Formulate a linear program which can be used to generate a comprehensive plan for the whole Far Eastern operations. Clearly define every variable used in
Formulate a linear program which can be used to generate a comprehensive plan for the whole Far Eastern operations.
Clearly define every variable used in your formulation. Start your report with an executive summary containing the most important results and recommendations. Attach supporting material in Appendices. 1. Solve your linear program. How many barrels of crude should Global Oil purchase from Saudi Arabia for its Far Eastern operations? How much crude should be refined in Australia? How much in Japan? Provide tables showing the quantities of gasoline and distillate shipped from each of the two refineries and from the U.S. to each of the four market areas.
2. Use sensitivity analysis to answer the following questions. a) What is the marginal value of increasing supply from Brunei fields? Can this marginal value be used to estimate the total savings for Far Eastern operations if 41,000 b/d are supplied from Brunei fields instead of 40,000? Explain. b) What is the marginal value of increasing the tanker fleet? Can this marginal value be used if we want to increase the size to 7 tankers (from the current size of 6.5)? Explain. c) What is the additional cost to Far Eastern operations if demand for gasoline in the Philippines increases to 5,200 b/d? What is the minimum price of gasoline in the Philippines that would make it profitable for Global Oil to consider such an increase in distribution? 6 d) By how much should the production costs be reduced at the refinery in Japan when operating at high process intensity in order to make it cost effective to use Saudi crude? e) Global Oil is planning a three day shutdown of its Australian refinery for maintenance purposes, in the coming year. It has storage facilities and at least two weeks of inventories, so a refinery shutdown for a few days will not disrupt distribution. What would be the cost of a planned shutdown of the refinery in Australia for three days per year? Same question for the refinery in Japan. f) Currently, it is not economical to ship US distillate to the Philippines. What is the cost of US distillate at which Global Oil should consider starting such shipments?
3. Several opportunities present themselves to the Global Oil company (see the attached memos). Consider combinations of these options and prepare a recommendation. Document your report.
Australia Japan Brunel Crude Transportation Cost ($/b) 0.15 0.25 High Process Intensity (S/b) Yield of Gasoline Yield of Distillate 0.93 0.36 0.58 0.91 0.35 0.59 0.55 Low Process Intensity (5/5) Yield of Gasoline Yield of Distillate 0.61 0.26 0.69 0.25 0.70 Tanker Operations Tankers are used to bring crude from Saudi Arabia and Borneo to Australia and Japan and to transport refined products from Australia and Japan to the Philippines and New Zealand. The variable costs of supplying gasoline or distillate to New Zealand and the Philippines are: Variable costs of shipping gasoline/distillate (in $/b): To From New Zealand Philippines Australia 0.20 0.30 Japan 0.40 0.25 However, there is a limited capacity of tankers available. The fleet has a capacity of 6.5 equivalent (standard sized) tankers. The amount of capacity needed to deliver one barrel from one destination to another depends upon the distance traveled, port time, and other factors. The table below lists the fraction of one standard sized tanker needed to deliver 1,000 b/d over the indicated routes. Tanker Usage Factors (Fraction of Standard Sized Tanker Needed to Deliver 1,000 b/d) and Between Saudi Arabia Borneo Philippines New Zealand Australia .12 .05 .02 .01 Japan .11 .05 .01 .06 Australia Japan Brunel Crude Transportation Cost ($/b) 0.15 0.25 High Process Intensity (S/b) Yield of Gasoline Yield of Distillate 0.93 0.36 0.58 0.91 0.35 0.59 0.55 Low Process Intensity (5/5) Yield of Gasoline Yield of Distillate 0.61 0.26 0.69 0.25 0.70 Tanker Operations Tankers are used to bring crude from Saudi Arabia and Borneo to Australia and Japan and to transport refined products from Australia and Japan to the Philippines and New Zealand. The variable costs of supplying gasoline or distillate to New Zealand and the Philippines are: Variable costs of shipping gasoline/distillate (in $/b): To From New Zealand Philippines Australia 0.20 0.30 Japan 0.40 0.25 However, there is a limited capacity of tankers available. The fleet has a capacity of 6.5 equivalent (standard sized) tankers. The amount of capacity needed to deliver one barrel from one destination to another depends upon the distance traveled, port time, and other factors. The table below lists the fraction of one standard sized tanker needed to deliver 1,000 b/d over the indicated routes. Tanker Usage Factors (Fraction of Standard Sized Tanker Needed to Deliver 1,000 b/d) and Between Saudi Arabia Borneo Philippines New Zealand Australia .12 .05 .02 .01 Japan .11 .05 .01 .06 Australia Japan Brunel Crude Transportation Cost ($/b) 0.15 0.25 High Process Intensity (S/b) Yield of Gasoline Yield of Distillate 0.93 0.36 0.58 0.91 0.35 0.59 0.55 Low Process Intensity (5/5) Yield of Gasoline Yield of Distillate 0.61 0.26 0.69 0.25 0.70 Tanker Operations Tankers are used to bring crude from Saudi Arabia and Borneo to Australia and Japan and to transport refined products from Australia and Japan to the Philippines and New Zealand. The variable costs of supplying gasoline or distillate to New Zealand and the Philippines are: Variable costs of shipping gasoline/distillate (in $/b): To From New Zealand Philippines Australia 0.20 0.30 Japan 0.40 0.25 However, there is a limited capacity of tankers available. The fleet has a capacity of 6.5 equivalent (standard sized) tankers. The amount of capacity needed to deliver one barrel from one destination to another depends upon the distance traveled, port time, and other factors. The table below lists the fraction of one standard sized tanker needed to deliver 1,000 b/d over the indicated routes. Tanker Usage Factors (Fraction of Standard Sized Tanker Needed to Deliver 1,000 b/d) and Between Saudi Arabia Borneo Philippines New Zealand Australia .12 .05 .02 .01 Japan .11 .05 .01 .06 Australia Japan Brunel Crude Transportation Cost ($/b) 0.15 0.25 High Process Intensity (S/b) Yield of Gasoline Yield of Distillate 0.93 0.36 0.58 0.91 0.35 0.59 0.55 Low Process Intensity (5/5) Yield of Gasoline Yield of Distillate 0.61 0.26 0.69 0.25 0.70 Tanker Operations Tankers are used to bring crude from Saudi Arabia and Borneo to Australia and Japan and to transport refined products from Australia and Japan to the Philippines and New Zealand. The variable costs of supplying gasoline or distillate to New Zealand and the Philippines are: Variable costs of shipping gasoline/distillate (in $/b): To From New Zealand Philippines Australia 0.20 0.30 Japan 0.40 0.25 However, there is a limited capacity of tankers available. The fleet has a capacity of 6.5 equivalent (standard sized) tankers. The amount of capacity needed to deliver one barrel from one destination to another depends upon the distance traveled, port time, and other factors. The table below lists the fraction of one standard sized tanker needed to deliver 1,000 b/d over the indicated routes. Tanker Usage Factors (Fraction of Standard Sized Tanker Needed to Deliver 1,000 b/d) and Between Saudi Arabia Borneo Philippines New Zealand Australia .12 .05 .02 .01 Japan .11 .05 .01 .06
