Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Low Knock Oil Company produces two grades of cut-rate gasoline for industrial distribution. The grades, regular and economy, are produced by refining a blend

The Low Knock Oil Company produces two grades of cut-rate gasoline for industrial distribution. The grades, regular and economy, are produced by refining a blend of two types of crude oil, type X100 and type X220. Each crude oil differs not only in cost per barrel, but in composition as well. The following table indicates the percentage of crucial ingredients found in each of the crude oils and the cost per barrel for each:

CRUDE OIL TYPE INGREDIENT A (%) INGREDIENT B (%) COST/BARREL ($)
X100 35 55 30.00
X220 60 25 34.80

Weekly demand for the regular grade of Low Knock gasoline is at least 25,000 barrels, and demand for the economy is at least 32,000 barrels per week. At least 45% of each barrel of regular must be ingredient A. At most 50% of each barrel of economy should contain ingredient B. While the gasoline yield from one barrel of crude depends on the type of crude and the type of processing used, we will assume for the sake of this example that one barrel of crude oil will yield 0.46 barrel of gasoline.

Hint: You may refer to the Low Knock Oil Company example analyzed on page 326-327 in the textbook (Program 8.9), and simply adjust your constraints for the demandsaccordingly.

Question 1 of 3

At the optimal production, does the company just make enough regular gasoline to meet the demand? Does the company just make enough economy gasoline to meet the demand?
A.Yes, yes
B.Yes, no
C.No, yes
D.No, no
Reset Selection ---I believe this one is A.???

Question 2 of 3

To minimize the production cost, the optimal amount of X100 crude oil used in producing regular gasoline is___________ barrels, and the optimal amount of X220 crude oil used in producing regular gasoline is___________ barrel. (Please round to the closest integer and include no units.)

Question 3 of 3

To minimize the production cost, the optimal amount of X100 crude oil used in producing economy gasoline is _________ barrels, and the optimal amount of X220 crude oil used in producing economy gasoline is_______ barrel. (Please round to the closest integer and include no units.)

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 Of European Fixed Income Securities

Authors: Frank J. Fabozzi, Moorad Choudhry

1st Edition

0471430390, 978-0471430391

More Books

Students also viewed these Finance questions

Question

How does the "invisible hand" work in a competitive market system?

Answered: 1 week ago

Question

7. What broad areas are covered under Personal Conscience?

Answered: 1 week ago

Question

How to solve maths problems with examples

Answered: 1 week ago