Evaluation of Pull Strategies in Lumber Production Planning: a Case Study

This paper addresses the problem of production planning in a divergent lumber production environment. It aims at analyzing operational performance changes by introducing pull production flow control mechanisms into the production part of the lumber supply chain. An agent-based simulation evaluation is performed using an experimentation platform based on a distributed advanced planning and scheduling system. Nine sawmill production configurations are evaluated under six scenarios, to complete a complete mixed level design of 54 simulation runs. Each configuration is a combination of a decoupling point position and a level of capacity that is committed to contracts. Accordingly, the six scenarios are designed as a combination of raw material mix and lumber market prices. Results demonstrate that pull-based planning approaches that propagate demand information upstream in the supply chain have the potential to improve customer service and reduce inventory. However, results also show that lumber companies need to receive a premium from their customers to compensate from the lost potential value.