OR Practice—A Utility Fuel Inventory Model

The Utility Fuel Inventory Model (UFIM) is an inventory modeling system designed to help electric utilities set long-term fuel inventory strategy. It is currently in use by more than 50 utilities. This paper describes the model, its use and one of its first applications. The paper has several objectives: (i) to illustrate the value of integrating different model forms—both analytical and simulation—to solve a complex multiple-issue decision problem; (ii) to illustrate a process for using the model to help the user understand the inventory problem; (iii) to illustrate the use of auxiliary simplified models to build insight and to complement judgment; and (iv) to document an application demonstrating significant cost savings for the electric utility industry.