3.

Vogel’s Approximation Method

Definition: The Vogel’s Approximation Method or VAM is an iterative
procedure calculated to find out the initial feasible solution of the
transportation problem. Like Least cost Method, here also the shipping cost is
taken into consideration, but in a relative sense.

The following is the flow chart showing the steps involved in solving the
transportation problem using the Vogel’s Approximation Method:

The concept of Vogel’s Approximation Method can be well understood

through an illustration given below:

1. First of all the difference between two least cost cells are calculated for
each row and column, which can be seen in the iteration given for each
 row and column. Then the largest difference is selected, which is 4 in
this case. So, allocate 20 units to cell BD, since the minimum cost is to
be chosen for the allocation. Now, only 20 units are left with the source
B.

2. Column D is deleted, again the difference between the least cost cells is
calculated for each row and column, as seen in the iteration below. The
largest difference value comes to be 3, so allocate 35 units to cell AF
and 15 units to the cell AE. With this, the Supply and demand of source
A and origin F gets saturated, so delete both the row A and Column F.

3. Now, single column E is left, since no difference can be found out, so

allocate 60 units to the cell CE and 20 units to cell BE, as only 20 units
are left with source B. Hence the demand and supply are completely
met.
 4. Now the total cost can be computed, by multiplying the units assigned to
each cell with the cost concerned. Therefore,

Total Cost = 20*3 + 35*1 + 15*4 + 60*4 + 20*8 = Rs 555

Note: Vogel’s Approximation Method is also called as Penalty

Method because the difference costs chosen are nothing but the penalties of
not choosing the least cost routes.
 4. Stepping Stone Method
Definition: The Stepping Stone Method is used to check the optimality of
the initial feasible solution determined by using any of the method : North-
West Corner, Least Cost Method or Vogel’s Approximation Method. Thus, the
stepping stone method is a procedure for finding the potential of any non-
basic variables (empty cells) in terms of the objective function.

Through Stepping stone method, we determine that what effect on the

transportation cost would be in case one unit is assigned to the empty cell.
With the help of this method, we come to know whether the solution is optimal
or not.

The series of steps are involved in checking the optimality of the initial feasible
solution using the stepping stone method:

1. The prerequisite condition to solve for the optimality is to ensure that the
number of occupied cells is exactly equal to m+n-1, where ‘m’ is the
number of rows, while ‘n’ is equal to the number of columns.
2. Firstly, the empty cell is selected and then the closed path is created
which starts from the unoccupied cell and returns to the same
unoccupied cell, called as a “closed loop”. For creating a closed loop the
following conditions should be kept in mind:
o In a closed loop, cells are selected in a sequence such that one
cell is unused/unoccupied, and all other cells are used/occupied.
o A pair of Consecutive used cells lies either in the same row or the
same column.
o No three consecutive occupied cells can either be in the same
row or column.
o The first and last cells in the closed loop lies either in the same
row or column.
o Only horizontal and vertical movement is allowed.
3. Once the loop is created, assign “+” or “–“ sign alternatively on each
corner cell of the loop, but begin with the “+” sign for the unoccupied
cell.
4. Repeat these steps again until all the unoccupied cells get evaluated.
 5. Now, if all the computed changes are positive or are equal to or greater
than zero, then the optimal solution has been reached.
6. But in case, if any, value comes to be negative, then there is a scope to
reduce the transportation cost further. Then, select that unoccupied cell
which has the most negative change and assign as many units as
possible. Subtract the unit that added to the unoccupied cell from the
other cells with a negative sign in a loop, to balance the demand and
supply requirements.
Example, suppose the following matrix shows the initial feasible solution and
stepping stone method is adopted to check its optimality:
With the new matrix so formed, again the empty cells will be evaluated
through a loop formation and signs will be assigned accordingly. The cell with
the highest opportunity cost will be assigned the units, and this process will
repeat until the best optimum solution is obtained or the opportunity cost of all
the unoccupied cells comes to be negative.
 D E F SUPPLY

A 6 4 1 50

15 35

B 3 8 7 40

20 20

C 4 4 2 60

60

DEMAND 20 95 35 150

Vacant Cells:

AD=7

BF=2

CD=5

CF=1

Therefore, the optimum solution is reached since the values of the net cost
change are all positive.