Supply chain modelling of forest fuel

We study the problem of deciding when and where forest residues are to be converted into forest fuel, and how the residues are to be transported and stored in order to satisfy demand at heating plants. Decisions also include whether or not additional harvest areas and saw-mills are to be contracted. In addition, we consider the flow of products from saw-mills and import harbors, and address the question about which terminals to use. The planning horizon is one year and monthly time periods are considered. The supply chain problem is formulated as a large mixed integer linear programming model. In order to obtain solutions within reasonable time we have developed a heuristic solution approach. Computational results from a large Swedish supplying entrepreneur are reported.