Tactical-operational coordination of a divergent production system with coproduction: the sawmilling challenge

Abstract

Various optimization tools have been used in industry to facilitate production planning at different levels of aggregation. Choosing the interoperability mechanisms of these systems, such as the planning frequencies, the information passed between them and the interpretation that other systems must make of them, has always been a challenge. This work focusses on production planning at the tactical and operational levels in North American sawmills, a commodity industry characterized by volatile prices and a divergent production process with coproduction. In this context, tactical planning produces aggregated plans, and information from these plans can be used as targets and/or constraints at the operational level (e.g., quantities to be produced/kept in stock per product and per period, sales targets, etc.). A simulation of this production system was therefore developed, encompassing the planning process and the market dynamic, to compare and evaluate the impact of different coordination approaches on business economic performance. Results showed that the type of information which should be shared from the tactical level to the operational level varies according to several factors, including the company’s order acceptance policy, price seasonality, and the presence or absence of overcapacity on the market.

Highlights

• A simulation approach is used to evaluate coordination between tactical and operational planning

• The context of North American sawmills is the one investigated

• The production and the planning process as well as the market behavior is considered

• Results show that the information shared between the two levels impact the income

• The order acceptance policy chosen also has an influence on the revenue generated

Keywords:

• Tactical-operational coordination
• lumber production planning
• simulation
• forest industry
• divergent process
• coproduction

Acknowledgements

We would like to thank the research consortium FORAC and its partners, as well as the financial support from NSERC.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 In our experiments, the products were not aggregated into families, in accordance with current practice of North American sawmills. The forecasts for these distinct convenience products are generally available by product. Furthermore, aggregation into families did not greatly reduce the planning model’s complexity.

2 The North American lumber system relies on a standardization process lead by the National Lumber Grades Authority (NLGA) that defines strict dimensions and qualities. This makes lumber a commodity market. The situation is different in Europe where most products are made to order according to specific characteristics.