Linear programming model to maximize contribution to profit

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Reference no: EM135760

Bay Oil produces two kinds of fuels (regular and super) by mixing three ingredients. The major distinguishing feature of the two products is the octane level required. Regular fuel should have a minimum octane level of 90 while super must have a level of at least 100. The cost per barrel, octane levels and available amounts (in barrels) for the upcoming two-week period are shown in the following table. Similarly the maximum demand for each end product as well as the revenue generated per barrel are shown. Linear Programming Applications in Finance, Marketing and Operations Management

Input    Cost/Barrel     Octane     Available (barrels)
1           $16.50             100            110,000
2           $14.00              87             350,000
3           $17.50             110            300,000

               Revenue/Barrel           Max Demand (barrels)
Regular       $18.50                            350,000
Super          $20.00                            500,000

Develop as well as solve a linear programming model to maximize contribution to profit. What is the ideal contribution to profit?

Reference no: EM135760

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