Determine the least-cost shipping and refining plan

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Reference no: EM132219427

Royal Shield Petroleum owns oil fields in two different locations. The oil field near Grande Prairie can produce a maximum of 550,000 barrels of oil per day, while the field near Fort St. John has a daily production capacity of 450,000 barrels. Once extracted from the oil field, the product is shipped to a refinery. Royal Shield operates a pair of refineries: one in Edmonton and the other in Red Deer. The Edmonton refinery has a capacity of 600,000 barrels of oil each day, while the Red Deer location can refine half that amount each day. Company officials have determined that refining 100,000 barrels of oil at Edmonton costs $1500. Red Deer, on the other hand, has refinery costs of $1200 for 100,000 barrels. Refined oil is subsequently shipped to major customers in Calgary and Lethbridge. Calgary customers demand 500,000 barrels of oil each day, while Lethbridge’s demand is 250,000 barrels. Assume that the cost of shipping 100,000 barrels of oil from the each of the refineries to each of the demand locations is provided in the file Applied LP shell.xls. Formulate and solve a linear programming model in this spreadsheet file to determine the least-cost shipping and refining plan through the given network.

Reference no: EM132219427

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