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Tutorial 2 Exercise

The document outlines a linear programming model for an oil company producing regular and premium gasoline, detailing profit contributions, resource constraints, and production capacities. It includes tasks such as formulating the model, solving it graphically, identifying binding constraints, and discussing the effects of changes in coefficients and constraints on the optimal solution. Additionally, it addresses concepts like shadow price and reduced cost related to the decision variables in the model.

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6 views1 page

Tutorial 2 Exercise

The document outlines a linear programming model for an oil company producing regular and premium gasoline, detailing profit contributions, resource constraints, and production capacities. It includes tasks such as formulating the model, solving it graphically, identifying binding constraints, and discussing the effects of changes in coefficients and constraints on the optimal solution. Additionally, it addresses concepts like shadow price and reduced cost related to the decision variables in the model.

Uploaded by

zhuandapujie
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

LGT3102 Management Science Tutorial 2

An oil company produces two grades of gasoline: regular and premium. The profit contributions are $0.30 per
gallon for regular gasoline and $0.50 per gallon for premium gasoline. Each gallon of regular oil contains 0.3
gallons of grade A crude oil, and each gallon of premium gasoline contains 0.6 gallons of grade A crude oil.
For the next production period, the company has 18,000 gallons of grade A crude oil available. The refinery
used to produce the gasoline has a production capacity of 50,000 gallons for the next production period. The
company’s distributors have indicated that demand for premium gasoline for the next production period will
be at most 20,000 gallons.

a. Formulate a linear programming model that can be used to determine the number of gallons of regular
gasoline and the number of gallons of premium gasoline that should be produced in order to maximize
total profit contribution.

b. Use the graphical method to solve the problem and suggest optimal solution.

c. What is the meaning of “binding constraint”? What are the binding constraints in this case?

d. Comment on this statement: “Binding constraints are always available for linear programming problem.”

e. What will be the impact to the optimal solution if one of the coefficients (e.g. 0.3) of the objective function
changes? What will be the revised optimal solution if it changes to be 0.5? How about 0.7? Will the optimal
solution change? Find the allowable range of this coefficient so that the optimal point does not change.

f. What will be affected if the RHS value of one of the constraints, i.e., demand for premium gasoline, is
changed from 20,000 to 30,000? What is the shadow price for this constraint?

g. What is meant by reduced cost? What are reduced cost values for the two decision variables, R and P
respectively?

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