Influence of Local Dynamic Conditions on Logistics Costs of Timber Procurement: Analyzed by Applying a Technique of Geographically Decentralized Decision Making

Abstract

Timber procurement is part of the flow of wood from forest to production. In the present study, it is referred to as timber flow, which consists of logging, roadside inventory, transportation, and mill inventory functions. Local timber flows should be managed by tactical means of decentralized decision making (DDM), which are facilitated by dynamic models of a decision system. The technique consists of several hierarchical negotiation levels which can solve a local procurement problem by the technique of functionally decentralized decision making (FDDM). Models describing the system are also bigger and more complicated than models which are constructed for geographically decentralized decision making (GDDM). Consequently, the models may cause different dynamic results. Therefore, this study has two main objectives: 1) to introduce a technique of GDDM and 2) to consider the effects of the time-factor using dynamically determined functions of local procurement. Using this application, the system can be controlled for balancing timber flows, because the system's internal adjustment process is defined with higher precision; the extra costs caused by a disturbance can be diminished by adjusting the durations of local timber-flow functions. The implications of these results for improving decision making (DM) of local timber procurement in Finland are discussed.