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Sawtimber Valuation and Sawlog Allocation Through Simulation of Temple-Inland Sawmills

Author

Listed:
  • Francis G. Wagner

    (Forest Products Department, College of Forestry, Wildlife, and Range Sciences, University of Idaho, Moscow, Idaho 83844-1132)

  • James A. Brody

    (Temple-Inland Forest Products Building Products Division Diboll, Texas 76941)

  • Douglas S. Ladd

    (Decision Consultants, Inc., 5511 Capitol Center Drive, Suite P130, Raleigh, North Carolina 27606)

  • Joe S. Beard

    (Temple-Inland Forest Products, Building Products Division, Diboll, Texas 76941)

Abstract

The cost of delivered sawlogs to a sawmill may account for 70 to 80 percent of all operating costs. Therefore, accurate valuation of standing sawtimber and proper allocation of sawlogs are critical to a sawmill's long-term profitability. Sawmills differ, including the four southern-pine sawmills operated by Temple-Inland Forest Products in east Texas and southwest Louisiana. As a result, one sawmill may process a certain group of sawlogs more efficiently and obtain a higher value from those sawlogs than another group. To determine sawtimber value and to allocate sawlogs to sawmills, Temple-Inland Forest Products has employed a simulation program (Micro-MSUSP) since 1991. During 1994, Temple-Inland Forest Products sawmills processed sawtimber worth $154 million, and analysis showed an approximate 3.3 percent ($5 million) improvement in profit margin through improved valuation of sawtimber and better allocation of sawlogs. Temple-Inland's investment in simulation has amounted to two full-time employees and approximately $95,000 each year.

Suggested Citation

  • Francis G. Wagner & James A. Brody & Douglas S. Ladd & Joe S. Beard, 1996. "Sawtimber Valuation and Sawlog Allocation Through Simulation of Temple-Inland Sawmills," Interfaces, INFORMS, vol. 26(6), pages 3-8, December.
    • Handle: RePEc:inm:orinte:v:26:y:1996:i:6:p:3-8
    DOI: 10.1287/inte.26.6.3
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    Cited by:

    1. Ray R. Hashemi & Louis A. Le Blanc, 2000. "Resource Allocation through Negotiation and Compromise: A Database Approach," Group Decision and Negotiation, Springer, vol. 9(4), pages 325-345, July.

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