Optimization and simulation of fuel distribution. Case study: Mexico City

Abstract

In this chapter, the combined use of optimization and simulation in the design of a distribution network for hazardous materials in the northern region of Mexico City is assessed. A mathematical programming model was developed to allow for fuel dispatch truck allocation, minimizing the total distribution cost. Heuristics were used to solve the model and different simulation scenarios were applied to do what-if analysis to be able to decide on different managerial situations. Reviewing simulation and optimization results, an appropriate estimate of the fuel quantity to order (EOQ), the best type of truck to carry out the supply, as well as the ordering schedule that minimizes the associated costs of distribution and inventory, is provided. This real-life Mexican case study shows how a combined optimization-simulation approach, specifically taking advantage of heuristic methods to diminish computing time, can provide a practical, efficient and flexible tool for optimization assessment in operational research.