Rafael Epstein Ramiro Morales Jorge Seron ´ Andres Weintraub
Department of Industrial Engineering, University of Chile, Republica 701—Santiago, Chile ´ Department of Industrial Engineering, University of Chile Bosques Arauco Los Horcones s/n, Concepcion, ´ Chile Department of Industrial Engineering, University of Chile
The Chilean forestrysector is composed of private ﬁrms that combine large timber-land holdings of mostly pine plantations and some eucalyptus with sawmills and pulp plants. Since 1988, to compete in the world market, the main Chilean forest ﬁrms, which have sales of about $1 billion, have started implementing OR models developed jointly with academics from the University of Chile. These systems support decisions ondaily truck scheduling, short-term harvesting, location of harvesting machinery and access roads, and medium- and longterm forest planning. Approaches used in solving these complex problems include simulation, linear programming with column generation, mixed-integer LP formulations, and heuristic methods. The systems have led to a change in organizational decision making and to estimated gains of atleast US $20 million per year.
he Chilean forestry sector generates about 13 percent of all exports. Forestry exports include timber logs, pulp, and sawtimber. It is the second largest sector in the country after mining. The sector has grown at a rate of 12 percent a year
Copyright 1999, Institute for Operations Research and the Management Sciences 0092-2102/99/2901/0007/$5.00 This paper wasrefereed.
during the last seven years and has good potential for further expansion during the next 20 years. The forest sector has been one of the drivers of Chile’s amazing economic development during the last 15 years.
INDUSTRIES—LUMBER/WOOD DECISION ANALYSIS—APPLICATIONS
INTERFACES 29: 1 January–February 1999 (pp. 7–29)
EPSTEIN ET AL.
The Chilean forestry sector is completelyprivate, based mainly on large ﬁrms that own pine plantations (some eucalyptus too) and are vertically integrated with pulp plants, sawmills, and paper markets. Holding Arauco and Forestal Mininco (CMPC), the two largest companies, are among the 50 largest forestry ﬁrms in the world. Holding Arauco, which consists of Bosques Arauco and Forestal Celco, has 740,000 hectares of plantations and annualtimber sales of about $300 million. In addition, it purchases timber valued at about $100 million. With its industrial products (pulp and sawtimber) its total sales are about $1 billion a year. CMPC, the other large ﬁrm, owns 490,000 hectares and has annual timber sales of $180 million. Timber purchases add another $120 million, and total sales are $1.3 billion a year when pulp, paper, and sawtimberare added. Other important forest ﬁrms are Forestal Bio-Bio, owned by the New Zealand group Fletcher (50,000 hectares); Forestal Millalemu (60,000 hectares); Forestal Monteaguila, owned by Shell (30,000 hectares); and Forestal Copihue (20,000 hectares). Chilean forestry ﬁrms have always had a high level of cooperation. In 1988, they were organized into an association called Forestry ProductionGroup (GPF), coordinated by Fundacion Chile, a nonproﬁt in´ stitution formed by the Chilean State and ITT, to promote the development of Chile. Within this initiative, the management of the Chilean forestry ﬁrms has changed through the introduction of optimization systems at different decision levels. Most of the systems were developed by the forestry ﬁrms in a joint effort coordinated by FundacionChile. We will describe the sys´ tems we developed, the problems we solved, the process we used in developing the systems, the methodology used, its implementation, and ﬁnally the results obtained in each case. The systems developed deal with three operational problems: daily truck scheduling, location of harvesting machinery, and short-term harvesting. A typical distribution of operating costs...