Effect of Seedling Production and Long-Distance Transportation Planning Strategies on Transportation Costs of a Nursery Company

Abstract

In Finland, the number of nurseries has been decreasing year by year, and it seems probable that in the near future this trend will continue. It can be assumed that greater economies of scale could also be achieved in Finnish seedling production by enlarging the size of production units [9, 10]. The management strategies used by a nursery company for long-distance seedling transportation were compared with different allocations of seedling production among nurseries. To determine the optimal transportation costs in different strategies for seedling production and planning of long-distance transportation, linear programming (LP) was applied. To manage spatial information, a geographical information system (GIS) was used. The current development towards seedling transportation managed by nursery companies seems to have marked advantages in the cost-effectiveness of transportation. The relative improvement in cost-effectiveness caused by centralized transportation strategy (CTS) compared to decentralized transportation strategy (DTS), which is the mostly used strategy in seedling transportation planning in Finland, varied from 13.0% to 36.5%, depending on the number of nurseries and the degree of specialization of production among them. These results will be useful for nursery companies and forest owners’ associations (FOAs) when they evaluate the cost effects of production allocation, product specialization and systems of transportation management.