An oil company distills two types of crude oil, A and B, to produce regular and premium gasoline and jet fuel. There are limits on the daily availability of crude oil and the minimum demand for the final products. If the production is not sufficient to cover demand, the short- age must be made up from outside sources at a penalty. Surplus production will not be sold immediately and will incur storage cost. The following table provides the data of the situation:
Fraction yield per bbl
Crude Regular Premium Jet Price/bbl ($) bbl/day
Crude A .20 .1 .25 30 2500
Crude B .25 .3 .10 40 3000
Demand (bbllday) 500 700 400
Revenue ($/bbl) 50 70 120
Storage cost for surplus
production ($ibbl) 2 3 4
Penalty for unfilled
demand ($/bbl) 10 15 20
Determine the optimal product mix for the refinery.