loaded or filled as much as possible in view of the origin capacity of its row and the destination requirements of its column.
iii) We move to the next lowest cost cell and make an allocation in view of the remaining capacity and requirement of its row and column. In case there is a tie for the lowest cost cell during any allocation, we can exercise our judgment and we arbitrarily choose cell for allocation.
iv) The above procedure is repeated till all row requirements are satisfied.
