Question
Exxon gas manufactures and sells petroleum components. They received an order for 6,000 liters of their high octane gas. To produce high octane gasoline, Exxon
Exxon gas manufactures and sells petroleum components. They received an order for 6,000 liters of their high octane gas. To produce high octane gasoline, Exxon uses three petroleum bases. The table below explains cost and octane % for each petroleum base.
Petroleum Base Cost ($/liter.) Octane (%)
1 0.20 40
2 0.30 70
3 0.25 50
National gas regulations require Exxon to produce high octane gas contains at least 60 percent octane by weight. Additionally, the development team does not want to use more than 35% of Petroleum Base 1 in the octane mix. Exxon wants to minimize the cost of ingredients combination of ingredients in order to supply the 6,000 liter order.Which mix minimizes the cost meeting the parameters and and identify the marginal value of petroleum base 2.
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