The cost of delivered sawlogs to a sawmill may account for 70 to 80 pe
rcent of all operating costs. Therefore, accurate valuation of standin
g sawtimber and proper allocation of sawlogs are critical to a sawmill
's long-term profitability. Sawmills differ, including the four southe
rn-pine sawmills operated by Temple-Inland Forest Products in east Tex
as and southwest Louisiana. As a result, one sawmill may process a cer
tain group of sawlogs more efficiently and obtain a higher value from
those sawlogs than another group. To determine sawtimber value and to
allocate sawlogs to sawmills, Temple-Inland Forest Products has employ
ed a simulation program (Micro-MSUSP) since 1991. During 1994, Temple-
Inland Forest Products sawmills processed sawtimber worth $154 million
, and analysis showed an approximate 3.3 percent ($5 million) improvem
ent in profit margin through improved valuation of sawtimber and bette
r allocation of sawlogs. Temple-Inland's investment in simulation has
amounted to two full-time employees and approximately $95,000 each yea
r.