Calculate Maximum Daily Profit from Oil Refinery Production
How can we calculate the maximum total profit that can be realized daily from an oil refinery production?
Given the production cost per barrel for gasoline and heating oil, the daily production budget, and the profit per barrel for each type of fuel.
Answer:
Maximum total profit = $4,800
In order to calculate the maximum total profit that can be realized daily from an oil refinery production, we need to consider the production cost, daily production budget, and profit per barrel for each type of fuel. The refinery can produce gasoline and heating oil, with a production cost of $6 per barrel for gasoline and $8 per barrel for heating oil.
The daily production budget is $9600, and the profit is $3 per barrel for gasoline and $4 per barrel for heating oil. To maximize the total profit, we need to allocate the budget cost to maximize the profit per production cost.
Calculating the profit per budget cost and ranking the products:
Gasoline: Profit per product cost = 3 / 6 = 0.5
Heating oil: Profit per product cost = 4 / 8 = 0.5
Since both gasoline and heating oil produce the same profit per dollar of cost, which is $0.5, they are equally ranked. Therefore, the total profit is calculated by multiplying the budget cost by the profit per budget:
Total profit = $9600 x $0.5 = $4,800
Thus, the maximum total profit that can be realized daily from the oil refinery production is $4,800.