This work uses techniques of optimization and operations research to develop the first comprehensive survey of the entire field of the optimization of resource, production, and distribution systems. Sten Thore proposes an economic logistics that is similar to the well-known concept of military logistics, but which is expanded to include such features as the optimal location of plants, inventories and retail outlets, and the management of hierarchical multi-echelon production, inventory, and distribution systems. The study of individual features of this supply process is familiar from operations research, but Thore joins these elements together into larger analytic structures encompassing the production and distribution system in an entire industry.
Following an introductory chapter and a review of the saddle-point theory, coauthored with W. W. Cooper, Thore explores the three dimensions of the supply process synthesis: the spatial dimension (as in simple transportation systems), the vertical dimension (extending from resources to finished consumer goods, as in activity analysis), and the time dimension (as in inventory accumulation and investment). The combination of these then leads to models of such diverse subjects as regional warehouse systems, activity analysis and activity networks, multi-stage warehouse systems of intermediate goods, distribution networks, and spatial equilibrium. Each chapter contains its own exercises which are solved numerically and discussed in great detail, and illustrate such optimization techniques as linear and nonlinear programming, goal programming and goal focusing, chance-constrained programming, and infinite games. This work is designed for use in graduate courses in economics and mathematics modeling, and will also be a useful addition to college and university library collections.