Comparison between economic order/manufacture quantity and just-in-time models from a thermodynamics point of view

- Modifies EMQ to include some operational, environmental and social costs.
- Compares EMQ and JIT models using the second law of thermodynamics.
- JIT is more expensive when worker stress and entropy costs are considered.

Just-In-Time (JIT) suggests that inventory is a waste and should be reduced. However, under some conditions, smaller and more frequent shipments can generate more waste, consume more resources and increase congestion in a supply chain rendering the JIT policy less effective. This paper first modifies the standard economic manufacture quantity (EMQ) models by including within them the costs of transportation, worker stress, process quality, energy, and greenhouse gas emissions. Then, it uses the second law of thermodynamics to calculate the entropy generated in the modified EMQ and JIT models, using entropy as a measure of system sustainability. To make the comparison meaningful, the EMQ model is modified to capture some of the costs that will work for and against EMQ and JIT. The modification then adds an entropic component to the cost functions of EMQ and JIT to capture the costs of disorder (entropic) that classical inventory analyses seldom include. The results show that when worker stress and entropy costs are considered, a JIT policy can be more expensive to operate than an EMQ policy.