Determining Target Inventories of Wood Chips Using Risk Analysis

The optimal inventory level for wood chips in front of a pulp mill involves trade-offs between losses due both to biological degradation and to financial carrying costs and the risks of running out of stock and shutting down the mill. The Springfield Inventory Target (SPRINT) model is used at a half dozen Weyerhaeuser pulp mills to assist in managing chip inventories of close to 200,000 dry tons. More important, SPRINT has contributed to chip inventory reductions at these mills totaling 190,000 dry tons in the last three years, lowering annual inventory costs by more than $2,000,000.