Agriculture

CHAPTER 2

LINEAR PROGRAMMING MODELS: GRAPHICAL AND COMPUTER METHODS

Internet Case Study: Agri Chem Corporation

In June 2006, Harry Sinclair, General Manager of the Texas Division of Agri Chem Corporation, received notification from Ben Elliot of Enerco that natural gas supplies were being rapidly depleted. In the event of a shortage, Enerco, the main producer and distributor of natural gas in the Gulf South region, would allocate gas to its customers under the following provisions established by the Federal Power Commission:

• First Priority: Residential and commercial heating and cooling

• Second Priority: Commercial and industrial firms that use natural gas as a source of raw material

• Third Priority: Industrial firms that use natural gas as a boiler fuel

Elliot related to Sinclair that most of Agri Chem's uses were in the second and third priority classifications. Hence, Agri Chem would probably be subjected to "rolling brownouts", temporary and periodic curtailments of natural gas supplies. Enerco planned to monitor its pipeline pressures and order reductions to maintain minimum levels. Elliot preferred that Enerco's customers initiate the reduction process to minimize the effect on their industrial processes. Enerco was authorized, however, to curtail supplies unilaterally if pipeline pressure fell below minimum levels.

The natural gas shortage was created by the unprecedented heat waves during recent summers. Electrical generating plants were operating at capacity to supply electricity to operate air conditioning and refrigeration units. Although long-range plans called for these utility companies to convert to coal, oil, or nuclear fuel, natural gas remained the dominant boiler fuel.

CURTAILMENT PLAN

Agri Chem's problem was to determine which of its complexes would be least affected by a gas curtailment. Its Texas Division is located in the greater Houston area; plants are located in the suburbs of Deer Park and...