Inventory and Energy

Preface to Chapter 4: The progressive consumption of the non-renewable energy stocks is determining wide fluctuations in the cost of energy (primarily, gas and oil), influencing both absolute values and volatility, leading the attention on the strategic role and function that these resources play in the economy and life in general. It is well known that the debate quickly spread to encompass other issues, such as the availability of alternative resources, including nuclear power generation, the scarcity of the “classic” sources, such as fossil fuels, and the impact on the environment, too. Similarly, there has been growing interest for a more rational and responsible consumption of energy in the industrial processes and services, this being not only a fundamental issue for sustainable production, but also a strategic leverage for competitiveness, due to the increased contribution of energy to the final cost per unit produced. Inevitably, these issues will exert, and are already exerting, an increasing and noticeable influence on the management of supplies and inventories, thus opening new horizons and opportunities to research in this field. The present Chapter aims at focussing on these issues, starting with several situations, already discussed in literature, in which inventory features (such as levels and quantities) are notably influenced (and frequently determined) by the energy content of the inventory itself and/or by the cost of the “energy” source. This is the case with dams (water reservoirs), gas/oil stocks and, more recently, warm/cool storage. These cases will allow the reader to perceive and understand how, why and in which ways stocks may be linked to energy. The subsequent sections will concentrate on those other relevant aspects that cannot be neglected when the relationships between stock features and energy are considered. As reference, the cases of the biomass Supply Chain (and, more generally, biofuels) and the “cold” supply of goods will be discussed. These examples will introduce the final comments, which will remind the reader that, when energy is employed, environmental aspects (e.g., emissions) are also to be taken into account. Therefore, several topics will be addressed in order to illustrate how, when the relationships between energy and inventory are considered, traditional economic analysis should be backed up by an accurate appreciation of the environmental costs.