Agent-based simulation and analysis of demand-driven production strategies in the timber industry

Abstract

This paper addresses the generic problem of production planning in a divergent timber production environment. It aims at analysing the performance of various demand-driven production strategies of a timber production system. This analysis is performed using a simulation platform built on an agent-based advanced planning system. Nine production strategies configurations are evaluated under six scenarios in order to carry out a complete mixed level design of 54 simulation runs. Each of these configurations is a combination of a decoupling point position and a level of capacity that is committed to contracts with customers. Accordingly, the six scenarios are designed as a combination of supply type (i.e. log diameter distribution) and timber market prices. Production processes and co-production yields are based on a real manufacturing system from eastern Canada. Performance is evaluated from the logistic and economic points of view. Results demonstrate that demand-driven planning approaches that propagate demand information upstream the supply chain have the potential to improve planned customer service and reduce planned inventories. Results also show that timber companies need to receive a premium from their customers in order to compensate from the loss of potential value resulting from a more constrained planning environment.