Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Coast-to-Coast Airlines is investigating the possibility of reducing the cost of fuel purchases by taking advantage of lower fuel costs in certain cities. Since fuel

image text in transcribed
Coast-to-Coast Airlines is investigating the possibility of reducing the cost of fuel purchases by taking advantage of lower fuel costs in certain cities. Since fuel purchases represent a substantial portion of operating expenses for an airline, it is important that these costs be carefully monitored. However, fuel adds weight to an airplane, and consequently, excess fuel raises the cost of getting from one city to another. In evaluating one particular flight rotation, a plane begins in Atlanta, flies from Atlanta to Los Angeles, from Los Angeles to Houston, from Houston to New Orleans, and from New Orleans to Atlanta. When the plane arrives in Atlanta, the flight rotation is said to have been completed, and then it starts again. Thus, the fuel on board when the flight arrived in Atlanta must be taken into consideration when the flight begins. Along each leg of this route, there is a minimum and a maximum amount of fuel that may be carried. This and additional information is provided in the table below. The regular fuel consumption is based on the plane carrying the minimum amount of fuel. If more than this is carried, the amount of fuel consumed is higher. Specifically, for each 1,000 gallons of fuel above the minimum, 5% (or 50 gallons per 1,000 gallons of extra fuel) is lost due to excess fuel consumption. For example, if 25,000 gallons of fuel were on board when the plane takes off from Atlanta, the fuel consumed on this route would be 12+0.05= 12.05 thousand gallons. If 26 thousand gallons were on board, the fuel consumed would be increased by another 0.05 thousand, for a total of 12.1 thousand gallons. Formulate this as an LP to minimize the cost in Excel. How many gallons should be purchased in each city? What is the total cost? Which of the following statement(s) is(are) true? A) Coast-to-Coast Airlines should not purchase any fuel in L.A. B) The beginning fuel in Atlanta should be 5 C) If the price in Houston increases by $0.5 per gallon, Coast-to-Coast Airlines should purchase less fuel in Houston. D) If the price in N.O. decreases only by $0.03 per gallon, Coast-to-Coast Airlines should not change its original purchase decision. E) None of the above

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Handbook For Investment Committee Members

Authors: Russell L. Olson

1st Edition

0471719781, 978-0471719786

More Books

Students also viewed these Finance questions

Question

Explain the forces that influence how people handle conflict

Answered: 1 week ago