Supply Chain Modeling of Forest Fuel

Abstract

We present the problem of deciding when and where forest residues are to be converted into forest fuel, and how the residues are transported and stored, in order to satisfy demand at heating plants. Decisions also include whether or not additional harvest areas and sawmills are to be contracted. In addition, we consider flow of products from sawmills and import harbours, and addresses the question of which terminals have to be used. The planning horizon is one year and monthly time periods are used. The supply chain problem is formulated as a large mixed integer linear programming model. To guarantee solutions within practical time limits we have developed a heuristic solution approach. Computational results from a large Swedish entrepreneur are reported.