Linear Programming: A Practical Approach to Transportation Cost Problems

14 Pages Posted: 18 Jul 2009

See all articles by Bernard Enya Edu

Bernard Enya Edu

Cross River University of Technology

Atim E. Esang

Cross River University of Technology (CRUTECH)

Agba D. O. Otonkue

Cross River University of Technology

Date Written: July 16, 2009

Abstract

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

Edu, Bernard Enya and Esang, Atim E. and Otonkue, Agba D. O., Linear Programming: A Practical Approach to Transportation Cost Problems (July 16, 2009). Available at SSRN: https://ssrn.com/abstract=1434823 or http://dx.doi.org/10.2139/ssrn.1434823

Bernard Enya Edu (Contact Author)

Cross River University of Technology ( email )

P.M.B 1123
Calabar,
Cross River State
Nigeria

Atim E. Esang

Cross River University of Technology (CRUTECH) ( email )

P.M.B 1123
Calabar,
Cross River State
Nigeria

Agba D. O. Otonkue

Cross River University of Technology ( email )

P.M.B 1123
Calabar,
Cross River State
Nigeria

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