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This paper presents the methodology of the development and the results of a simulation model used to capture the complexities of sulphur distribution system run by Sultran Ltd. in Western Canada. Sulphur is a valuable by-product of natural gas which should be continuously transported from the gas plants to avoid plant shutdowns. The sulphur is routed via rail to port terminals, where ships with variable demands arrive. The empty cars are then assigned back to gas plants for reloading. This closed-loop rail transportation system is challenging to simulate due to the push-pull nature of the system, the high degree of variability, as well as the interdependency of simulated elements. The problem becomes even more challenging when we consider many tactical and operational policies. The developed model is used to study the results of different operations management policies and help the mangers make appropriate decisions.