Texago Case Study Essay
A Case Study with Many
The Texago Corporation is a large, fully integrated petroleum company based in the United
States. The company produces most of its oil in its own oil fields and then imports the rest of what it needs from the Middle East. An extensive distribution network is used to transport the oil to the company’s refineries and then to transport the petroleum products from the refineries to Texago’s distribution centers. The locations of these various facilities are given in Table 1.
Texago is continuing to increase market share for several of its major products. Therefore, management has …show more content…
120 million barrels will need to be imported from the Middle East.
SUPPLEMENT TO CHAPTER 8
A CASE STUDY
Since the amounts of crude oil produced or purchased will be the same regardless of which location is chosen for the new refinery, the task force concludes that the associated production or purchase costs (exclusive of shipping costs) are not relevant to the site selection decision. On the other hand, the costs for transporting the crude oil from its source to a refinery are very relevant. These costs are shown in Table 4 for both the three current refineries and the three potential sites for the new refinery.
Also very relevant are the costs of shipping the finished product from a refinery to a distribution center. Letting one unit of finished product correspond to the production of a refinery from 1 million barrels of crude oil, these costs are given in Table 5. The bottom row