Find the Minimum Cost Solution for the Transportation Problem Detailed

question 21

Essay

Find the minimum cost solution for the transportation problem detailed in the table below. Explain carefully the meaning of any quantity in a "dummy" row or column. $$\begin{array} { | l | r | r | r | r | } \hline \text { COSTS } & \text { Dest 1 } & \text { Dest 2 } & \text { Dest 3 } & \text { Supply } \\\hline \text { Source 1 }& 30 & 12 & 5 & 20 \\\hline \text { Source 2 }& 10 & 14 & 12 & 30 \\\hline \text { Source 3 }& 20 & 11 & 25 & 75 \\\hline \text { Dummy } & 0 & 0 & 0 & 30 \\\hline \text { Demand }& 40 & 60 & 55 & 155 \backslash 155 \\\hline \end{array}$$

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Definitions:

Break-Even Point

The financial point at which total revenues equal total costs and expenses, resulting in no net loss or gain.

Fixed Costs

Costs that do not change with the level of production or sales activities, such as rent, salaries, and insurance.

Operating Leverage

A measure of how sensitive a company's operating income is to changes in revenue, indicating the degree to which fixed costs are utilized.

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.