Description
Formulate a linear program which can be used to generate a comprehensive plan for the whole Far Eastern Operations. Clearly define every variable used in your formulation, and clearly write the objective and constraints in algebraic form. Then you need to use EXCEL SOLVER (or ANALYTICAL SOLVER PLATFORM) to find the optimal decision and value. Your entire report should be at most 4 pages long (Times New Roman, 12pt, double spaced).
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Explanation & Answer
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Outline Reflection the Global Oil Company
I.
Introduction
II.
Formulation of the Linear Program Equation
III.
Constraints
IV.
Objective Function
V.
Conclusion
VI.
Reference.
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The Global Oil Company
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Introduction
Linear programming is a mathematical technique often used in optimization operations
under specific constraints. The overall purpose of including a linear programming technique is to
either maximize or minimize a specific numerical value in the equation (BYJU’S, 2022). Ideally,
it often comprises linear functions subjected to a specific set of constraints presented either in
linear equations or in the form of inequalities. Linear programming has been identified as one of
the methods that can facilitate the process of optimum resource utilization. Besides, linear often
focuses on defining the relationship between multiple variables.
In this case, the point of focus will be on one global oil company that often outsources its
crude oil from both Saudi Arabia and Borneo. The far eastern operations of the company often
rely on close to over 80000 units of the barrel from Saudi Arabia. In comparison, it outsources
close to 30000 units of barrels from the Borneo region. Subsequently, the cost of a barrel of oil
from Saudi Arabia is $62, while the cost of crude oil from Borneo is $67. Additionally, the point
of focus will also be on the transportation expenses per barrel from Saudi Arabia and Borneo.
The company has two subsidiaries that are often responsible for the refinement process, and they
are situated in both Australia and Japan.
Formulation of the Linear Program Equation
Australia produces 30000 barrels in the refinery operations while Japan can produce
50000 barrels. Before the refinery operations, there is a need to transport the barrels of oil from
Saudi and Brunei. However, there are transportation expenses and high process intensity costs.
The transportation expense per barrel from Saudi Arabia to Australia and Japan is $0.75 and
$0.8, respectively, while the high process intensity cost per barrel will be $1.19 and $1.26. There
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is a need to note that the refinery facilities have processing flexibilities that allow for a wide
range of yields. However, we will only include the high process intensity values to simplify the
overall process.
Since the capacity of the two refineries is known, the supplying capacity of the countries
is determined. The point of focus will be on determining the unit selling price of the refinery
products that will maximize the overall outcome for the firm. Ideally, the Global oil company
often sources its crude oil from Saudi Arabia and Borneo, and the set acquisition price often
stands at $62 and $67 per barrel, respectively.
Then, the transportation expenses stand at $0.75 and $0.8 per barrel from Saudi to
Australia and Japan, respectively. Moreover, the high process intensity costs stand at $1.19 and
$1.26, respectively, and this is for the two countries. The other case will also be on the
transportation co...