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Problem Solving No. 123

The document describes a problem solving scenario for a petroleum company with two refineries. Refinery 1 costs $25,000 per day to operate, and Refinery 2 costs $30,000 per day. Each refinery can produce different amounts of high, medium, and low grade oil. The company needs to determine how many days to run each refinery to minimize costs while meeting orders of 35,000, 30,000, and 40,000 barrels respectively for each grade. The optimal solution is to run Refinery 1 for 47.06 days and Refinery 2 for 82.35 days, resulting in total costs of $3,647,000.

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Christy Joy Barbo
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136 views5 pages

Problem Solving No. 123

The document describes a problem solving scenario for a petroleum company with two refineries. Refinery 1 costs $25,000 per day to operate, and Refinery 2 costs $30,000 per day. Each refinery can produce different amounts of high, medium, and low grade oil. The company needs to determine how many days to run each refinery to minimize costs while meeting orders of 35,000, 30,000, and 40,000 barrels respectively for each grade. The optimal solution is to run Refinery 1 for 47.06 days and Refinery 2 for 82.35 days, resulting in total costs of $3,647,000.

Uploaded by

Christy Joy Barbo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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PROBLEM SOLVING

1. A small petroleum company owns two refineries. Refinery 1 costs $25,000 per day to
operate, and it can produce 300 barrels of high-grade oil, 200 barrels of medium-grade oil,
and 150 barrels of low-grade oil each day. Refinery 2 is newer and more modern. It costs
$30,000 per day to operate, and it can produce 300 barrels of high-grade oil, 250 barrels of
medium-grade oil, and 400 barrels of low-grade oil each day. The company has orders
totalling 35,000 barrels of high-grade oil, 30,000 barrels of medium-grade oil, and 40,000
barrels of low-grade oil. How many days should the company run each refinery to minimize
its costs and still meet its orders?

Decision variables
X = number of days refinery 1 to be operated
Y = number of days refinery 2 to be operated
Objective Function
C = 25,000x + 30,000x
Set of Constraints
a. 300x + 300y ≥ 35,000
b. 200x + 250y ≥ 30,000
c. 150x + 400y ≥ 40,000

a. 300x + 300y = 35,000  y = 0 ; 200x = 30,000


 x = 0 ; 300y = 35,000 x = 30,000 / 200
y = 35,000 / 300 x = 150
y = 116.6667
 y = 0 ; 300x = 35,000
x = 35,000 / 300 c. 150x + 400y = 40,000
x = 116.6667
 x = 0 ; 400y = 40,000
y = 40,000 / 400
b. 200x + 250y = 30,000
y = 100
 x = 0 ; 250y = 30,000
 y = 0 ; 150x = 40,000
y = 30,000 / 250
x = 40,000 / 150
y = 120
x = 266.6667

COORDINATES
a. ( 0 , 116.6667 ) , ( 116.6667 , 0 )
Feasible region
b. ( 0 , 120 ), ( 150 , 0 )
 Optimum point
c. ( 0 , 100 ), ( 266.6667 , 0 )
(0,120)

(47.06 , 82.35)
C = 25,000x + 30,000x
(0, 120) C = 25,000 (0) + 30,000 (120) = 3,600,000
(47.06, 82.35) C = 25,000 (47.06) + 30,000 (82.35) = 3,647,000
(266.67, 0) C = 25,000 (266.67) + 30,000 (0) = 6,666,750
MICROSOFT EXCEL SOLVER
2.
3.

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