Minimizing wood raw material cost in cabinet manufacturing

A cabinet assembly plant in Alabama, USA, would like to minimize their cost of procuring hardwood logs and common grade lumber (dry and green). A company-owned sawmill converts the hardwood logs into lumber, which is kiln-dried with the green lumber. A study was conducted to determine (1) the company’s optimal purchasing policy for wood raw material and (2) whether it was cost effective for the company to continue to operate the sawmill. A linear programming model of the blank production operation was developed to provide a quantitative method on which to base purchasing policy and operating decisions.