Optimum Product Mix Selection from Waste Oil: A Linear Programming Application

This paper presents an application of linear programming to product mix selection problem in an oil company. The company produces more than 250 types of lubrication oils from 14 different types of raw materials refined from collected waste oil and 59 types of additives. Product mix in each planning period is determined based on the demand and production capacity. Four separate models are constructed for the problem considered and the model which resulted in the best solution was selected for implementation. The results of the model demonstrated that significant improvements can be achieved over the currently practiced product mix selection method which is based on experience. The procedures outlined and the model presented in this paper could be useful for planning engineers in similar industries.