The north-west rule as we get the name it starts from the top left corner and collects the amount by the supply and demand to this variable i.e. X11. Then the one satisfied is crossed because the remaining variables in the column or row are considered as zero. In thecase of simultaneous satisfaction of other rows and columns then they are being crossed out. Now after the adjustments the rows and columns that are left uncrossed are again crossed, and this process is continued until only one pair of uncrossed row and column is left.
Look at the steps below:
Step I: starting with the north-west corner that is the top left corner and cross with the supply source (S1) along with the demand of the destination centre 1 (D1). In such cases there are only three possible conditions:
Step II: the steps are to be executed in such a manner that the value of the S-E or the right bottom corner gets a value. Let’s take an example.
The transportation cost associate with the solution is
Z = 2000 × 1000 + 2500 × 1300 + 2700 × 1400.
= 20, 00,000 + 32, 50,000 + 37, 80,000
= 90, 36, 000.