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The Theory of Inventory Management

1958; Wiley; Volume: 25; Issue: 100 Linguagem: Inglês

10.1111/ecca.1958.25.100.355

1468-0335

M. H. PESTON,

Supply Chain and Inventory Management

The appearance of a second edition of The Theory of Inventory Management is indicative both of the success of the first edition, which when it appeared was virtually the only book of its kind in existence, and of the growing importance of operational research expecially in the inventory field. For a great many people their introduction to modern inventory management, theoretical and practical, was by way of Whitin's work, and it is to be expected that this will continue to be the case for some time in the future. The present volume is, in fact, a reprint of the first edition with a certain number of minor misprints and errors removed, together with six papers on various related topics which Whitin has published in the past four years. The inclusion of these appendices presumably has as its object bringing the reader up to date with more recent developments in the field, showing more clearly than the main text what problems remain to be solved, and in what way rather difficult technical complications tend to arise. The first part of the book deals with the problem of the control of inventories in the firm. It discusses alternative systems of control and shows how optimal ordering quantities and safety allowances may be computed. In addition, the question of the place of inventories in the theory of the firm as understood by economists is examined, and considerable doubt is thrown on the validity of the contributions made by Eiteman and Boulding, neither of whom offers an adequate account of the behaviour of inventories and of the way inventories fit into conventional marginal analysis. Inventories in the economic system as a whole are considered in Part II. There is a chapter dealing with their role in aggregated models in terms of their stabilising or destabilising effects, and of the question whether inventories tend to vary directly with sales or with the square root of sales. It is pointed out that the latter assumption may lead to stability where the former does not, and that there is a considerable amount of evidence in support of the view that inventories vary less than proportionately to sales. The second chapter in this section is concerned with inventories in disaggregated models, especially those of Leontief, von Neumann, and the U.S.A.F., and is, perhaps, most interesting for a discussion of the practical difficulties of applying these models. Part III is devoted to an analysis of inventories in the U.S. military establishment. Although at first glance this would appear to be of interest only to a rather narrowly specialised class of readers, in fact it throws considerable light on the general problem of the control of inventories in a large organisation. One topic which Whitin deals with at some length is that of military value, in particular as it relates to the evaluation of the costs of depletion. He indicates that this question cannot be treated in isolation from strategic considerations, but that so far very little is known about the relationship between strategy and value. It must be noted that this point applies with equal validity to civilian organisations, and that one of the great gaps in operational research at the present day lies in the field of preference, value, and criteria of efficiency. The technical appendices are concerned with such matters as multi-stage inventory control, and the derivation of a unit ordering formula for commodities in low demand. In addition, there is a summary of Professor Schneider's pre-war paper on inventory control which shows to what extent Schneider had anticipated more recent work in this field, and even dealt with some interesting problems of linear programming. In conclusion, it may be said that Whitin's book continues to constitute a first-class approach both to the subject of inventory control, and to operational research in general. The only major criticism to be made of it is that the use of appendices does tend to break the argument up excessively, so that it is to be hoped that when the third edition appears it will be rewritten to the extent of incorporating more recent analysis in a general introduction and survey of the field.