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Business Economics

Business Economics is the part of economic theory which focuses on business enterprise and inquires into the factors contributing to the diversity of organisational structures and to the relationships of firms with labour, capital and product markets.
Business economics is concerned with economic issues and problems related to business organisations, their management and strategies. 
It tries to explain, why corporate firms emerge and exist, how they expand, the role of entrepreneurs, the significance of organisational structure, the relationship of firms with their employees, their stakeholders, the providers of capital, the customers and the government, the interactions between firms and the business environment.  
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The Stepping Stone Method

The Stepping Stone Method Once an initial feasible solution to a transportation problem is determined by any of the previous methods, the next step is to solve the model for the optimal solution. The Stepping Stone Method is an iterative technique used to evaluate the cost effectiveness of  the shipping routes not currently in the solution. When applying it, we test each unused cell, or square, in the transportation table by asking : What would happen to the total shipping cost if one unit of product was tentatively shipped to an unused route? To illustrate the same, let us look at the initial solution of the Bengal Plumbing Problem derived by the Northwest Corner Rule. Transportation Matrix for Bengal Plumbing From \ To Warehouse E Warehouse F Warehouse G Factory Capacity Plant A 100 Rs. 5 0 Rs. 4 0 Rs. 3 0 100 Plant B 200 Rs. 8 0 100 Rs. 4 0 Rs. 3 0 300 Plant C Rs. 9 0 100 Rs. 7 0 200 Rs. 5 0 300 Ware...
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The Intuitive Lowest Cost Method

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. 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 War...
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Modified Distribution (MODI) Method

Modified Distribution (MODI) Method The MODI method is another way of evaluating the initial solution of a transportation problem and finding a more optimal solution with much less iterations compared to the Stepping Stones method. It allows us to compute improvement indices much quickly for each unused square without drawing all of the closed paths. MODI provides new means of finding the unused route with the largest negative improvement index. Once the largest index is identified, we are required to trace only one closed path. We can then decide the maximum number of units that can be shipped along that unused route. We begin with an initial solution obtained by the Northwest Corner Rule. Transportation Matrix for Bengal Plumbing From \ To Warehouse E Warehouse F Warehouse G Factory Capacity Plant A 100 Rs.50 Rs.40 Rs.30 100 Plant B ...
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