[Steps Shown] OIL BLENDING: An oil company produces three brands of oil: Regular, multigrade, and supreme. Each brand of oil is composed of one or more
Question: OIL BLENDING:
An oil company produces three brands of oil: Regular, multigrade, and supreme. Each brand of oil is composed of one or more of four crude stocks, each having a different lubrication index. The relevant data concerning the crude stocks are the following:
CRUDE STOCK | LUBRICATION INDEX | COST ($/BARREL) | SUPPLY/DAY (BARRELS) |
1 | 20 | 7.10 | 1,000 |
2 | 40 | 8.50 | 1,100 |
3 | 30 | 7.70 | 1,200 |
4 | 55 | 9.00 | 1,000 |
Each brand of oil must meet a minimum standard for a lubrication index, and each brand thus sells at a different price. The relevant data concerning the three brands of oil are the following:
BRAND | MINIMUM LUBRICATION INDEX | SELLING PRICE ($/BARREL) | DAILY DEMAND (BARRELS) |
REGULAR | 25 | 8.50 | 2,000 |
MULTIGRADE | 35 | 9.00 | 1,500 |
SUPREME | 30 | 10 | 7.50 |
Determine the optimal output plan for a single day, assuming that production can be either sold or else stored at negligible cost.
Deliverable: Word Document