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An oil company produces oil from two wells. Well 1 can produce up to 150,000 barrels per day, and well 2 can produce up to 200,000 barrels per day. It is possible to ship oil directly from the wells to the company’s customers in Los Angeles and New York. Alternatively, the company could transport oil to the ports of Mobile and Galveston and then ship it by tanker to New York or Los Angeles, respectively. Los Angeles requires 160,000 barrels per day, and New York requires 140,000 barrels per day. The costs of shipping 1000 barrels between various locations are shown in the file Chapter 14, Problem 88 Shell in the Module for 4/27, where a blank indicates shipments that are not allowed. Determine how to minimize the transport costs in meeting the oil demands of Los Angeles and New York.

An oil company produces oil from two wells. Well 1 can produce up to 150,000 barrels per day, and well 2 can produce up to 200,000 barrels per day. It is possible to ship oil directly from the wells to the company’s customers in Los Angeles and New York. Alternatively, the company could transport oil to the ports of Mobile and Galveston and then ship it by tanker to New York or Los Angeles, respectively. Los Angeles requires 160,000 barrels per day, and New York requires 140,000 barrels per day. The costs of shipping 1000 barrels between various locations are shown in the file Chapter 14, Problem 88 Shell in the Module for 4/27, where a blank indicates shipments that are not allowed. Determine how to minimize the transport costs in meeting the oil demands of Los Angeles and New York.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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An oil company produces oil from two wells. Well 1 can produce up to 150,000 barrels per day, and well 2 can produce up to 200,000 barrels per day. It is possible to ship oil directly from the wells to the company’s customers in Los Angeles and New York. Alternatively, the company could transport oil to the ports of Mobile and Galveston and then ship it by tanker to New York or Los Angeles, respectively. Los Angeles requires 160,000 barrels per day, and New York requires 140,000 barrels per day. The costs of shipping 1000 barrels between various locations are shown in the file Chapter 14, Problem 88 Shell in the Module for 4/27, where a blank indicates shipments that are not allowed. Determine how to minimize the transport costs in meeting the oil demands of Los Angeles and New York.

Unit shipping costs (per 1000 barrels) To Well 1 Well 2 Mobile Galveston NY LA From Well 1 $10 $13 $25 $28 Well 2 $15 $12 $26 $25 Mobile $16 $17 Galveston $14 $16 Decision Variables NY1 Shipment from Well 1 to NY Shipment from Well 1 to LA Shipment from Well 1 to Mobile Shipment from Well 1 to Galveston Shipment from Well 2 to NY Shipment from Well 2 to LA Shipment from Well 2 to Mobile Shipment from Well 2 to Galveston Shipment from Mobile to NY LA1 M1 G1 NY2 LA2 M2 G2 MNY MLA Shipment from Mobile to LA GNY Shipment from Galveston to NY GLA Shipment from Galveston to LA
Transcribed Image Text:Unit shipping costs (per 1000 barrels) To Well 1 Well 2 Mobile Galveston NY LA From Well 1 $10 $13 $25 $28 Well 2 $15 $12 $26 $25 Mobile $16 $17 Galveston $14 $16 Decision Variables NY1 Shipment from Well 1 to NY Shipment from Well 1 to LA Shipment from Well 1 to Mobile Shipment from Well 1 to Galveston Shipment from Well 2 to NY Shipment from Well 2 to LA Shipment from Well 2 to Mobile Shipment from Well 2 to Galveston Shipment from Mobile to NY LA1 M1 G1 NY2 LA2 M2 G2 MNY MLA Shipment from Mobile to LA GNY Shipment from Galveston to NY GLA Shipment from Galveston to LA
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