Trans World Oil

1170 Words5 Pages
PROPOSED ACTION: Recommendations on Far Eastern Operations Significance: Within the Trans World Holding Company’s portfolio there is a unique opportunity for synergy between the multiple subsidiary companies, however, that synergy is not currently being optimized to drive the most value throughout the firm. The Far Eastern Operations Team has taken the data that we have available from our refineries, marketing operations and production centers and put forth a plan that we believe best optimizes the resources currently available to the Far Eastern Operations organization, and considers the future opportunities. From our team’s linear programming efforts, we are confident that we can reduce total operations costs from $1, 927,000 to $1, 839, 000 and increase daily operations revenue from $-160,000 to $18, 760. Background on Current Operations : The ability to optimize operations across a varied enterprise is always a difficult feat, given the number of constraints and items that managers need to consider. When our team was originally asked to optimize the current operations, we were given the following table of demand data: 1996 Demand (Thousands B/D) Area Gasoline Distillate Australia 9.0 21.0 Japan 3.0 12.0 Philippines 5.0 8.0 New Zealand 5.4 8.7 Total 22.4 49.7 In addition to the amount demanded, one of the other key considerations that needed to be taken into account are the types of crude oil being processed, the distance that the finished product has to be shipped and the market to which the gasoline or distillate is being sold. This information is in the table below: Refinery Costs and Yields Costs Yields (BBL Output per Crude BBL Input) Cost of Crude Inc. Ship. Cost Inc. Ref. Cost Total

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