Pacific-Gulf Oil Company Is Faced with the Problem of Refining

question 25

Essay

Pacific-Gulf Oil Company is faced with the problem of refining three petroleum components into regular and premium gasoline in order to maximize profit.Components 1 and 2 are pooled in a single storage tank,and component 3 has its own storage tank.Regular and premium gasolines are made from blending the pooled components and component 3.Prices per gallon for the two products and three components,as well as product specifications,are listed below. ​ ​
The maximum number of gallons available for each of the three components is 4000,8000,and 8000,respectively.Formulate a nonlinear program to determine: (1)what percentages of components 1 and 2 should be used in the pooled mixture and (2)how to make regular and premium gasoline by blending the mixture of components 1 and 2 from the pooling tank with component 3.

---

Definitions:

Fixed Period

Refers to a specific duration of time that does not change, often set for contracts or payments.

Cash Flows

Pertains to the total sum of cash and cash-equivalents moving in and out of a business.

Annual Percentage Rate

The cost of borrowing or the yield from an investment, expressed as a single percentage number that represents the yearly cost over the term of a loan or income from an investment.

Interest Rate

The payment, specified as a percentage of the principal, necessitated by a lender from a borrower for employing assets.