Combining Optimisation and Simulation to Model a Supply Chain from Pit to Port

Abstract

An export supply chain, beginning with the extraction of ore from a pit and ending with the loading of this ore onto vessels at a port, is a key component of many mining operations. These supply chains are comprised of a number of complex subsystems such as mining, ore processing, transportation, stockyard management and vessel loading. Typically, the operation and performance of each of these subsystems is analysed in isolation, with little consideration of their interaction with upstream and downstream subsystems. In reality, stochastic and dynamic influences that affect one of these subsystems will have flow on effects for all other subsystems in the supply chain. Hence, evaluation of the performance of the total integrated system needs to capture the interaction of these subsystems. Discrete Event Simulation (DES) has proved to be a powerful tool in modelling supply chains, capturing the system dynamics and interactions, and evaluating the overall performance of the integrated system. The primary objective of mining export supply chains is typically to maximise production capacity, i.e. tonnes of ore loaded onto vessels at the port. In some mining operations, the extracted ore is blended into a variety of products with differing characteristics before being exported. This can be the case for ores such as coal, iron and manganese. In these operations, an additional objective, in the form of achieving a predetermined quality of material on the vessels, is equally important as a measure of system performance as production capacity. The objective of delivering a certain quality of product often conflicts directly with the objective of maximising production capacity, resulting in an increased level of complexity within the supply chain. In these supply chains, the decision-making process of planning the movement and blending of ore through the system is paramount to the overall system performance. Capturing this complex planning process in a DES modelling language is possible, but proves to be a very difficult and time-consuming task. Since planning problems are often modelled and solved using an optimisation framework, an alternative approach is to decouple the decision-making process from the simulation model, develop a stand alone optimisation model for it, and then integrate the two to create a holistic model of the supply chain. This paper describes the approach taken and presents a case study of a successful implementation on the export supply chain of PT Kaltim Prima Coal (KPC) in Indonesia.