Research Paper: ITdInformation Technology and the Human Interface Integrated procurement planning for supplying energy plant with forest, fossil, and wood-waste fuels Teijo Palander*, Lauri Vesa Faculty of Forest Sciences, P.O. Box 111, University of Joensuu, 80101 Joensuu, Finland article info Article history: Received 18 August 2008 Received in revised form 10 May 2009 Accepted 20 May 2009 Published online 21 June 2009 In this paper, a potential solution to large-scale and long-term industrial fuel procurement scheduling problems is considered. The problems include the allocation of a number of fossil, peat, and wood-waste fuel procurement chains to an energy plant during different periods. This decision environment is further complicated by sequence-dependent procurement chains for forest fuels. A dynamic linear programming model was used to describe the scheduling task. This approach can be efficiently used for modelling material flows in procurement planning. However, due to the complex nature of the problem, the resulting model cannot be directly used to solve the integrated planning problem in a manner that is relevant to the forest industry. Therefore, this approach was combined with an energy-flow model to better describe the combinatorial complexity. The properties of this methodology are discussed and two examples of how the model works based on real-world data and an optional emissions cost constraint are presented. ª 2009 IAgrE. Published by Elsevier Ltd. All rights reserved. 1. Introduction In Finland, 3.4 million solid m 3 of forest chips were used to generate 6.8 TWh of energy in 2006 (Ylitalo, 2007). There are currently targets to increase the annual use of forest chips to 5.8 million solid m 3 per year (10 TWh) by 2010, and to between 8 and 12 million solid m 3 per year (16–24 TWh) by 2015 (Anon, 2003, 2008a). These targets presuppose that the delivery of forest fuels to the energy-production industry can be tripled or even quadrupled compared with the current delivery volume. This will require significant changes in the logistics environ- ment for fossil and wood-waste fuels, but the changes are also complicated by the sequence-dependent procurement chains for forest fuels. The efficient use of available raw materials is vitally important to the energy-production industry. Procurement decisions for raw materials play a key role in achieving this goal, which can only be reached using accurate information provided by optimisation methods. Therefore, for the deci- sion-support systems to be efficient, they must be based on the right methodology for solving the problem at hand. Since the classical work of Dantzig (1951), there have been contin- uous efforts by operational researchers to develop optimisa- tion methodologies suitable for various types of problems related to procurement operations (e.g., Hadley, 1962; Beng- ston, 1966). In addition to mathematical formulations, various heuristic approaches suitable for cases with various sequence-dependent problems have been provided among others by Dykstra (1976). Two of the earliest continuous-time formulations for solving the problem of scheduling energy production from forest fuels were presented by Eriksson and Bjo ¨ rheden (1989) and Bjo ¨ rheden and Eriksson (1990). Decision- making models and a recent review of the various techniques for scheduling wood procurement as a system or as a wood * Corresponding author. E-mail address: teijo.s.palander@joensuu.fi (T. Palander). Available at www.sciencedirect.com journal homepage: www.elsevier.com/locate/issn/15375110 1537-5110/$ – see front matter ª 2009 IAgrE. Published by Elsevier Ltd. All rights reserved. doi:10.1016/j.biosystemseng.2009.05.008 biosystems engineering 103 (2009) 409–416