Oilco must determine how many barrels of oil to extract during each of the next 2 years.

Question:

Oilco must determine how many barrels of oil to extract during each of the next 2 years. If Oilco extracts x1 million barrels during year 1, each barrel can be sold for 80  x1 dollars. If Oilco extracts x2 million barrels during year 2, each barrel can be sold for 85  x2 dollars. The cost of extracting x1 million barrels during year 1 is 2x1 2 million dollars, and the cost of extracting x2 million barrels during year 2 is 3x2 2 million dollars. A total of 20 million barrels of oil are available, and at most $250 million can be spent on extraction. Determine how Oilco can maximize its profit (revenues less costs) for the next 2 years.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Practical Management Science, Revised

ISBN: 9781118373439

3rd Edition

Authors: Wayne L Winston, S. Christian Albright

Question Posted: