Forest biomass is one of the renewable sources of energy that has been used for generating electricity. The feasibility and cost of producing electricity from forest biomass depend on long term availability of biomass, its cost and quality, and the cost of collecting, pre-processing, handling, transportation, and storage of forest biomass, in addition to the operating and maintenance costs of the conversion facility. To improve the cost competitiveness of forest biomass for electricity generation, mathematical programming models can be used to manage and optimize its supply chain. In this paper, the supply chain configuration of a typical forest biomass power plant is presented and a dynamic optimization model is developed to maximize the overall value of the supply chain. The model considers biomass procurement, storage, energy production and ash management in an integrated framework at the tactical level. The developed model is a nonlinear mixed integer programming which is solved using the outer approximation algorithm provided in AIMMS software package. It is then applied to optimize the supply chain of a real biomass power plant in Canada. The optimum solution provides more profit compared to the actual profit of the power plant. Different scenarios for maximum available supply and also investment in a new ash recovery system were evaluated and the results were analyzed. The model in particular shows that investment in a new ash recovery system has economic as well as environmental benefits for the power plant. (C) 2012 Elsevier Ltd. All rights reserved.