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Vogel’s Approximation Method

Step1: Calculate penalty for each row and column by taking the difference between the two smallest unit costs. This penalty or extra cost has to be paid if one fails to allocate the minimum unit transportation cost.

Step2: Select the row or column with the highest penalty and select the minimum unit cost of that row or column. Then, allocate the minimum of supply or demand values in that cell. If there is a tie, then select the cell where maximum allocation could be made.

Step3: Adjust the supply and demand and eliminate the satisfied row or column. If a row and column are satisfied simultaneously, only of them is eliminated and the other one is assigned a zero value.Any row or column having zero supply or demand, can not be used in calculating future penalties.

Step4: Repeat the process until all the supply sources and demand destinations are satisfied.

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