Due to deposition sequence, reservoir can be approximately considered as formation vertically consisting of many small layers with different physical properties. Meanwhile, the property distribution of these small layers, e.g. heterogeneity of the formation, has a great impact on reservoir development and its production performance. No matter how fine grid to be used, it is always difficult for traditional numerical simulation to couple the impact of vertical heterogeneity of the formation, that will inevitably result in significant calculation error. Therefore in order to overcome this defect and deliver better calculation results which are consistent along with real production performance, this paper derives a math model combined both analysis approach and numerical approach, which has a better description for vertical heterogeneity of formation by overlapping small layers and could deliver better calculation results by fine-gridding strata profile. The model could be applied to either predict further field production performance or conduct history match based on production history of field. This method has applied in actual production analysis and reservoir evaluation, and good results have been achieved.