Linear Programming: A Practical Approach to Transportation Cost Problems
14 Pages Posted: 18 Jul 2009
Date Written: July 16, 2009
Cost, in accounting terms, refers to the sacrifice given up in order to obtain a product or service. Transportation cost, on the other hand, relates to the cost of carriage or conveyance of goods and services from one place (the origin - the factor) to another place (the destination - the warehouse). Various techniques and procedures are employed to minimize transportation cost. This paper dwells on the usage of linear programming approach towards solving transportation cost problems. Linear programming in a nut-shell is a term that covers a whole range of mathematical techniques that aim at optimizing performance in terms of combination of resources. It is one of the practical approaches which are employed by the cost accountant to achieve the desired objective of minimizing cost while maximizing profit and efficiency. According a brief introduction of the subject matter is proffered, and the concepts which are commonly used are examined. The paper also discusses the method of solving linear programming problems. Others areas where linear programming could be applied are also outlined.
Keywords: Objective function, Set of constraints, Linear Programming Model, Solution of the System, Polyhedral Convex Set basic Variables, Non-basic Variables, Feasible solution, Optimal solution
JEL Classification: C61
Suggested Citation: Suggested Citation