Petroleum Industry Management

1
Petroleum Industry Management

• By Lauren Brian
• Natasha Gerstenschlager
• Zack Spears
• Jason McClenney

2
Petroleum Industry Management

• Equations obtained from first situation
• 20m14m2 4m3 5,000 gallons of motor oil
• 10d1 14d25d3 8,500 gallons of diesel oil
• 5g1 5g2 12g3 10,000 gallons of gasoline

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Petroleum Industry Management

• Barrels of crude oil given to each factory to
  meet demand
• Factory 1 gets 49 barrels of crude oil
• Factory 2 gets 331 barrels of crude oil
• Factory 3 gets 675 barrels of crude oil

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Petroleum Industry Management

• Solution to doubled demand for all products

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Petroleum Industry Management

• Factory 1 gets 98 barrels of crude oil.
• Factory 2 gets 663 barrels of crude oil.
• Factory 3 gets 1350 barrels of crude oil.
• This solution is proportionally the same as the
  original, and because we doubled the factors, the
  solution will also double.

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Petroleum Industry Management

• New distributors demand is 2000 gallons of motor
  oil, 4000 gallons of gasoline, and 4000 gallons
  of diesel oil.

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Petroleum Industry Management

• Factory 1 gets 13 barrels of crude oil.
• Factory 2 gets 188 barrels of crude oil.
• Factory 3 gets 250 barrels of crude oil.
• Any other solutions?

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Petroleum Industry Management

• Amount of crude oil needed for each factory to
  meet demand of both groups of distributors.

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Petroleum Industry Management

• Factory 1 gets 62 barrels of crude oil.
• Factory 2 gets 519 barrels of crude oil.
• Factory 3 gets 925 barrels of crude oil.
• This result is simply the addition of the
  previous results obtained.

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Petroleum Industry Management

• Variation of 3 coefficients computer solution

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Petroleum Industry Management

• Shut down of factory 3 and companies ability to
  meet demand
• The back substitution produces and inconsistent
  system.
• The shut down of factory 3 makes meeting demand
  impossible.

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Petroleum Industry Management

• For now, the company should cut production to
  original supply of
• Factory 1 gets 49 barrels of crude oil.
• Factory 2 gets 331 barrels of crude oil.

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Petroleum Industry Management

• Addition of 4th factory identical to factory 3
• The new factory 4 provides ultimate flexibility
  and allows for infinite many solutions.

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Petroleum Industry Management

• Supply of paraffin available to candle company
  daily
• Factory 1 provides 3 gallons of paraffin for each
  of the 49 barrels of crude oil used daily.
• Factory 2 provides 5 gallons of paraffin for each
  of the 331 barrels of crude oil used daily.
• Factory 3 provides 2 gallons of paraffin for each
  of the 675 barrels of crude oil used daily.
• Total 3,152 gallons of paraffin daily

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Petroleum Industry Management

• Production capability in absence of factory 1
• Back substitution produces an inconsistent
  system.
• Therefore it is impossible for the company to
  meet the demand with only factory 2 and factory 3.

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Petroleum Industry Management

• Effect of factory 4 in absence of factory 1 to
  meet demand
• Back substitution produces an inconsistent system.

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Petroleum Industry Management

• Since factory 4 is identical to factory 3, it has
  no effect in meeting demand.
• Therefore, it is impossible for the company to
  meet the demand with factory 4 in absence of
  factory 1.