Oilco must determine how many barrels of oil to extract during each of the next 2 years. If Oilco extracts x1million barrels during year 1, each barrel can be sold for 80 - x1dollars. If Oilco extracts x2million barrels during year 2, each barrel can be sold for 85 - x2dollars. The cost of extracting x1million barrels during year 1 is 2x12million dollars, and the cost of extracting x2million barrels during year 2 is 3x22million dollars. A total of 20 million barrels of oil are available, and at most $250 million can be spent on extraction. Determine how Oilco can maximize its profit (revenues less costs) for the next 2 years.
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