Question

In: Statistics and Probability

chandler Oil has 5000 barrels of crude oil 1 and 10,000 barrels of crude oil 2...

chandler Oil has 5000 barrels of crude oil 1 and 10,000 barrels of crude oil 2 available. Chandler sells gasoline and heating oil. These products are produced by blending the two crude oils together. Each barrel of crude oil 1 has a quality level of 10 and each barrel of crude oil 2 has a quality level of 5.6 Gasoline must have an average quality level of at least 8, whereas heating oil must have an average quality level of at least 6. Gasoline sells for $75 per barrel, and heating oil sells for $60 per barrel. In addition, if any barrels of the crude oils are leftover, they can be sold for $65 and $50 per barrel, respectively. (This opion wasn’t part of the model before the fifth edition of the book.) We assume that demand for heating oil and gasoline is unlimited, so that all of Chandler’s production can be sold. Chandler wants to maximize its revenue from selling gasoline, heating oil, and any leftover crude oils.

Objective:

To develop an LP spreadsheet model for finding the revenue-maximizing plan that meets quality constraints and stays within limits on crude oil availabilities.

and Write an appropriate mathematical Model for this problem

Solutions

Expert Solution

ANSWER:-

The above LPP is solved using Excel Solver as shown below. The maximum revenue is found to be $ 325,000 by having the blend of 3000 barrels of Gasoline and 2000 barrels of heating oil for crude oil 1 and by having the blend of 2000 barrels of Gasoline and 8000 barrels of heating oil for crude oil 2.ANOTHER ANSWER:-

THANK YOU!


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