Question
A refinery procures two types of crude oil: Type A and Type B, and processing either type into finished fuel products. Type A costs $70
A refinery procures two types of crude oil: Type "A" and Type "B", and processing either type into finished fuel products. Type "A" costs $70 per barrel to procure and costs $1 to process per barrel, while Type B costs $50 per barrel and costs $1.6 per barrel to process.
The refinery produces four end products: Gasoline which sells for $150 per barrel, kerosene which sells for $100 per barrel, fuel oil which sells for $85 per barrel, and residual oil which sells for $10 per barrel.
Demand for gasoline is 24,000 barrels per day, kerosene is 2000 barrels per day, fuel oil is 6000 barrels per day.
The refinery suffers from yield loss and for this reason Type "A" only yields 80% gasoline, 5% kerosene, and 10% fuel oil, while the remaining 5% is residual oil. Type B only yields 44% gasoline, 10% kerosene, and 36% fuel oil, while the remaining 10% is residual oil.
Develop a sourcing plan for the refinery to maximize profits/day. Profit = Revenue - raw material cost - processing cost. In other words, solve this linear program using Excel Solver and show the sensitivity report.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started