Andes Inc. is an oil company that has a refinery on the Texas coast. The refinery...

 

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Andes Inc. is an oil company that has a refinery on the Texas coast. The refinery processes crude oil from Saudi Arabia and Venezuela, producing gasoline, diesel, and lubricants. The two crude oils differ in their chemical composition, which is why they produce different amounts of each product. A barrel of crude from Saudi Arabia produces 0.3 barrels of gasoline, 0.4 barrels of diesel, and 0.2 barrels of lubricants. On the other hand, a barrel from Venezuela produces 0.4 barrels of gasoline, 0.2 barrels of diesel, and 0.3 barrels of lubricants. The remaining 10% of the crude is lost in the refining process. Crudes also differ in price and availability. Andes Inc. can buy up to 9,000 barrels per day from Saudi Arabia at a price of $20 per barrel. You can buy from Venezuela up to 6,000 barrels per day at a price of $ 15 per barrel. The contracts established by Andes Inc. forces them to produce 2,000 barrels per day of gasoline, 1,500 barrels per day of diesel, and 500 barrels per day of lubricants. You want to determine the supply plan for the crude oil that results in the least cost for Andes Inc. To do this, first you decide to formulate this problem as an LP model. In particular: a. (15 points) Suppose that the number of barrels bought from both Saudi Arabia and Venezuela are exactly 9,000 and 6,000, respectively. However, this solution is not optimal. Find the basic solution associated with these values and use it (as an initial feasible solution) in the Simplex Algorithm to find the optimal solution to the problem. Andes Inc. is an oil company that has a refinery on the Texas coast. The refinery processes crude oil from Saudi Arabia and Venezuela, producing gasoline, diesel, and lubricants. The two crude oils differ in their chemical composition, which is why they produce different amounts of each product. A barrel of crude from Saudi Arabia produces 0.3 barrels of gasoline, 0.4 barrels of diesel, and 0.2 barrels of lubricants. On the other hand, a barrel from Venezuela produces 0.4 barrels of gasoline, 0.2 barrels of diesel, and 0.3 barrels of lubricants. The remaining 10% of the crude is lost in the refining process. Crudes also differ in price and availability. Andes Inc. can buy up to 9,000 barrels per day from Saudi Arabia at a price of $20 per barrel. You can buy from Venezuela up to 6,000 barrels per day at a price of $ 15 per barrel. The contracts established by Andes Inc. forces them to produce 2,000 barrels per day of gasoline, 1,500 barrels per day of diesel, and 500 barrels per day of lubricants. You want to determine the supply plan for the crude oil that results in the least cost for Andes Inc. To do this, first you decide to formulate this problem as an LP model. In particular: a. (15 points) Suppose that the number of barrels bought from both Saudi Arabia and Venezuela are exactly 9,000 and 6,000, respectively. However, this solution is not optimal. Find the basic solution associated with these values and use it (as an initial feasible solution) in the Simplex Algorithm to find the optimal solution to the problem.

Answer rating: 100% (QA)

First lets define the decision variables Let X1 be the number of barrels of crude oil bought from Saudi X2 be the number of barrels of crude bought fr... View the full answer