This study presents a methodology for planning log purchases, production strategies and market policies in a radiata pine (Pinus radiata D. Don) veneer and plywood plant in New Zealand. It develops resource, production and marketing-oriented linear programming (LP) models (LOGPLY, logs to plywood model and VENPLY, veneer to plywood model) that can be used as real time decision support systems in a microcomputer (PC) environment. These models address the global decision-making needs for strategic, tactical and operational planning horizons in veneer and plywood operations. The modelling also encompasses veneer recovery of radiata pine by log source, type and small end diameter (SED) class and by veneer thickness. These factors are necessary to structure an efficient LOGPLY modelling system that can evaluate the effects of log type proportions and SED classes in relation to the economic profitability of the operation. Total veneer recovery yield, according to log source, log type, SED class and veneer peel thickness have been modelled using multiple linear regressions that incorporate dummy variables. Time studies for new material categories (e.g. SED class, type of corestocks, panel thickness, etc.) in major machine centres to measure appropriate production have also been conducted in order to best capture the effect of production aspects of the operations in the models. Maximum and minimum sales constraints by panel grade and thickness are included to reflect fully the importance of the market impact on veneer and plywood operations and to demonstrate the concept of market-oriented manufacturing. LOGPLY and VENPLY are formulated in consistent standards of measurement to ease validation and interpretation of results. The models have special constraint structure sets manifested by a nested (multicoupled) angular coefficient structure that accommodates the de novo programming approach or soft optimisation to design optimal systems rather than merely optimising a specified fixed system. VENPLY acts as a complementary model to LOGPLY and as a second-stage optimiser.

LOGPLY and VENPLY working models are implemented in a spreadsheet environment (Quarttro Pro 3.0) and an add-on LP package, Beeline on PC (at least 1 Mb of RAM and 80286). This provides real time systems that managers and decision makers can use to simulate production and market conditions routinely, by updating the technological and resource coefficients of the models without the help of operations research personnel. The user-friendliness of the system for people familiar with spreadsheets is emphasised.

Five LOGPLY case studies and four VENPLY case studies are investigated using de novo optimisation or a soft optimisation approach by way of demonstration of a real plant. The LOGPLY case studies reveal that: i) designing an optimal system from an already optimised base case with the same product mix can result in increased revenue by 5 percent; ii) optimising a given system with market demand variation (± 50 % of individual product grade and thickness of the base case product mix) can result in increased revenue by 3.5 percent over optimised base case; iii) designing an optimal system with product (A and B veneer sales) and market demand variation from the optimised base case has increased the revenue by 13.6 percent; and iv) designing for the ideal system from the optimised base case has increased the revenue by 43 percent. The VENPLY case studies reveal that: i) designing an optimal system with the same machine time availability as the base case has increased the revenue by 6.7 percent over the base case; ii) designing an optimal system without production (machine) constraints has increased the revenue by 28.7 percent over the base case; iii) designing an optimal system with market variation has increased the revenue by 37 percent over the base case.

The study also demonstrates the capabilities of the models to address the global needs and problems of decision-making in veneer and plywood operations in the area of: i) log allocation \ procurement using LOGPLY; ii) veneer allocation using LOGPLY and VENPLY; iii) layup options and product mix determination using both models; iv) veneer downgrading using both models; v) machine performance and production bottlenecks evaluation using both models; vi) production scheduling and control using both models; and vii) production and market coordination using both models.

Furthermore, the study reveals that veneer and plywood operations do not need to be fed 100 percent pruned logs as claimed in a recent study, but a combination of pruned and unpruned logs. The log mix proportion varies from 40:60 (pruned:unpruned) down to 21:79. The results Indicate that veneer and plywood production in New Zealand can be one of the most profitable investments for the nation's radiata pine resource contrary to findings of the recent Forest Industries Strategy Study 1992 conducted by New Zealand Forest Industries Council, but log type proportions must be properly identified to suit the intended or planned product mixes for the markets. One should apply the concept of market-oriented manufacturing as demonstrated in this study.

This study shows new approaches and dimensions which have not been done before in modelling veneer and plywood operations: i) the modelling considers fully the log resource, production and marketing aspects of the operations which makes the models fully effective to address the global needs of decision-making in veneer and plywood operations; ii) the models are formulated in consistent standard of measurement to ease valuation and interpretation of the results; iii) the concept of soft optimisation which has not been applied before in this operation, enhances the utility of the models to address the needs in strategic planning by designing an optimal log procurement strategy in the case of LOGPLY and an optimal veneer allocation without veneer downgrading in the case of VENPLY; iv) the technique of two-stage optimisation using LOGPLY and VENPLY creates opportunities and new perspectives on how to manage the veneer and plywood operation effectively; v) the implementation of LOGPLY and VENPLY in a spreadsheet environment provides real time decision support systems to respond to the needs of solving problems of production scheduling and control in the least possible time; and vi) the study disproves the traditional view point that veneer and plywood operation should be fed with 100 percent pruned logs to be profitable.