Integrated production and distribution planning for Södra Cell AB

In this paper we consider integrated planning of transportation of raw material, production and distribution of products of the supply chain at Södra Cell AB, a major European pulp mill company. The strategic planning period is one year. Decisions included in the planning are transportation of raw materials from harvest areas to pulp mills, production mix and contents at pulp mills, distribution of pulp products from mills to customer via terminals or directly and selection of potential orders and their levels at customers. Distribution is carried out by three different transportation modes; vessels, trains and trucks. We propose a mathematical model for the entire supply chain which includes a large number of continuous variables and a set of binary variables to reflect decisions about product mix and order selection at customers. Five different alternatives regarding production mix in a case study carried out at Södra Cell are analyzed and evaluated. Each alternative describes which products will be produced at which pulp mills.