The practical capacity of National Wood Products’ Georgia mill is based on running one shift per day five days a week because of limited access to timber in that region. Negotiations to gain access to timber on Native American reservation land to replace reduced timber from U.S. federal land have not progressed satisfactorily

(from the company’s perspective).

a. A member of the corporate controller's staff has observed that the per-unit cost of lumber from the Georgia mill is higher than at mills running two shifts per day for six days a week. He suggests that the company should consider closing the Georgia mill because other mills are more efficient. Is there a sound basis for this recommendation? Explain.

b. As amember of the Georgia mill management team, how would you respond to the recommendation to close your mill? Consider both local and companywide issues.