Group 2

No Name
1 Trinh Nguyễn Tú Anh
2 Phùng Thị Hương Giang
3 Nguyễn Khánh Huyền
4 Phạm Thị Mỹ Linh Nhóm Trưởng
5 Đặng Ngọc Tiên
6 Nguyễn Hữu Thuận
Task 1. Total shipping cost for crude oil

Los Angeles
Unit Cost
Destination (Refinery or Potential Refinery)
New Orleans Charleston Seattle
Texas 2 4 5
Source
(Oil Fields) California 5 5 3
Alaska 5 7 3
Middle East 2 3 5

Shipment Quantity Destination (Refinery or Potential Refinery)

New Orleans Charleston Seattle

Texas 40 0 0
Source California 0 0 0
(Oil Fields) Alaska 0 0 80
Middle East 60 60 0
Total Reveive 100 60 80
= = =
Receive 100 60 80
Total cost

Galveton
Unit Cost
Destination (Refinery or Potential Refinery)
New Orleans Charleston Seattle
Texas 2 4 5
Source California 5 5 3
(Oil Fields) Alaska 5 7 3
Middle East 2 3 5

Shipment Quantity Destination (Refinery or Potential Refinery)

New Orleans Charleston Seattle
Texas 0 0 0
Source California 0 20 0
(Oil Fields) Alaska 20 0 80
Middle East 80 40 0
Total Reveive 100 60 80
= = =
Receive 100 60 80
Total cost

St.Louis
Unit Cost
Destination (Refinery or Potential Refinery)
New Orleans Charleston Seattle
Texas 2 4 5
Source California 5 5 3
(Oil Fields) Alaska 5 7 3
Middle East 2 3 5

Shipment Quantity Destination (Refinery or Potential Refinery)

New Orleans Charleston Seattle
Texas 0 0 0
Source California 0 20 0
(Oil Fields) Alaska 20 0 80
Middle East 80 40 0
Total Reveive 100 60 80
= = =
Receive 100 60 80
Total cost
r Potential Refinery)
Los Angeles
3

1
4
4

r Potential Refinery)

Los Angeles Total Supply Supply

40 80 = 80
60 60 = 60
20 100 = 100
0 120 = 120
120
=
120
cost 880

r Potential Refinery)
Galveton
1
3
5
3

r Potential Refinery)
Galveton Total Supply Supply
80 80 = 80
40 60 = 60
0 100 = 100
0 120 = 120
120
=
120
cost 920
r Potential Refinery)
St.Louis
1
4
7
4

r Potential Refinery)
St.Louis Total Supply Supply
80 80 = 80
40 60 = 60
0 100 = 100
0 120 = 120
120
=
120
cost 960
Task 2: Total shipping cost for finished product

Los Angeles
Unit Cost
Destination (Distribution Centers)
Pittsburg Atlanta Kansas City
New Orleans 6.5 5.5 6
Source Charleston 7 5 4
(Refinery) Seattle 7 8 4
Los Angeles 8 6 3

Shipment Quantity Destination (Distribution Centers)

Pittsburg Atlanta Kansas City
New Orleans 80 20 0
Source Charleston 0 60 0
(Refinery) Seattle 20 0 0
Los Angeles 0 0 80
Total Reveive 100 80 80
= = =
Receive 100 80 80
Total cost

Galveton
Unit Cost
Destination (Distribution Centers)
Pittsburg Atlanta Kansas City
New Orleans 6.5 5.5 6
Source Charleston 7 5 4
(Refinery) Seattle 7 8 4
Galveton 5 4 3

Shipment Quantity Destination (Distribution Centers)

Pittsburg Atlanta Kansas City
New Orleans 100 0 0
Source Charleston 0 60 0
(Refinery) Seattle 0 0 0
Galveton 0 20 80
Total Reveive 100 80 80
= = =
Receive 100 80 80
Total cost

St.Louis
Unit Cost
Destination (Distribution Centers)
Pittsburg Atlanta Kansas City
 New Orleans 6.5 5.5 6
Source Charleston 7 5 4
(Refinery) Seattle 7 8 4
St.Louis 4 3 1

Shipment Quantity Destination (Distribution Centers)

Pittsburg Atlanta Kansas City
New Orleans 100 0 0
Source Charleston 0 60 0
(Refinery) Seattle 0 0 0
St.Louis 0 20 80
Total Reveive 100 80 80
= = =
Receive 100 80 80
Total cost
bution Centers)
San Francisco
8
7
3
2

bution Centers)
San Francisco Total Supply Supply
0 100 = 100
0 60 = 60
60 80 = 80
40 120 = 120
100
=
100
cost 1570

bution Centers)
San Francisco
8
7
3
6

bution Centers)
San Francisco Total Supply Supply
0 100 = 100
0 60 = 60
80 80 = 80
20 120 = 120
100
=
100
cost 1630

bution Centers)
San Francisco
 8
7
3
5

bution Centers)
San Francisco Total Supply Supply
0 100 = 100
0 60 = 60
80 80 = 80
20 120 = 120
100
=
100
cost 1430
Task 3. Calculate total variable cost from the choice of each site for the new Texago refinery.

THE TEXAGO CORP.SITE SELECTION PROBLEM

Site Total cost of shipping crude oil Total cost of shipping finished product
Los Angeles $880 million $1.57 billion
Galveton $920 million $1.63 billion
St. Louis $960 million $1.43 billion

Compare the 3 total costs in the Total column, we notice that St. Louis has the lowestcost with $2.92 billion

=> Therefore, the best option would be St. Louis with a total cost of $2.92 billion
new Texago refinery.

ON PROBLEM

Operating cost for new refinery Total

$620 million $3.07 billion
$570 million $3.12 billion
$530 milion $2.92 billion

th $2.92 billion