29. Riverside Oil Čompany in eastern Kentucky produces regular and supremegasoline. Each barrel of regular sells for $21 and must have an octane rating of atleast 90. Each barrel of supreme sells for $25 and must have an octane rating ofat least 97. Each of these types of gasoline are manufactured by mixing differentquantities of the following three inputs:Octane RatingBarrels Available(in 1000s)Input Cost per Barrel1$17.25100150$15.75873503$17.75110300Riverside has orders for 300,000 barrels of regular and 450,000 barrels of supreme.How should the company allocate the available inputs to the production of regularand supreme gasoline to maximize profits?a. Formulate an LP model for this problem.b. Create a spreadsheet model for this problem and solve it using Solver.c. What is the optimal solution?

a). It is given that a Riverside Oil Company in eastern Kentucky produces regular and supreme…

Answered: 29. Riverside Oil Company in eastern…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter4: Linear Programming Models

Section: Chapter Questions

Problem 71P

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This problem is based on Motorolas online method for choosing suppliers. Suppose Motorola solicits bids from five suppliers for eight products. The list price for each product and the quantity of each product that Motorola needs to purchase during the next year are listed in the file P06_93.xlsx. Each supplier has submitted the percentage discount it will offer on each product. These percentages are also listed in the file. For example, supplier 1 offers a 7% discount on product 1 and a 30% discount on product 2. The following considerations also apply: There is an administrative cost of 5000 associated with setting up a suppliers account. For example, if Motorola uses three suppliers, it incurs an administrative cost of 15,000. To ensure reliability, no supplier can supply more than 80% of Motorolas demand for any product. A supplier must supply an integer amount of each product it supplies. Develop a linear integer model to help Motorola minimize the sum of its purchase and administrative costs.
a production company that sells two typesof gasoline, G1 and G2, from two types of crude oil, C1 and C2. Parmar prides itself in producingsignature gasoline. As such, G1 is allowed to contain up to 6% impurities, and G2 is allowed to containup to 4.5% impurities. G1 sells for $62 per barrel, whereas G2 sells for $76 per barrel. Up to 4200barrels of G1 and up to 4500 barrels of G2 can be sold. The cost per barrel of each crude, theiravailability, and the level of impurities in each crude are listed in the table below.Before blending the crude oil into gas, any amount of each crude can be “purified” for a cost of $4.50per barrel. Purification eliminates half of the impurities in the crude oil. Someone has hired you to solvethis problem to determine how they can maximize profit.

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