dog bedding in doghouse

Question
I have four dogs (two senior mixed breeds, indoor dogs) and two English (Llewellen) setters, 9 mo. and 2 yr.  Inside the garage is a 4'X10' enclosure made of "hardware cloth" (1"X2")with a doghouse at the end.  It has 3" R-13, styrofoam-ish insulation on the bottom and the two sides where it touches the wall. On top of that is outdoor grade plywood.  At the end is a nice tight doghouse surrounded by 3" insulation since it's the NW corner of the garage.  The "roof" comes off for easy cleaning.  What can I use as bedding in the doghouse itself?  They've been coming indoors at night but prefer to be outside.  Everything I can find on the internet refers to new crates, igloos, etc.  I was told by several older farmers to just use straw, or straw and cedar shavings.  I tried it but the pup pulls it all out.  I have blankets in the outer area to lie on and hopefully to dry off on before using the doghouse, but they drag the blankets into the house, even if they're damp.  Both dogs fit well in the doghouse but it needs to have dry bedding.  Today I purchased some "Woody Pet" on a recommendation of another older farmer, but before I put it in, someone told me that when it gets wet, it disintegrates into sawdust and gets in the dog's lungs.  Please...suggest something. (the bottom of the doghouse is also outdoor grade plywood)  I just want them warm and dry. thank you thank you thank you  

Answer
Hello thank you for your questions, I would use straw or hay(hay would be less likely to poke there eyes, Or the only other thing I would persoanly use would be old blankets or a big fluffy dog bed, NEVER use cedar shavings they are very very strong and can seriusly harm hamsters/mice/guinea pigs and rabbits even cause fatal respitory problmes...don't use them around beloved pets. The woody pet is a rabbit or rodent litter it does turn to sawdust its wet and cna irrate eyes/noses.