Oilco has oil fields in San Diego and Los Angeles. The San Diego field can produce 500,000 barrels per day, and the Los Angeles field can produce 400,000 barrels per day. Oil is sent from the fields to a refinery, in either Dallas or Houston (assume each refinery has unlimited capacity). To refine 100,000 barrels costs $700 at Dallas and $900 at Houston. Refined oil is shipped to customers in Chicago and New York. Chicago customers require 400,000 barrels per day, and New York customers require 300,000 barrels per day. The costs of shipping 100,000 barrels of oil (refined or unrefined) between cities are shown in Table.
To ($)
From
Dallas
Houston
New York
Chicago
Los Angeles
300
110
—
San Diego
420
100
450
550
470
530
a Formulate an MCNFP that can be used to determine how to minimize the total cost of meeting all demands.
b If each refinery had a capacity of 500,000 barrels per day, how would the part (a) answer be modified?
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