Maximizing Profit in Oil Refinery Production

How can an oil refinery maximize profit through production?

Given the data on production costs, daily budget, and profit margins, what is the optimal production mix to achieve maximum profit?

Optimal Production Mix for Maximum Profit

To maximize profit, the refinery should produce 600 barrels of gasoline and 400 barrels of heating oil daily.

Maximizing Profit through Production Optimization

With the given data on production costs, daily budget, and profit margins, the oil refinery can optimize its production mix to achieve maximum profit. The refinery has a maximum daily production limit of 1400 barrels, with production costs of $6 per barrel for gasoline and $8 per barrel for heating oil. The daily production budget is $9600, and the profit margins are $3.50 per barrel for gasoline and $4 per barrel for heating oil.

To determine the optimal production mix for maximum profit, we can set up a linear programming problem. Let x be the number of barrels of gasoline produced and y be the number of barrels of heating oil produced daily. The objective is to maximize profit, given by the profit function: Profit = 3.50x + 4y.

The production mix must satisfy the following constraints: 1. Daily production limit: x + y ≤ 1400 barrels 2. Daily production budget: 6x + 8y ≤ 9600 dollars

By solving the linear programming problem, we find that the optimal production mix for maximum profit is 600 barrels of gasoline and 400 barrels of heating oil daily. This production mix maximizes profit while staying within the production limits and budget constraints.

By optimizing production based on the profit margins and constraints, the oil refinery can maximize its profitability and operational efficiency. This strategic approach ensures that resources are allocated effectively to generate the highest possible profit from production activities.