A linear programming approach to minimizing wood procurement costs for integrated forest products firms

Abstract

A linear programming cost minimization problem is presented to demonstrate the applicability of the technique to problems inherent in the forest management decision making process. A case study of an integrated forest products firm with the objective of minimizing the present value cost of wood procurement over a 20 year study is solved by a computer using the firm's present and three alternate price structures. The study is implemented with the product quality constraints and a managerial constraint of the firm and incorporates timber growth into the selection of procurement alternatives. The minimum present value cost solutions of the four price structures studied are presented and discussed. Additional information regarding the stability of the solution to changes in future expectations, easily obtained by various computer agendums, is evaluated.