Pre-harvest estimation of value of trees in forest stands based on market demand: A cost optimization model for Northwestern Ontario

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The forest industry in Northwestern Ontario has been under significant competitive pressure in recent years due to deteriorating cost conditions at home and increasing global competition. The lack of competitiveness has resulted in a number of mill closures in Northwestern Ontario, whereas the demand for high quality structural lumber, which is exclusively produced from softwood species, has been constantly rising in the global markets. This is an area where Northwestern Ontario's forest products industry can improve its competitiveness in the global market. However, in order to cost effectively produce high-quality lumber, the forest industry needs stand-specific and precise information of the relationship between the lumber quality grade and stem characteristics. Another allocation issue that has not been addressed in the literature is the optimization of the transportation costs of wood assortments to different production units.