Production and Operations Management - Term Paper Example

Taking four days to reach Louisiana Offshore Oil Port (LOOP), it further takes 10 days to reach Marathons Robinson, Ill refinery which is processed into gasoline, diesel, fuel, and other petroleum products such as fuel oil, kerosene, asphalt, jet fuel, tolvene, xylene, and benzene within 8 days in Phase III. The refined products are later shipped to Marathon owned terminals in further 8 days after which are stored for six days before being transported to jobbers, dealers or other convenience stores which are further transported to brand stations of Marathon.

It should be noted that refined products are stored at the terminals for three to six days before being transported to various centres (www.marathonpetroleum.com). According to video, it takes almost 35 days to offer oil products to Americans and this could be reduced further if the storage time is limited to few days or may even directly transport the products to jobbers, dealers, convenience stores and brand stations of Marathon. Hence, Phase V could be improved to reduce the time for supply of oil fuels in the United States. 2) In order to understand the relationship between the retail price of gasoline and the world demand for crude oil, it is necessary apply the law of demand to the problem.

According to the law demand, when price raises, the demand for the good falls and when the price falls, the demand rises (Mankiw and Taylor, 2006, p.65). This law is in complete contrast to oil product because it is the top prioritized good which runs the national and international economy. It is important to mention here that the United States imports 42 million gallons of gasoline every day in addition to the gasoline produced by U.S. refineries apart from importing crude oil in order to meet the high demand of gasoline.

The world demand for crude oil is 87.7 million barrels per day while U.S alone requires 19.7 mmbd out of which 46 percent is used for the production of gasoline (www.marathonpetroleum.com). World demand for crude oil is increasing day by day and consumption of gasoline is increasing 0.5 to 0.10 percent each day. United States share of purchasing crude oil depends of the world demand because if world demand decreases the US can import more crude oil which will have positive effect on the market making the government possible to supply gasoline and meet the ever increasing demand.

Otherwise, the price of gasoline will increase due to shortage of supply in US market and increasing world demand for crude oil. Thus there is a definite relationship between gasoline prices and world demand for crude as the decrease in latter will result in the decrease of prices in United States 3) Marathon delivers the products to jobbers, dealers and other convenient stores through various modes of transports. However, Marathon also operates its own convenience stores branded as ‘Speedway’.

It is the wholly owned subsidiary of Marathon. Oil is a commodity which powers the international economy. Most of the organizations are dependent of refined oil products which make it more important for the companies dealing in oil products to formulate a strategy in advance citing future crisis of reduced global production of crude oil (www.marathonpetroleum.com). Marathon, which already operates chain of convenience stores, must design a strategy to attract customers without changing the prices even if the global production decreases. Fuel