The Two-Rivers Oil Company near Pittsburgh transports gasoline to its distributors by truck. The company has recently

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The Two-Rivers Oil Company near Pittsburgh transports gasoline to its distributors by truck. The company has recently received a contract to begin supplying gasoline distributors in southern Ohio and has $600,000 available to spend on the necessary expansion of its fleet of gasoline tank trucks. Three models of trucks are available, as shown in the table at the bottom of the page. The company estimates that the monthly demand for the region will be 550,000 gallons of gasoline. Due to the size and speed differences of the truck models, they vary in the number of possible deliveries or round-trips per month; trip capacities are estimated at 15 per month for the Super Tanker, 20 per month for the Regular Line, and 25 per month for the Econo-Tanker. Based on maintenance and driver availability, the firm does not want to add more than 15 new vehicles to its fleet. In addition, the company wants to purchase at least three of the new Econo-Tankers to use on the short-run, low-demand routes. As a final constraint, the company does not want more than half of its purchases to be Super Tankers.

a. If the company wants to satisfy the gasoline demand with minimal monthly operating expense, how many models of each truck should it purchase?

b. If the company did not require at least three Econo-Tankers and allowed as many Super Tankers as needed, what would the optimal strategy be?

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OM4 operations management

ISBN: 978-1133372424

4th edition

Authors: David Alan Collier, James R. Evans

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