ABC Oil has three refineries A, B, C. The A refinery can refine up to 1.5 million
Question:
ABC Oil has three refineries A, B, C.
The A refinery can refine up to 1.5 million barrels of oil per year, and the B and C refineries up to 2.5 million each. Once refined, the oil is sent to three distribution points: Miami, Houston and NY City.
ABC Oil estimates that each distribution point can sell (receive) up to 4.5 million barrels per year. Due to differences in shipping and refining costs, the profit made (in dollars) per million barrels of oil shipped depends on where the oil was refined and the point of distribution (see table) ABC Oil is considering expanding its capacity. Each million barrels of added annual refining capacity added will cost $ 150,000 for the B refinery and $ 125,000 for the C refinery. They have a maximum of $ 600,000 to invest in expansion. A's refinery cannot be expanded.
1. Formulate an LP that can be used to maximize your profits minus expansion costs over a ten year period
profits | profits | profits | |
FROM | MIA | HOU | NYC |
A | 17500 | 15000 | 16000 |
B | 18000 | 15500 | 17000 |
C | 17500 | 14500 | 15500 |