Optimisation & Decision Making ENGM072

Assignment
a) An oil company produces a single type of petrol and wishes to minimise the production cost which is a complex relation between the transportation cost of crude oil ( ), cost of crude oil storage ( ) and refining ( ), for which the cost per tonne of petrol is given as
= + + + 10.75

b) Also, the company has the shipment requirements for produced petrol as in the Table 1.
Table 1 Shipment requirements Petrol June July August Required shipment [t] 28,000 42,000 45,000

The monthly production capacity is 40,000 tonnes of petrol per month at a minimum cost per tonne of petrol obtained in 1a. Also, the cost of storage of petrol is 4 per tonne per month and it is calculated on the amount of petrol that is in storage at the end of each month. The company does not have any beginning amount of petrol and should not have any petrol left in storage after the three month period. The problem is to schedule monthly production of petrol at such to minimise production and storage cost for the three month period. Also, you should assess the sensitivity of optimal schedule to the change in price of storage, say to 5 per tonne, and change in the production cost, say by 10% of calculated minimum price per tonne of petrol. Task Formulate the optimisation model which will: 1. Calculate the minimum cost of production per tonne of petrol and using appropriate analytical technique show that this is indeed the minimum cost. Explain the optimisation problem and result(s). 2. Show the analytical form of objective function and associated constraints for the distribution of petrol. A graphical representation of the problem, a block diagram, is preferred. 3. If the problem of distribution is two-dimensional, sketch the feasibility domain and clearly identify the edges and possibly some objective value lines; 4. If any of given problems in 1a) and 1b) is a linear programming problem, verify whether it is in the normal form: if not, convert it to the normal form. 5. Implement the optimisation problem(s) in GAMS and hence calculate the optimum using appropriate solvers: for the solution it is important that you show actual objective value(s) as well as all parameter values and explain them in terms of the given task. It is also important that you implement both original and normal form (for linear programs only) of the formulated problem and compare the results. The GAMS program(s) have to be properly commented. Optimisation & Decision Making ENGM072 1/2

6. Implement in GAMS the version of the problem that would help you to assess the sensitivity of overall cost to production and storage prices. Report Write up report with a full account of your design, which will include: 1. Account of your design which will show justification of your analytical form in relation to the given problem, selection of the parameters, conversion to normal form if appropriate and solver selection for GAMS program. You will also explain your standard form as well as verification of calculated optimums with analytical support. Comment on the sensitivity to the change in price of production and storage which should be supported by results from GAMS; [30 % of total mark] 2. Graphical representation of the feasibility area and clear representation of constraints as well as objective value lines, if appropriate (if a 2-dimensional problem); [10% of total mark] 3. A brief account of your GAMS program with the focus on variable, parameter and solver selection. [10% of total mark] 4. Description and explanation of the results, especially in terms of the given problem; [20% of total mark] 5. Electronic and non-compressed and fully-commented version of the GAMS. [30% of total mark]. Your report with electronic version of the GAMS program is to be submitted on Surrey Learn by December 17th, 2014.

Optimisation & Decision Making ENGM072

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