Optimization of Wood Fuel Chips Production in Denmark

The increased use of wood chips at centralized power plants is an important initiative in the field of biomass in Denmark. In order to cope with the unbalanced supply and demand, the supplier of wood fuel stores 20% of its inventories for a period of time at the storage terminal. A variant of the production, inventory, distribution, routing problem (PIDRP) is developed in this book to describe the production and distribution of wood chips. The work is focused on reducing the high inventory and routing cost by optimizing the production planning in the forest which is divided into different districts and different stands within each district. A mix integer programming model is developed to make a yearly production plan with minimal inventories costs between districts. In addition, a 2-opt tabu search with best improvement solution method is used for intra-districts routing planning. Computational results show great inventory and routing costs saving opportunity for the supplier of wood chips. The book can be used as a mathematical programming and heuristic case study for master level students.The methods used provide insight to supply chain managers faced with related challenges.