I would like to ask how to solve question 2.

Question 2 Our neighbouring country, Indonesia, has opened up its crude oil refinery industry by inviting private investors to start a private oil refinery business. Your company, Sing O&G, which has oil refinery operations experience in other countries, has tasked you with the task of analysing the refinery operations in view of the different constraints and profits. Sing O&G received its crude oil in four different grades (Grade 1, 2, 3 and 4, where Grade 1 is the highest and most valuable grade) where each grade differs from each other in terms of its physical characteristics and chemical compositions. Sing O&G purchased its supply of crude oil from the Indonesian government where the maximum allowable monthly supply of Grade 1, Grade 2, Grade 3 and Grade 4 crude oil is 5,000, 7,000, 8,000 and 10,000 barrels, respectively. Crude oil needs to be processed before it can be used. Three major types of operation are performed to refine the crude oil into finished products (i.e., oil products): Separation, Conversion and Treating. Sing O&G can sell the refined oil products at any of the 3 stages, where the profit is dependent on the grade of the raw (or unrefined) crude oil and refining stage at which it is sold. Crude oil of a higher grade would require lesser energy to be refined, hence this translates into a higher net profit which is shown in Table 2-1. Table 2-1: Net Profit ($/barrel) of Refined Oil Products Sold at Each Refining Stage by Grade Refining Stages* Crude Oil Grade Grade 1 Grade 2 Grade 3 Grade 4 Separation 8 7 5 Conversion 11 10 7 Treating 12 11 9 8 * We shall assume that there is no loss in the refining stage (i.e., 100% conversion from crude oil to refined oil products) SINGAPORE UNIVERSITY OF SOCIAL SCIENCES (SUSS) Page 4 of 5 BUS107 Group-based Assignment Due to contractual commitment, Sing O&G is required to supply at least 4,000 barrels of refined oil per month after the Separation stage. Also, the management has adopted a policy where the amount of refined oil sold (in barrels) after the Separation stage is limited to a quarter of the total amount of crude oil purchased for that month. (a) Determine an LP model to maximise your profit. Discuss any two (2) assumptions, pertaining to the case, to be made prior to analysing the business case. (23 marks) (b) Solve the LP problem by using Microsoft Excel. (16 marks) (c) Due to climate change, countries around the world are increasing its effort in reducing carbon footprint through various measures. Comment on how the possible measures undertaken by the government to reduce consumption of treated refined oil (final refine stage of crude oil after undergoing the three stages) could affect your original solutions based on Excel Sensitivity Report. (8 marks)