Another interesting way that optimization can be seen applied is in the oil industry. American oil refineries are scrambling to fix bottle necks in their systems in order to maximize profit and production.
Most refineries are running at almost-full capacity. Some are at 98% and the demand for oil doesn't appear to be decreasing even with higher prices. Some question the possibility of building new rifineries because of the cost and environmental regulations. Optimization will help them decide on how to overcome the capacity squeeze facing the restraints involved in oil production such as inventory and supply of raw material.
1 comment:
-1 for a spelling mistake in the post.
This is an excellent example. Refineries are highly complex operations, and they already use a lot of sophisticated techniques to optimally manage their operations because their margins are so low (we even do refinery problems specifically in my ECON 6100 class).
What's really scary is that refiners have made the optimal choice over the last 30 years to overwork their existing plants rather than to build new ones (and confront political opposition).
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