Mountain Lumber Company (MLC) obtains raw materials from forests and differentiates its wood products based on quality. It is introducing incentive planning to increase production, material yields, and productivity while reducing costs. The company sells to consumers, dealers, and businesses. It aims to maximize board width and length while minimizing defects through quality control and process optimization across its sawmill, mill shop, and other operations. MLC is assessing whether incentive plans prioritizing quantity may compromise its strategy focusing on quality and material yields.

1. Mountain Lumber Company

2. Case Summary
• How does MLC obtain their raw materials?
• How does MLC differentiate their products from others in
the industry?
• Why are they introducing incentive planning?
• What is incentive planning?
• Why did their product mix shift over the past year?
• Give a brief description of the company
• How does the sales differ from consumer, dealers, and
businesses?
• What is the sales process?
• What is their strategy in regards to quality and material
yield loss?

3. Strategy

4. Case Prep Assignments
• Summarize the company product offerings

5. Success Factors
• Engineering
– Equipment maintenance
– Special Products
• Operations- managed from time arrived to time
leaves
– Manufacturing Process
• Increase production, improve material yields, and
productivity, and reduce cost
• Get more timber that has less defects
• Controller
• Purchasing/Sales

6. Success Factors
• Lumberyard
– Get nails out of wood
• Defects from nail removal
– Contingency factors

7. Success Factors
• Sawmill
– Highest width of board
– Biggest determinant of defects
• Create standard of quality
• Currently go for more quantity over quality

8. Success Factors
• Mill Shop
– Length of the board
– Side that is surface vs bottom
– Mold into flooring
– Linear feet per day
– 2nd trimming of defects

9. Success Factors
• Purchasing and sales

10. Success Factors
• Operations

11. Yield Loss Margin vs Strategy
• Incentive plans bonus increases with more
wood
• Goes against strategy of quality
• Output Slide

12. Strengths Weaknesses
• Incentive Planning
• What should change
• What should stay the same