Question
Part IIl: Solving an Allocation Problem A small Excel application, LP Estimation xisx is available to help you with this part of the Case A refinery produces gasoline and fuel oil under the following constraints. Let gas number of gallons of gasoline produced per day fuel number of gallons of fuel oil produced per day Demand constraints: Minimum daily demand for fuel oil 3 million gallons (fuel 2 3) Maximum daily demand for gasoline 6.4 million gallons (gas s 64) Production constraints Refining one gallon of fuel oil produces at least 0.5 gallons of gasoline (fuel s 0.5'gas, gas 2 2 fuel Wholesale prices (earned by the refinery): Gas: $1.90 per gallon Fuel oil: $1.5 per gallon. Your job is to maximize the refinery's daily profit by determining the optimum mix of fuel oil and gasoline that should be produced. The correct answer consists of a number for fuel oil, and a number for gasoline, that maximizes the following profit equation: P (1.90) gas (1.5) fuel (Answer will be in millions of dollars.) Run at least 10 trials, and enter the data into a table that should look something like this:
Explanation / Answer
LinearProgramming Estimation Problem Price per gallon Gasoline = 1.9 Fuel oil = 1.5 Minimum Demand Gasoline = 0 (million of gallons) Fuel oil = 3 maximum demand Gasoline = 6.4 (Millions of gallon) Fuel oil = 0 Products Fuel Oil = 2 Revenue (Millions of dollar per day) R = 17.74 Total Production Values Fuel oil Gasoline Profit 1 3.1 6.3 16.62 2 3.2 6.4 16.96 3 3.3 6.4 17.11 4 3.4 6.4 17.26 5 3.5 6.4 17.41 6 3.6 6.4 17.56 7 3.7 6.1 17.14 8 3.8 6.2 17.48 9 3.9 6.3 17.82 10 4 6.4 18.16 11 4.1 6.1 17.74 Enter tentative Min Max 1 Fuel 3