Heterogeneity in the properties and arrangement of constituents can have an important effect on a composite's properties. This paper evaluates the effects of variability in wood strand dimensions, mechanical properties, and orientation on the engineering properties of cement excelsior board. The finite element method is used to analyze a heterogeneous three-dimensional microstructure of strands, predicting elastic and strength properties. Results suggest that variability in strand mechanical properties can significantly lower composite tensile and compressive strengths, while composite stiffness is not affected. The model also predicts that relatively modest alignment of strands can lead to significant increases in composite strength and stiffness in the direction of alignment