Research on supply chain management has received much attention in
recentyears. A supply chain is the network of all parties involved in
fulfilling a customer request, that is, from the acquisition of raw
materials, over the production of finished goods to their distribution
to the customers. Supply chains are governed by inventory policies,
which are key drivers of supply chain performance. In this book, Kai
Hoberg applies linear control theory to study various inventory policies
and to analyze the supply chain performance. Linear control theory
originates in the engineering field and uses transfer functions to model
the system in question. However, using the appropriate assumptions, it
can be applied to model supply chains. In this research, the effect of
the inventory policy on the fundamental performance of the supply chain
is analyzed. The fundamental performance relates to the key performance
drivers in the supply chain: variability and responsiveness. High
variability causes companies to hold excess capacity, use overtime
production, and motivates high safety stocks. Poor responsiveness
hinders a supply chain to track customer demand and it will suffer from
lost sales, unsatisfied customers, and increased competition. In this
research, various properties of the different inventory policies are
demonstrated. While the book is mathematically rigorous, the author
focuses on important managerial insights gained from the analysis. He
particular emphasizes the necessity of trade-offs and shows how to move
the trade-offcurves by applying a particular inventory policy.
