A manager
of a forestry company in Scotland has to decide which trees to
plant. There are three main species to choose from, Sitka Spruce,
European Larch or Lodgepole Pine.A manager
of a forestry company in Scotland has to decide which trees to
plant. There are three main species to choose from, Sitka Spruce,
European Larch or Lodgepole Pine.
Whatever trees are planted they have to be thinned after 10 and 20
years and the wood from the thinning is sold for a profit.
Each kind of tree has a different planting cost per hectare, a
different growth rate and a different value per hectare depending
on the age the tree is felled. All this information is given in the
table below.
What strategy for planting and felling would you recommend to the manager in order to maximise the profit after 70 years, 90 years, more generally?