Lab 3 – IEE376
Problem 1
Solution
xT = 11
xC = 32
xL = 15
Hours = 0
Profit = 28700
Problem 2
Solution
xL = 12
xA = 0
Barley = 1
Hops = 0
Profit = 60
Problem 3
Solution
y = 20
x1 = 10
x2 = 10
x3 = 8
x4 = 0
Profit = 760
Problem 3 – Managerial Analysis
Price Increase Analysis
5%
15%
20%
The original solution for problem 3 yields a maximum profit of $760 achieved by
purchasing 20,000 barrels of crude oil, distilling equal portions of aviation oil, and
heating oil, utilizing the 8 available processing hours on aviation oil, and leaving heating
oil unprocessed. As aviation prices increased 5% to 20%, we can observe profit growing
linearly from $818 to $992 without any changes in optimal production. Therefore, the
limit is not profit, but how much crude oil we can buy and how much can we process.
Production Time Reduction Analysis
Solution
By reducing the processing time of aviation oil from 1 hour to 0.75 hours per 1,000
barrels we achieved a profit of $900 meanwhile producing 2 more units of aviation oil
(from 8 originally to 10).