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This model is an example of a "network" problem--requiring the movement of resources, at minimum cost, along different routes with which varying costs are associated. With the addition of limits to capacity along the routes, it becomes "capacitated". Oil and gas pipelines, truck and air routes may be utilized at their highest cost-efficiency by applyin the principles demonstrated in this model.
Objective of Optimization:
The objective in this model is to minimize the Total Pumping Cost without exceeding either the monthly output capacity of the wells or the capacity of the pipelines, while meeting demand at each refinery.