Abstract: A lumber inspection and optimization system is disclosed combining the speed of electro-optic scanning for flaw detection with electronic data manipulation and computation for optimizing the utilization of the lumber in accordance with an order entry list specifying the dimensions, grade and priority of products desired to be cut from each board inspected by the system. The system receives input data from an order entry device and an electro-optical scanner. Digital scan data from the electro-optical scanner is electronically processed to form a flaw data buffer containing the edge location of all the detected flaws enlarged to compensate for defective material usually surrounding each flaw. Optimization of the material is accomplished by electronically comparing the order entry data with the location of the flaws in the flaw buffer to generate cut line data indicative of where the board is to be cut.