Question
The Amorco Oil Company controls two oil fields. Field 1 can produce up to 20 million barrels of oil per day, and field 2 can
The Amorco Oil Company controls two oil fields. Field 1 can produce up to 20 million barrels of oil per day, and field 2 can produce up to 15 million barrels of oil per day. At field 1, it costs $37.50 to extract and refine a barrel of oil; at field 2 the cost is $41.20. Amorco sells oil to two countries: United Kingdom and Japan. The shipping costs per barrel are shown in the table. Each day, the United Kingdom is willing to buy up to 10 million barrels at $65.80 per barrel, and Japan is willing to buy up to 25 million barrels at $68.40 per barrel. Determine how to maximize Amorco's profit.
Cost per barrel of shipping
U.K.
Japan
Field 1
$5.50
$6.80
Field 2
$4.20
$5.30
- Solve this problem using the regular model.
- Solve this problem using the alternative model.
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