Vogel Approximation Method VAM - Definition & Meaning

Published in Operations and Supply Chain Terms by MBA Skool Team

What is Vogel Approximation Method VAM?

Vogel Approximation Method is used to find the feasible solution for transportation of goods where the solution is either optimal or near to the optimal solution.

This method is used to reduce the transportation costs by interpreting in a mathematical table the transportation costs from one place to another. The column represents the demand centres while the row represents the supply points.

A block represents the transportation cost from i to j if the block is C-ij(i-number of row, j-number of column). The following steps need to be followed which are:

1. Identify the minimum and next minimum numbers in a column and repeat the same for the row

2. The above step needs to be redone for all other columns and rows

3. Now, subtract the two numbers identified for each column and each row such that the difference is positive

4. Identify the maximum difference among all the rows and also among all the columns

5. Assign all the demand units for that minimum number in that column which has got the maximum difference (repeat the same for the row)

6. Remove that column and row completely and repeat the above process until all the demand units are filled up completely.

Finally jot down all the allotted points in a new table and calculate the transportation cost which will be optimum.

Hence, this concludes the definition of Vogel Approximation Method VAM along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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