Question 1

Table below shows the supply and demand associated with the respective transportation cost.

Source	Destination				Supply
	1	2	3	4
A	3	2	7	6	500
B	7	5	2	3	600
C	2	5	4	5	250
Demand	600	400	200	150

Compute the initial starting cost with two methods of the transportation model. State the method name and calculate the initial cost. Fill in the following tables.

SOLUTION 1

Method 1: _________________ Initial Cost: _________________

Source	Destination				Supply
	1	2	3	4
A	3	2	7	6	500
	?
B	7	5	2	3	600
	?
C	2	5	4	5	250
Demand	600	400	200	150

Method 2: _________________ Initial Cost: _________________

Source	Destination				Supply	Row Penalty
	1	2	3	4		1	2	3	4	5	6
A	3	2	7	6	500
	?
B	7	5	2	3	600
	?
C	2	5	4	5	250
Demand	600	400	200	150
Penalty 1
Penalty 2
Penalty 3
Penalty 4
Penalty 5
Penalty 6