Question: Sunco Oil has three different processes that can be used to manufacture various types of gasoline. Each process involves blending oils in the companys catalytic
Sunco Oil has three different processes that can be used to manufacture various types of gasoline. Each process involves blending oils in the company’s catalytic cracker. Running process 1 for an hour costs $20 and requires two barrels of crude oil 1 and three barrels of crude oil 2. The output from running process 1 for an hour is two barrels of gas 1 and one barrel of gas 2. Running process 2 for an hour costs $30 and requires one barrel of crude 1 and three barrels of crude 2. The output from running process 2 for an hour is three barrels of gas 2. Running process 3 for an hour costs $14 and requires two barrels of crude 2 and three barrels of gas 2. The output from running process 3 for an hour is two barrels of gas 3. Each month, 4000 barrels of crude 1, at $45 per barrel, and 7000 barrels of crude 2, at $55 per barrel, can be purchased. All gas produced can be sold at the following per-barrel prices: gas 1, $85; gas 2, $90; and gas 3, $95. Determine how to maximize Sunco’s profit (revenues less costs). Assume that only 2500 hours of time on the catalytic cracker are available each month.
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