Analyzing the Fundamental Performance of Supply Chains - A Linear Control Theoretic Approach

Research on supply chain management has received much attention in recent
years. 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-off
curves by applying a particular inventory policy.

AUTOR:
Kai Hoberg studied Industrial Engineering at Paderborn University, Germany
and Monash University, Melbourne. He carried out this research at Münster
University, Germany, at Cornell University, New York and at the Israel
Institute of Technology, Haifa. In 2006, he obtained the PhD degree at
Münster University with summa cum laude (highest honor). Currently, he is a
postdoctoral researcher at the Department of Supply Chain Management and
Management Science at University of Cologne, Germany.