Input-Output Model in Network Flow Problem

Abstract

Production process is a process, which is done by industry, to transform input into output. According to the type of output and its activity, industry can be classified into various sectors, which are connected to each other. Therefore, a model to analyze the connection among sections is needed. The model is known as input-output model (IO model). IO model presents an IO table, which shows informations about the transaction between goods and services in each economic sector. Furthermore, the IO model also shows that the amount of all input is the same as the amount of all output. In this paper, the transaction of each economic sector in IO table is analyzed using network flow theory. The formulated network flow problem implies that each sector represents partly as a producer and also as a consumer. This paper also solves a minimum cost circulation problem.