ABSTRACT This study addresses the relationship between subsidies and thinning operations in Makino bamboo forests, with implications for sustainable timber production management. Focusing on indigenous lands in Taoyuan, North Taiwan, where 85% of bamboo is cultivated, with a 70% coverage constraint, and the government provides an annual subsidy of NT$30,000 per hectare. Three scenarios, minimizing subsidies, thinning rates, and maximizing profits, are analyzed using linear and multi-choice goal program techniques. Results indicate that a company with 5 laborers can clear-cut 15,000 culms/ha in 22 days, yielding a profit of NT$101,150. Without subsidies, a minimum 34% thinning rate ensures financial viability. Sensitivity analysis reveals that NT$29,345 in subsidies with a 70% thinning rate matches clear-cutting profits, validating the effectiveness of the existing NT$30,000 compensation policy. Recommendations propose a two-phase thinning program for sustainable Makino bamboo forest management. The first phase involves a 70–75% thinning rate in the first year, leaving one-year-old bamboo. The second phase, starting from the fourth year, harvests 3 and 4-year-old bamboo every two years, covering 50% of the bamboo forest. This phased approach, covering 24 hectares, establishes a win-win situation for the Forest Bureau and bamboo forest managers.