Use of OR Systems in the Chilean Forest Industries

Abstract

The Chilean forestry sector is composed of private firms that combine large timber-land holdings of mostly pine plantations and some eucalyptus with sawmills and pulp plants. Since 1988, to compete in the world market, the main Chilean forest firms, which have sales of about $1 billion, have started implementing OR models developed jointly with academics from the University of Chile. These systems support decisions on daily truck scheduling, short-term harvesting, location of harvesting machinery and access roads, and medium- and long-term forest planning. Approaches used in solving these complex problems include simulation, linear programming with column generation, mixed-integer LP formulations, and heuristic methods. The systems have led to a change in organizational decision making and to estimated gains of at least US $20 million per year.