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Research the Best Cost for 1 Gallon of Cellulosic Ethanol

You are running a company that produces cellulosic ethanol. You know that the production cost per gallon is based on two things:

  1. transportation costs to bring the materials to the plant, and
  2. the cost of the materials.

Your company needs to find the combination of these two factors that will lead to the lowest cost per gallon of cellulosic ethanol. You are given a research budget to discover this combination.

RESEARCH BUDGET: $3,000

An inexpensive method for estimating the cost outcome is to run a computer simulation.

ONE COMPUTER SIMULATION RUN: $100

The simulation will help you to guess which cost combination leads to the lowest fuel cost, but you must still perform a small-scale laboratory test to be sure. This is called a benchmark fuel production.

ONE BENCHMARK TEST: $1,000

Since you only have a research budget of $3,000, choose your benchmark input guesses wisely.

Find the best price for 1 gallon of cellulosic ethanol.

If you use all your money you may start the simulation over.