Using linear programming to make wood procurement and distribution decisions

Abstract

A user-friendly, computer modeling system was developed to help make decisions for a forest products firm that is organized into profit centres. Interactive data entry provides input to a linear programming model which the system automatically builds and solves. The system considers land ownership, harvest block volumes, mill requirements, stumpage prices, mill product prices, harvest methods and their costs, and shipping distances and costs. In a case study, the system produced a solution with a unit wood cost for the firm's pulpmill that was 5.1% less than the historical cost. Tradeoff analysis showed that the woodlands division has flexibility to increase its profit by up to 25% without exceeding the pulpmill's historical unit wood cost. Key words: harvesting, linear programming, operational planning, profit centre, tradeoff, transportation, wood distribution, wood procurement