Thursday, January 12, 2006

Trade Off

In a WSJ story today, the authors reported that one consequence of the widespread adoption of just-in-time inventory management is the low stock level of medicine. The authors consider the current stock level of medicine as insufficient in view of the risk of the possible outbreak of a flu pandemic, read it here.

The criticism is flawed, in my view, because the authors pretty much assume scarcity away in their criticism of the just-in-time inventory. Yes, of course we can have as many stockpiles of medicine as we want. But in a world of scarcity, the nagging question reappears: at what costs?
Resources used up in the production of medicine imply there are less resources that can be used in other things that we value (say building whatever is needed in Lousiana that could help it withstand another hurricane like Katrina better). As in everything in life, we have to make tradeoffs. And medicine is no exception.

Near the end of the story, an emergency physician made a similar point, "You can't plan for a surge capacity in an emergency room of 500 or 1,000 patients from the 20 you see in a day...Nobody could afford to do that. You can't have 10 doctors and 100 nurses sitting around waiting for something to happen."

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