Abstract: In this paper, a heat exchanger network is simulated by a new transshipment model. The model is a stage-wise representation of thermodynamic control volume. Within each stage, hot stream and cold stream are split with heat exchange between each other, then are mixed at different temperatures and enter the next stage. This transshipment model is meshed with a nonlinear programming to model both the selection of stream matches and the derivation of a heat exchanger network configuration, and allows the feasible space to be defined by a set of linear constraints. A new simultaneous optimal synthesis method is thusdeveloped on solid physical background to generate automatically a heat exchanger network which provides simultaneously optimal utility consumption level, srteam matches and network configuration. The method overcomes the shortcomings of such decomposition methods as (extend) pinch point design, dual temperature difference method and mathematical programming, and has unique advantages compared with other simultaneous optimization models, Working examples have proved that the proposed method compares favorably with the other existing methods.