Supply chain planning for a timber harvesting plus sale tender

Abstract

Since 2010, the Czech State Forest Enterprise has been inviting timber-harvesting tenders while insisting on the forestry company purchasing the timber from the felled trees as well. To win, a tender must offer the greatest difference between the price of the timber purchased and the cost of the operations. Thus, the forest companies are now facing new problem: apart from minimizing the logging costs they are searching for a cross-cutting and mill-distribution strategy that maximizes the selling price of the harvested timber. The optimization model devised by the present paper provides support for finding an optimal timber selling strategy and, as an important contribution, include a detailed plan for cross-cutting the logs and assign them to the particular customers. We keep the support accessible via common office software and the cross-cutting and customer-assigning problem is formulated as a linear programming model for EXCEL, a particular real-world problem is solved and, using expert comparison, the model appears to provide very good results.