Profit variance analysis is a term coined by HALCO to describe a procedure that involves a detailed comparison of actual and planned operations and net income for each sawmill production run.
A production run may be defined by an accounting period such as a week or a month, or it may be a run of a particular species mix through the mill.
Essential features of the analysis are:
The total profit variance is the difference between:
Objective of this analysis is to allocate the total profit variance to differences in:
If the kilns or planer constrain:
If lumber size or length mix is a major concern:
HALCO's SAWSIM® and WOODMAN™ systems are used to develop a linear programming model of the operation:
HALCO has developed software to accumulate the results for each production run in a database from which the analysis is made. If the long log input to the mill is measured accurately, the inputs can be the long log inputs. If not, the inputs can be sawmill blocks that are actually sawn.
Sawmill optimization will be more effective if it is applied in conjunction with the profit variance analysis described here.
The benefits from the optimization will be measurable and more apparent if the production analysis is applied before the optimization is attempted, and the effect of the optimization then becomes a variance that is measured.
Profit variance analysis can be performed by mill staff, or HALCO can carry out the analysis on a regular basis as a service.