Based on Magoulas and Marinos- Kouris (1988). Oilco produces two products: regular and premium gasoline. Each product contains 0.15 gram of lead per liter. The two products are produced from these six...

Based on Magoulas and Marinos- Kouris (1988). Oilco produces two products: regular and premium gasoline. Each product contains 0.15 gram of lead per liter. The two products are produced from these six inputs: reformate, fluid catalytic cracker gasoline (FCG), isomerate (ISO), polymer (POL), Methyl Tertiary Butyl Ether (MTBE), and butane (BUT).


Each input has four attributes: research octane number (RON), Reid Vapor Pressure (RVP), ASTM volatility at 70 degrees Celsius, and ASTM volatility at 130 degrees Celsius. (ASTM is the American Society for Testing and Materials.) The attributes and daily availability (in liters) of each input are listed in the file P04_91.xlsx. The requirements for each output are also listed in this file. The daily demand (in thousands of liters) for each product must be met, but more can be produced if desired. The RON and ASTM requirements are minimums; the RVP requirement is a maximum. Regular gasoline sells for $0.754 per liter; premium gasoline for $0.819. Before each product is ready for sale, 0.15 gram per liter of lead must be removed. The cost of removing 0.1 gram per liter is $0.213. At most, 38% of each type of gasoline can consist of FCG. How can Oilco maximize its daily profit?