Modeling an integrated market for sawlogs, pulpwood, and forest bioenergy

Traditionally, in the initial stage of the forest supply chain, most applications deal with sawlogs to sawmills, pulpwood to pulp mills, or forest residues to heating plants. In this paper, we develop a model that accounts for all raw materials in the forest, i.e., sawlogs, pulpwood, and forest residues, and byproducts from sawmills. They exist in an integrated market where pulpwood can be sent to heating plants as bioenergy. The model represents a multiperiod multicommodity network planning problem with multiple sources of supply, i.e., preselected harvest areas, and multiple types of destinations, i.e., sawmills, pulp mills, and heating plants. Different from the classic wood procurement problem, we take the unit purchasing costs of raw materials as variables on which the corresponding supplies of different assortments depend linearly. The objective of the problem is to minimize the total cost for the integrated market including the purchasing cost of raw materials. Therefore, it is a quadratic programming problem. A large case study in southern Sweden, under different scenario assumptions, is implemented to simulate the integrated market and to study how price restriction, market regulation, harvest flexibility, demand fluctuation, and exogenous change in the price for fossil fuel will influence the entire wood flows.