An Oil Company Produces Oil at Two Wells

question 42

Essay

An oil company produces oil at 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 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. Los Angeles requires 160,000 barrels per day, and New York requires 140,000 barrels per day. The costs (in dollars) of shipping 1000 barrels between various locations are shown below:
-Determine how to minimize the transportation cost in meeting the oil demands of Los Angeles and New York.