Final answer:
To minimize transport costs for Sunco Oil, a transshipment model would analyze routes, supply and demand, transport modes, and costs. It aims to meet oil demands in Los Angeles and New York efficiently, utilizing strategies that consider opportunity cost, trading price, and transport options like rail and water ways.
Step-by-step explanation:
To formulate a transshipment model for minimizing transport costs for Sunco Oil, one must consider various factors such as shipping lanes, demand centers, and modes of transportation that include congested street networks, freeways, rail, and water transport. The goal of the model would be to satisfy the oil demands of Los Angeles and New York in the most cost-effective manner.
Firstly, it's important to understand the demand in each city and the potential supply locations. From there, the model would involve determining various routing options and their associated costs, such as transit times, fuel consumption, and potential delays due to congestion. Ideally, the model would utilize locations near uncrowded freeways and have access to rail or water transport to take advantage of more cost-effective transport options.
The transshipment model could also consider international trade aspects, such as the trade between the United States and Saudi Arabia, where oil is exchanged for other goods like corn. The opportunity cost and trading price would play significant roles in formulating the model, as they influence the cost-effectiveness of different transportation strategies and routes.