Price-driven economic order systems from a thermodynamic point of view

Abstract

Many researchers have attempted to bridge their fields with others to gain insight into their own, benefiting from the synergies of such processes. As markets have become increasingly more competitive, disorder has become a prevailing characteristic of modern productive systems operating in complex, dynamic and uncertain environments. Some researchers in the discipline of management science/operational research have applied information theory and entropy approaches to account for disorder when modelling the behaviour of productive systems. However, few have applied classical thermodynamics reasoning to modelling such systems. The present paper postulates that the behaviour of production systems very much resembles those of physical systems. Such a parallel suggests that improvements to production systems might be achievable by applying the first and second laws of thermodynamics to reduce system entropy (or disorder). To demonstrate the applicability of these laws, the economic order (production) quantity model is used as an illustrative example.

Acknowledgements

The authors thank the anonymous reviewers for their positive and constructive reviews. M. Y. Jaber thanks the Natural Sciences and Engineering Research Council of Canada (NSERC) for supporting his research, and the Dean of the Faculty of Engineering and Architecture and the Chair of the Department of Mechanical Engineering at the American University of Beirut for the in-kind support they provide.