The furniture production industry has been a key industry in South Korea since 1970, when South Korea started to develop its economy after the South Korean War.
The total sales of the South Korean furniture industry were US$982,142,857, with 11,572 companies and 66,932 workers engaged, which shows an increase of 2000 companies and 4000 workers, since 2003.
The main reason for this expansion is demand growth, due to South Korea’s rapid urbanisation, and the opening of the furniture market to global companies.
However, as most companies have focused on the domestic market, rather than global markets and global brands, companies such as Pottery Barn, IKEA, and Ethan Allen have entered the South Korean market, the South Korean furniture industry has since been exposed to excessive competition, and many companies have risked failure.
Moreover, although the needs and wants of South Korean customers have diversified, South Korean companies cannot produce furniture that reflects consumers’ various wants and needs, because they lack sufficient technology and capital, due to small firm sizes.
Recent interest in environmental hormones emitted from furniture has led firms to use expensive natural wood panels rather than artificial, wood-based panels, such as medium-density fibreboard (MDF) and particle board (PB), which are relatively cheap and easy to process.
Thus, research was made to focus on helping South Korean small and mid-size furniture manufacturers to use MDF to find a way to rehabilitate and contribute to environmental protection, by analysing their production processes, and suggesting ways in which they can save on production costs and protect the environment.
First of all, we need discuss the production process and characteristics of MDF, which is the main material for the production of furniture, and consider the two-dimensional bin packing problem developed by, which is used to solve the optimisation problem for the representative company of South Korea furniture industry.
Medium Density Fibreboard (MDF)
Wood-based panels, used for furniture production, are classified into natural wood, plywood, particle board (PB), and MDF. Natural wood is wood itself, which is not processed at all except for washing and cutting.
The use of natural wood in furniture production has decreased since 1970, because it is very expensive and is not easily processed into various shapes, although furniture made with natural wood is aesthetically pleasing and free from environmental hormones, such as formaldehyde.
Plywood consists of thin plates of wood glued together so that the wood grain of each layer is orthogonal to its neighbours. It solves the problem that a single slate is easy to break along the grain and is easy to shrink and expand due to moisture.
Printed plywood with a pattern printed on the surface or fancy plywood with a melamine resin plate are also made and widely used in furniture, building materials, and sports fields as well as construction. Urea resin and phenol resin are used as adhesives.
More than 90 percent of plywood is used for producing dies for construction and house interiors rather than furniture, as it is relatively expensive, and not easily processed and changed.
Both PB and MDF are wood-based panels made by grinding wood, mixing the ground wood with adhesive, and hardening it with heat and pressure. While they are organic and economical because they are produced with discarded or recycled wood, and easily processed into various shapes, panels of PB and MDF are easily deformed by moisture and water.
They also cause new furniture syndromes, such as atopy and respiratory disturbance because the adhesives used. The main difference between PB and MDF is that, because MDF particles are smaller and more tightly bonded than PB, it is stronger.
This difference explains the fact that far more MDF is produced and used for furniture production in South Korea, although they are almost homogeneous in the aspect of production cost and formaldehyde emission.
MDF is classified into the following four grades, based on the amount of formaldehyde emission: Super E0, E0, E1, and E2. E2 must not be used inside; E1 and E0 have an indoor use area limitation; only super E0 can be used inside freely.
However, because approximately 98.4 percent of MDF used in South Korea belongs to the E2 and E1 grades, the amount of MDF used for furniture production should also be reduced to protect the environment and save on production costs.
Materials For Furniture Production
Furniture is produced with wood-based panels and other materials, such as plastics, steel, and fabric. More than 95 percent of furniture, however, is made of wood-based panels. Wood-based panels for furniture production are classified into natural wood, in furniture production.
While natural wood was originally used to produce furniture, it has some weaknesses in that it is expensive and cannot be easily processed in various shapes.
Above all, world forests may have been depleted from the use of natural wood for furniture production.
Thus, artificial wood-based panels, such as PB and MDF were invented and have been used broadly for furniture production.
PB was invented in 1887 in Germany, under the name, ‘artificial wood’, and it has long been used for office furniture and kitchen furniture. MDF was invented in 1965 in the US and was industrialised for the production of all kinds of furniture in the 1970s.
Both types of artificial wood are more easily processed into various shapes, more resilient against shocks than natural wood, and contribute to environmental protection measures because they are produced with discarded or recycled woods.
Due to these advantages, the global production and consumption of PB and MDF have grown steadily since 1980. The consumption of MDF has increased by an average of 10 percent annually since 1980. It reached 48,000,000 cubic metres in 2006 and 96,400,000 cubic metres (US$3,850,000,000 in value) in 2016. Of this, approximately 60 percent is used to produce furniture, and 40 percent is used for construction.
China, Turkey, Brazil, and Poland are the world’s key MDF-producing countries and account for 59 percent, five percent, four percent, and four percent of MDF output, respectively in 2016.
The statistics for PB are similar. Global consumption in 2016 was 118,966,000 cubic metres, an increase of 41 percent from 2001, and most PB is used for furniture production.
China, the U.S.A., Canada, Russia, and Germany are the world’s largest PB producing countries and account for 19.4 percent, 13.8 percent, 8.1 percent, 6.2 percent, and 5.9 percent of PB output, respectively, in 2016.
Furniture and Construction Industries in South Korea
South Korea is also an important country in both the production and consumption of MDF and PB because the nation’s furniture and construction industries have grown steadily since the 1970s.
Three factories, owned by three companies, produced 816,000 cubic metres of PB, and 10 factories, owned by 6 companies, produced 1,859,000 cubic metres of MDF in 2016. South Korea’s MDF production capacity is ranked ninth in the world. A total of 1,185,000 cubic metres of MDF and 2,070,090 cubic metres of PB were used for furniture production in South Korea in 2016, in addition to the 1,275,000 cubic metres of PB and 116,000 cubic metres of MDF that was imported that year.
Due to these productions, MDF and PB are now the main factors affecting the production cost and product liability of South Korean furniture manufacturers.
Critical Weakness Of PB & MDF
While PB and MDF are good for producing furniture, they also have a critical weakness in their emission of formaldehyde, which is a kind of toxic chemical and environmental hormone.
Both PB and MDF emit formaldehyde mainly because of adhesives used to amalgamate ground wood, as chemicals are rarely used during the grinding and hardening processes in wood.
In other words, the main source of formaldehyde, emitted from PB and MDF, are adhesives, which are used to amalgamated ground wood to make it into the shape of a board.
Formaldehyde can stimulate human eyes and skin conditions and cause respiratory diseases, atopy, and cancers after long term exposure. Many countries have designated formaldehyde as a dangerous toxic chemical and regulate its use.
MDF of other classes are still used broadly. It is classified it into four groups based on its emissions levels, although the use of top-level MDF or the reduction of MDF use, and MDF producers are encouraged to use adhesives and resins with lower emission levels of formaldehyde, thereby fulfilling the requirement of super E0 class.
Setting Of Empirical Study
For this study, we selected a representative company in the South Korean furniture industry and implemented an empirical study with its 2016 production data, including their sales, management quality, and technical efficiencies.
Sales demonstrate the scale or size of a company, while its management quality indicates its soundness as a company, and technical efficiencies are a useful measure to evaluate how a company’s production processes scale in terms of efficiency against other players in the industry.
Thus, we selected an average-sized, sound, technically efficient company as the representative company. The authors published a survey targeting South Korean furniture companies that collated the responses of 236 companies and evaluated their management quality and technical efficiencies.
They left the full results and analysis open, which assisted us in selecting a representative company for this research.
The 2016 sales, KNPAI, and technical efficiencies from the survey can be summarised. The KNPAI is measured on a 1000 point-full scale, and most companies are located on the scale between 0 and 500, industry leaders are located between 500 and 700, and world class companies are located over 700.
We collected data relevant to the production of furniture, using MDF and its procurement amount, by the company through an interview with the company’s CEO.
And then, a company was collected whose sales are closest to the mean sales, it is an industry leader by KNPAI, and what is technically efficient to be the representative company.
Its sales are US$14,712,344.88, which includes all kinds of furniture such as chairs, steel cabinets, sofas, etc., as well as tables, desks, and bookshelves. Its KNPAI is 537.77, which means it is technically efficient.
The company produces tables, desks, and bookshelves with 130 different size-MDF boards by cutting (t: 28 mm × w: 2400 mm × h: 1200 mm) raw MDF boards.
Each size of MDF board is used by one or more than, for example, the amount of (w: 2400 mm × h: 1200 mm) MDF board is used is four, the amount of w: 1800 mm × h :800 mm MDF boards used is 196, and the most amount of boards of (w: 1200 mm × h: 600 mm) is 799.
In this way, a total of 5152 MDF boards are used to produce tables, desks, and bookshelves.
The company bought 5103 (t:28 mm × w: 2400 mm × h: 1200 mm) MDF boards at the procurement cost of $124,396.98 (=5,103 × $24.38) in 47 order placement times and at the transportation cost of $4181.49 (=47 × $88.97). Thus, we solved a two-dimensional bin packing problem with 5152 elements, potential levels, and potential bins
In addition, technical efficiencies are measured in three ways: variable returns to scale (VRS), constant returns to scale (CRS), and scale efficiency (SE) as the ratio of technical efficiency based on CRS to technical efficiency based on VRS.
All furniture manufacturers procure pieces of MDF with a specific thickness, a specific width, and a specific height (for example, thickness × width × height = 28 mm×2400 mm×1200 mm), and produce furniture by cutting those pieces into various products sizes.
This MDF cutting process generates leftovers, and reducing them saves production costs and helps protect the environment.
Seeking The Minimum Amounts Of MDFs
With the data on MDF use, we seek the minimum amounts of MDFs, required to match the 2016 furniture production levels by employing the bin packing/cutting stock problem, which is an essential step in production planning for the wood, glass, paper, and cloth industries.
The two-dimensional bin packing/cutting stock problem is defined as a problem with an unlimited number of identical rectangular bins of width W and height H, and where the objective is to allocate all elements (items) to the minimum number of bins.
We employed CPLEX version 12 embedded in the GAMS (General Algebraic Modelling System) to solve the model. CPLEX uses a branch and cut algorithm to solve the mixed integer programming problems, which is the most efficient algorithm, because this problem may be a very complex, mixed-integer problem.
This research focused on the two-dimensional bin packing/cutting stock problem, as furniture production allocates a set of rectangular items to larger rectangular MDF with standardised sizes, by minimising leftovers. Since the 1960s, a considerable amount of literature has been published on the one-dimensional bin packing/cutting stock problem.
Based with the background as noted, the summary of the empirical data and the explanation of some issues in the data have been shown as the following.
A total of 3186 MDF out of 5152 potential boards is the minimum number of MDF boards that can produce the 5152 boards needed to produce furniture for this company.
Because the total area of 3186 (w: 2400 mm × h: 1200 mm) MDF boards is 9175.68 sqm and the total area of MDF boards for production is 5575.42 sqm, the amount of leftovers totals roughly 3600.26 sqm.
And because the price and transportation of 2.88 sqm is $24.38 and $0.89, the total purchase cost of MDFs is $80,500.36, and the total cost of leftovers is $31,585.94. The average emission of formaldehyde of the optimal production plan is 1,752,480 μg/sqm/h.
In 2016, since the company bought 5013 MDF boards and it had 460 in inventory at the end of the year, it used 4553 boards to produce 5152 products. The total area of MDF boards used was 13,112.60 sqm, and leftovers were 7537.18 sqm.
The total purchase cost of MDF boards was $128,578.47 and the total cost of leftovers was $63,797.12. The average emission of formaldehyde of the present production plan is 2,504,400 μg/sqm/h.
Comparing the results from the optimal production plan with those from the 2016 real production plan, we found that the representative company spent more on leftovers by $32,211.17 and emitted more formaldehyde by 751,920 μg/sqm/h in 2016, than in the optimal production plan.
For the extension of the above result to the entire industry, if it came from statistical analysis to the sample of, it is possible for the population of this research to follow normal distribution asymptotically and to estimate the robust industry-wide result by using it.
However, because it came from the representative company, it may not be reasonable to do it, although it is clear that the model has value in the results presented for the representative company, and that substantial savings are possible industry-wide. So it’s obvious that there are limitations.
The above result are the only connection in obtaining some insight to industry-wide results, even though the findings are dim, we must also assume that the results are an average outlook of the industry, as the 2016 sales of the representative company are very close to mean of sample of 236 companies.
Keeping these factors in mind, if we extend the results to all of 11,572 companies a total $372,747,709.89 will be saved resulting in an 8,701,218,240 μg/sqm/h reduction in formaldehyde emission.
Instead, even though the result of the representative company is extended to 236 companies in the samples of, the production cost of $7,610,733.95 will be saved and 177,453,120 μg/sqm/h of formaldehyde emission will be reduced.
In conclusion, the South Korean furniture industry can reduce production cost and formaldehyde emission substantially by following the optimal production plan obtained by applying the two-dimensional bin packing/cutting stock model.
In other word, if furniture producers can use the minimum amount of MDFs within their production plans, they can both save their own production cost and contribute to environmental protection.
An approach in this effort is to utilise a bin packing/cutting stock model. Specifically, the two-dimensional bin packing/cutting stock model is suitable for the furniture industry because the top boards of tables, desks, and shelves of bookshelves are mainly measured by their width and height.
Because the bin packing/cutting stock problem has been proven to be strongly NP-hard, research has focused on developing heuristic algorithms to solve the problem rather than applying the problem model to production processes of industries.
However, we can now apply the bin packing/cutting stock model to industries, such as furniture, paper, glass, and clothes by using advanced computer technology.
Thus, this research tries to select a representative company in the South Korean furniture industry based on sales, KNPAI, and technical efficiency, collect its production data using MDF and MDF procurement, obtain the optimal production and procurement plan by solving a two-dimensional bin packing/cutting stock problem, and compare the results with real production and procurement plans.
This research suggests an opportunity to reduce the amount of MDF boards used to produce tables, desks, and bookshelves and, as a result, substantially reduce the amount of MDF leftovers.