Mikael Frisk

Cost Allocation in Collaborative Forest Transportation

Transportation planning is an important part of the wood flow chain in forestry. There are often several forest companies operating in the same region and co-ordination between two or more companies is rare. However, there is an increasing interest in collaborative planning as the potential savings are large, often in the range 5-15%. A key question is how savings should be distributed among the participants. In this paper we investigate a number of possibilities based on economic models including Shapley value, the nucleolus, separable and non-separable costs, shadow prices and volume weights. We also propose a new allocation method based on finding as equal relative profits as possible among the participants. A case study including eight forest companies is described and analyzed.

Innovative Applications of O.R.Cost allocation in collaborative forest transportation

Transportation planning is an important part of the supply chain or wood flow chain in forestry. There are often several forest companies operating in the same region and collaboration between two or more companies is rare. However, there is an increasing interest in collaborative planning as the potential savings are large, often in the range 5–15%. There are several issues to agree on before such collaborative planning can be used in practice. A key question is how the total cost or savings should be distributed among the participants. In this paper, we study a large application in southern Sweden with eight forest companies involved in a collaboration. We investigate a number of sharing mechanisms based on economic models including Shapley value, the nucleolus, separable and non-separable costs, shadow prices and volume weights. We also propose a new allocation method, with the aim that the participants relative profits are as equal as possible. We use two planning models, the first is based on direct flows between supply and demand points and the second includes backhauling. We also study how several time periods and geographical distribution of the supply and demand nodes affect the solutions. Better planning within each company can save about 5% and collaboration can increase this about another 9% to a total of 14%. The proposed allocation method is shown to be a practical approach to share the overall cost/savings.

FlowOpt – A Decision Support Tool for Strategic and Tactical Transportation Planning in Forestry

Abstract We report on the development of a new decision support system for transportation planning in Swedish forestry. The system deals both with strategic and tactical decisions. Strategic decisions concern usage of train system, terminal location and capacity, and wood bartering between companies and/or organizations. In tactical planning we consider decisions on catchment areas, destination of supply points and potential back-haulage routes. The system uses a GIS-based map user-interface. Two important modules in the system are the new Swedish road database and an optimization module consisting of a suite of models and methods. The development has included several organizations and forest companies. We discuss two case studies at participating companies that illustrate the usage of the system.

FuelOpt: a decision support system for forest fuel logistics

The use of forest fuel is increasing at heating plants in Sweden. Heating plants provide energy in the form of hot water for heating houses and apartments in local municipalities. Forest fuel are products obtained from harvesting in forests that cannot be used for further processing at sawmills and pulp and paper mills. Examples of such products are tree branches, tree tops and low quality logs. The optimization of the supply chain for round-wood (logs to sawmills, pulp and paper mills) and for forest fuel is similar but involves two main differences. First, forest fuel has to be converted into chips before delivery to the customer, and second, the demand for forest fuel varies over the year due to the temperature. To balance the chipping and transportation capacities over time, it is important to manage inventory levels at terminals. The optimization model developed provides decision support for questions regarding the choice of technology for chipping, where to perform the chipping operations, and the allocation of different assortments to heating plants. The system has been tested on a large case study from a Swedish forest energy company. The results show large savings and that the system is very useful for both planning and business development.

RoadOpt: A decision support system for road upgrading in forestry

Abstract Road blocking due to thawing or heavy rains annually contributes to a considerable loss of profit in Swedish forestry. Companies have to build large stocks of sawlogs and pulplogs to secure a continuous supply during periods where the accessibility of the road network is uncertain. This storage leads to quality deterioration, which means loss in profit. One approach to reduce the losses due to blocked roads is to upgrade the road network to a standard that guarantees accessibility throughout the year. This article describes a decision support system called RoadOpt for the planning of forest road upgrading. The planning horizon is about one decade. The system uses a Geographical Information System (GIS)-based map user interface to present and analyse data and results. Two important modules are the Swedish road database, which provides detailed information about the road network, and an optimization module consisting of a mixed integer linear programming model. A case study from a major Swedish company is presented.

Supply Chain Planning of Harvest and Transportation Operations after the Storm Gudrun

Abstract The storm Gudrun hit southern Sweden in January 2005 and approximately 70 million cubic meters of forest was wind felled. Existing logistic planning at forest companies in the storm damaged area had to be changed over night. There was a direct shortage in both harvest and transportation capacities. Key questions that arose were which terminals to use, where to harvest, where to store and which transportation modes (truck, train, ship) to use. In this paper, we describe how the forest company, Sveaskog, made use of Operations Research (OR) as an important decision support in their supply chain planning in the aftermath of the storm. The necessary development of the support was carried out quickly and the OR models and methods enabled efficient and detailed re-planning continuously as more accurate information about supply and new customers became available.

Integrated harvest and logistic planning including road upgrading

This paper provides an integrated model for harvesting and logistic planning for tactical purposes over several years. The logistic planning includes both road upgrading and transportation between harvest areas and industries. The former is particularly important when dealing with problems when the accessibility of the road network is low due to, for example, thawing and heavy rains. The optimization model uses a detailed description of harvest areas including their spatial location, volume output of different assortment computations and net present value (NPV) for each year in the planning horizon. The model also uses a detailed description of the road network using the Swedish national road database. The model is very large and hard to solve, and hence, we are developing a solution approach based on an aggregation technique. An important part of the planning process is to select areas for the next 5 years, for example, and we analyze three different approaches. One approach is based on maximizing the NPV of the forest value, that is, the value at roadside. The second one is based on minimizing the logistic cost, and the third one combines NPV of the forest value at roadside and logistic. We analyze differences in a case study with over 6000 areas from the Swedish forest company Sveaskog. The results show that an integrated approach is necessary in order to avoid sub-optimal solutions.

Developing training for industrial wood supply management

An understanding of supply chain management is a prerequisite for efficient supply operations. This paper presents the structure of training currently used in Sweden to prepare master’s-level foresters for managing wood supply operations. Based on a basic framework of professional tasks, eight key learning outcomes are targeted; one focuses on raw material requirements, three on securing supply, three on enabling delivery, and one on control and coordination. Sixteen exercises are used to meet the eight learning outcomes. An overview of the exercises is presented as well as the pedagogical approach used. Current training is focused on developing student understanding of the industrial context as well as competences and skills required to solve typical professional tasks. The paper concludes with a discussion of further development opportunities including a coupling of tasks and learning outcomes with applicable operations research methodology.

Usage of OR-tools for logistics support in forest operations at sveaskog after the storm Gudrun

Abstract The storm Gudrun hit southern Sweden in January 2005 and 70 million cubic meters of forest was wind felled. The existing logistic planning at forest companies in the damaged area had to be changed. There was a direct shortage of both harvest and transportation capacities. Key questions that arised were which terminals to use, where to harvest, where to store, which transportation modes (truck, train, ship) to use. In this paper we describe how the forest company Sveaskog made use of Operations Research (OR) as an important decision support in their logistic planning in the aftermath of the storm.

The Aftermath of Implementing Collaboration in a Network of Sawmills: A Retrospective Analysis on Logistics Costs

While usually collaborative logistics assures all partners are better off in coalition, a partner may in turn be composed by different sub-units. What is the effect of implementing collaboration for each of these sub-units? We study this problem motivated by a real-world case arising in a network of sawmills in Sweden. These sawmills have a common purchase and logistic organisation. The purchasing cost of forest areas is divided evenly among the mills even though the real purchasing costs differ between sawmills. The organisation looks for an approach to also split the logistic cost in a fair and transparent way. Moreover, the sawmills collaborate with an external company in wood bartering. Even if the organization as a whole benefits from the collaboration, the collaborative solution may leave some of the sawmills worse off, as the volumes they would use in absence of collaboration goes to the external company. The impact depends on the geographical location of mills, and the organisation wants to know how the negative impact can be balanced by a new allocation of the logistic costs. By using an optimization model implemented in a decision support system, we compute the logistics costs perceived by the organization in presence and absence of collaboration. We study a number of approaches to allocate the logistic cost and analyze how these approaches can serve as a basis for the process.