The Intuitive Lowest Cost Method Or The Minimum Cell Cost Method
The Intuitive Lowest Cost Method is a cost based approach to finding an initial solution to a transportation problem.
It makes allocations starting with the lowest shipping costs and moving in ascending order to satisfy the demands and supplies of all sources and destinations.
This straightforward approach uses the following steps.
When we use the Intuitive Approach to the Bengal Plumbing problem, we obtain the solution as below.
We will take following steps to arrive at an initial solution.
The total cost of this initial solution is Rs.41000.00 as compared with a total cost of Rs.42000.00 by the Northwest Corner Rule.
The Intuitive Lowest Cost Method is a cost based approach to finding an initial solution to a transportation problem.
It makes allocations starting with the lowest shipping costs and moving in ascending order to satisfy the demands and supplies of all sources and destinations.
This straightforward approach uses the following steps.
 Identify the cell with the lowest cost.
 Allocate as many units as possible to that cell without exceeding the supply or demand.
 Then cross out the row or column or both that is exhausted by the above assignment.
 Move on to the next lowest cost cell and allocate the remaining units.
 Repeat the above steps as long as all the demands and supplies are not satisfied.
When we use the Intuitive Approach to the Bengal Plumbing problem, we obtain the solution as below.
Transportation
Matrix for Bengal Plumbing


From \ To

Warehouse
E

Warehouse
F

Warehouse
G

Factory
Capacity


Plant A

Rs.50

Rs.40

100

Rs.30

100


Plant B

Rs.80

200

Rs.40

100

Rs.30

300


Plant C

300

Rs.90

Rs.70

Rs.50

300


Warehouse Requirement

300

200

200

700

We will take following steps to arrive at an initial solution.
 Assign 100 units from Plant (A) to Warehouse (G), as it has the lowest shipping cost of Rs.30, exhausting Plant (A)'s supply.
 Assign the remaining 100 units to Warehouse (G) from Plant (B), as now it has the lowest shipping cost of Rs.30, exhausting Warehouse (G)'s demand.
 Move on the next lowest cost cell, Assign 200 units from Plant (B) to Warehouse (F), exhausting Plant (B)'s supply and Warehouse (F)'s demand.
 Finally enter 300 units in the only remaining cell to complete the allocations and satisfying the supply and demand of Plant (C) and Warehouse (E).
Transportation Route Selection based on Minimum Cell Cost Method


From

To

Units Shipped

Cost per unit

Total Cost

Plant A

Warehouse G

100

Rs.30

Rs.3000

Plant B

Warehouse G

100

Rs.30

Rs.3000

Plant B

Warehouse F

200

Rs.40

Rs.8000

Plant C

Warehouse E

300

Rs.90

Rs.27000

Total Shipping Cost

Rs.41000

The total cost of this initial solution is Rs.41000.00 as compared with a total cost of Rs.42000.00 by the Northwest Corner Rule.
It is not a coincidence that a lower total cost is derived, using the Minimum Cell Cost Method, it is a logical occurrence.
The Northwest Corner Rule does not consider costs at all while making allocations, while Minimum Cell Cost method does.
This initial solution is closer to the optimal solution and requires fewer subsequent iterations.
Both the Northwest Corner and the Intuitive Lowest Cost approaches are meant only to provide us with a starting point, we often have to employ an additional procedure to reach an optimal solution.