A.You're right about ripping graded lumber. Doing so "relocates" strength-reducing characteristics that affect performance, and effectively voids the grade designation (see illustration). It's different with LVL, which is a more consistent material. Manufacturers rip it as standard practice when producing beams. LVL is made in billets up to 48 inches wide that are ripped to commercially available standard depths. It's okay to rip LVL beams to a smaller depth, too, though you'll have to recalculate the beam capacity. Sizing software supplied by manufacturers (TJ Beam, for example) provides a sizing override where you can enter a non-standard depth to determine the load-carrying capacity of a ripped LVL.
Why you can't rip graded lumber...
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