Bay Oil produces two types of fuels (regular and super) by mixing three ingredients.
The major distinguishing feature of the two products is the octane level required. Regular
fuel must 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. Likewise, the maximum
demand for each end product and the revenue generated per barrel are shown.
400 Chapter 9 Linear Programming Applications in Marketing, Finance, 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 and solve a linear programming model to maximize contribution to profit.
What is the optimal contribution to profit?