Forestry production and logistics planning: an analysis using mixed-integer programming Juan J. Troncoso a, * , Rodrigo A. Garrido b a Department of Forest Sciences, Pontificia Universidad Cato ´lica de Chile, P.O. Box Casilla 305, Correo 22, Santiago, Chile b Department of Transport Engineering, Pontificia Universidad Cato ´lica de Chile, P.O. Box Casilla 305, Correo 22, Santiago, Chile Received 13 August 2002; received in revised form 21 November 2003; accepted 10 December 2003 Abstract This article presents a mathematical model for the problem of production and logistics in the forest industry. Specifically, a dynamic model of mixed-integer programming was formulated to solve three common problems in the forest sector: forest production, forest facilities location and forest freight distribution. The implemented mathematical model allows the strategic selection of the optimal location and size of a forest facility, in addition to the identification of the production levels and freight flows that will be generated in the considered planning horizon. A practical application of the model was carried out, validating its utility in the location of a sawmill. The model was optimally solved using LINGO, which also allowed to evaluate its response capacity in relation to changes in information considered in the initial planning, as well as the comparison of the decisions and the solution times for different scenarios such as demand, transportation costs, timber prices and yields of the sawn process. D 2004 Elsevier B.V. All rights reserved. Keywords: Forest planning; Production and logistics; Plant location problem; Mixed-integer programming 1. Introduction The Chilean economic growth in the last decade has been accompanied by a strong development of the forest sector, particularly in plantations of Pinus radiata and Eucalyptus sp. This economic growth has motivated the creation of large timber transforma- tion facilities; especially cellulose plants, sawmills and boards plants, which are mainly export oriented. When analyzing the availability of future sawtim- ber (Infor, 1999), it is noticed that there will be a deficit of forest facilities, especially mechanical trans- formation plants (sawmills, board plants, remanufac- ture plants, among other), because the timber available will be duplicated in the triennium 2001 – 2003 and will almost triple for the triennium 2025– 2027. This leads to the necessity of quick strategic decisions to allow for the needed capacity, and at the same time, to be able to sell the value added products in the international markets. This article presents an approach of mathematical modeling for the integrated problem of production and logistics in the forest industry. The forest production 1389-9341/$ - see front matter D 2004 Elsevier B.V. All rights reserved. doi:10.1016/j.forpol.2003.12.002 * Corresponding author. Tel.: +562-686-4169; fax: +562-686- 5982. E-mail address: jtroncot@puc.cl (J.J. Troncoso). www.elsevier.com/locate/forpol Forest Policy and Economics 7 (2005) 625 – 633