Production Planning for Integrated Primary and Secondary Lumber Manufacturing

This paper describes two linear programming models that were developed for production planning in value-added lumber manufacturing facilities. One model is designed for nonintegrated value-added facilities; the other is designed for value-added facilities integrated with a sawmill. The models were then used to explore the financial benefits for a sawmill to integrate a value-added lumber manufacturing facility at the back end of the mill. Net revenues are compared from the sawmill's point of view for two experimental cases. In Case 1 the sawmill sells its entire lumber production to the market (including to an independent value-added facility). In Case 2, the sawmill sells only the lumber that it is not directed to the value-added facility for further processing. Net revenue for Case 2 exceeds the net revenue of Case 1 by 10%. Results shown demonstrate that production decisions in the value-added facility had a significant influence on production decisions in the sawmill