1. Chemical Processing - Input/Output Processing - Blending
The Massoil Refinery processes two different kinds of crude oil, Venezuelan and Saudi to
produce two general classes of products, Light and Heavy. Either crude oil can be
processed by either of two modes of processing, Short or Regular. The processing cost
and the amounts of Heavy and Light produced depend upon the mode of processing used
and the type of crude oil used. Costs vary, both across crude oils and across processing
modes. The relevant characteristics are summarized in the table below. For example, the
short process converts each unit of Venezuelan crude to .45 units of Light product, .52
units of Heavy product and .03 units of waste.
SHORT PROCESS REGULAR PROCESS
Venezuelan Saudi Venezuelan Saudi
Light product fraction .45 .60 .49 .68
Heavy product fraction .52 .36 .50 .32
Unusable product fraction .03 .04 .01 .00
Saudi crude costs $22 per unit while Venezuelan crude costs $21 per unit. The
short process costs $2.10 per unit processed while the regular process costs $2.50 per
unit. During any week, Massoil can process at most 10,000 units of crude at the regular
mode and 13,000 units of crude at the short mode.
The respective market values of light and heavy products are $29 and $27 per
unit, while the unusable product is disposed of at the cost of $1 per unit. Formulate a LP
problem that optimally determines the amounts of crudes to buy and the processes to run.
What are the optimal purchasing and operating decisions?
