SUPPLY CHAIN OPTIMIZATION IN THE FOREST INDUSTRY

Diploma

Abstract

The scope of this thesis is modelling and solving large-scale planning problems in the supply chain within the forest industry. Five research papers are included, the first three of which focus on the modelling, and the last two on the solution methods. All problems included are tactical multi-commodity problems expressed as mixed integer programming (MIP) models. The work has been done in collaboration with two Swedish companies within the forest industry.


Introduction and overview

We start by giving a short introduction to the field of supply chains. Thereafter the forest supply chain is in focus and different planning levels are introduced. Then some approaches of optimizing the supply chain are presented. Last the papers included in this thesis and their contributions are described.

Supply chains

A supply chain starts with the supply of raw materials for the products, passes through one or several steps for manufacturing, storing and distribution, and ends at the customer for the final products. Examples of supply chains are often presented in a network form.


Planning levels

There are different planning levels, which depend mainly on the planning horizon, to consider. Different planning levels and horizons have different needs for supporting tools. Even if the number of computer based supporting tools is increasing, most of the planning work is still done manually. These different planning levels are described, for example, in R¨onnqvist [64] and Weintraub and Romero [80]. The strategic level often describes decisions that concern several years or decades. Strategical decisions include investment planning and infrastructure planning, for example, road building. Tactical planning is often connected to annual decisions, but it could be for shorter or longer periods, depending on the problems considered. Tactical decisions include, for example, road upgrading, annual production planning related to the budget processing, route structure and equipment utilization. The last level to be mentioned is operative planning, which could span over a couple of months or involve daily planning. Examples of operative decisions are detailed production planning and truck dispatching. The differences in time for each level depending on the type of problem are not clearly defined. We will now describe the planning levels related to the supply chain in the forest industry. We start by harvest problems and continue with routing problems. Finally, planning levels in production are discussed.