Enhancing the profitability of a vertically integrated wood products production system. Part 1. A multistage modelling approach

A multistage modelling approach to production and inventory problems inherent in vertically integrated wood products manufacturing operations is discussed. A multistage linear programming model is presented for a production-inventory problem faced by an integrated hardwood lumber-cabinet manufacturing operation in the South. The model can be modified easily to suit other vertically integrated wood products operations. The model provides objective, valuable information for making management decisions regarding many important issues, including the following: 1. desired level of production and end-of-period inventories at each stage of the integrated operation in each planning period, 2. desired quantity of products to be sold in each planning period, 3. level of resource utilization at each stage and the potential benefits of providing additional resources or productive capacity at each stage, and 4. impact of changes in input/output and operating conditions on system profitability.