Linear Programming Tool and Sensitivity Analysis

Linear Programming Tool and Sensitivity Analysis

Chevron Corporation is a global energy corporation that is active in over 180 nations. The energy corporation is involved in various aspects from oil, natural gas to geothermal energy industries, including exploration of hydro carbon and production; refining, marketing and the transport of its products (David , Anderson, Denis, Sweeney, Thomas, Williams, Jeffrey, camm, James & Cochran, 2015). Chevron also manufactures chemicals and sell them as well as generation of power.

Chevron corporation as one of the world’s largest oil company it utilizes various methodologies to improve its competitive advantage by achieving its best outcome involving the maximization of profit and its cost reduction through mathematical models required to be represented by a linear relationship termed as linear programing (David , Anderson, Denis, Sweeney, Thomas, Williams, Jeffrey, camm, James & Cochran, 2015). Further, Chevron Corporation utilizes sensitivity analysis that is the study of how the risks in the result of a mathematical model can be apportioned to different sources of uncertainty in its inputs.

For Chevron Corporation to improve on its production efficiency, various factors are considered across the supply chain. The uniqueness of the company’s qualities and the pricing are put into consideration from purchases to improve on its profit. Chevrons refineries is therefore configured in a unique manner. The markets price of crude oil being in a constant flux makes the determination of the best operation way to operate the refineries complex. The utilization of a linear programming tool (petro) therefore helped to meet the challenge. The software is a lengthy list of dynamic variables that helps in determining whether a certain bid makes sense at a particular time. Refining of crude oil takes the largest percentage. Chevron takes the crude oil that is economically fit to refine, facilitates a greater deal in the value. Further, petro helps in the refineries as well as the product traders on various economic mixes of products to produce.

Additionally, petro permits the analysts to explore on planning alternatives to come up with the best recommendation faster compared to other planning technology. Moreover, petro employs the linear programing (distributive recursion) to process hundreds of variables related to crude characterization along with other refinery variables arriving to amicable solutions in a small period of time (David et al., 2015).

As a manager at Chevron Corporation, the consideration of the company’s future is key through planning in the production process. The consideration and the determination of the future leaders is a requirement in carrying out the economic analysis as a career development for the company’s downstream management (David et al., 2015). The utilization of the programming tools as well as the sensitivity analysis is essential to the manager to assist in decision analysis that in return helps the planners on the effective ways to invest in the company to benefit from the annual capital of the firm.

Further, the company’s manager is not only accountable to the internal application with the help of liner programming tool (petro) but also has to be involved in the discussion with the environmental protection agencies to analyze and determine various blends of fuel for the future regulation. The manager therefore has the accountability to ensure that formulations are identified to ensure there is less impact on supply as well as the cost at the same time meeting the targets required by the environment.  Further, David et al., (2015) assert that it is the role of the manager to ensure the selection of crude oil is done, optimization of the products as well as the refinery unit optimization to continually maximize the profit as well as making better decisions in the allocation of the generated capital.


David R, Anderson, Denis j. Sweeney, Thomas A. Williams, Jeffrey D. camm, James J. Cochran. (2015). Quantitative methods for business. Cengage learning.

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