Abstract

http://ssrn.com/abstract=1946445
 
 

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Drivers of Finished-Goods Inventory in the U.S. Automobile Industry


Marcelo Olivares


Columbia University - Columbia Business School - Decision Risk and Operations; University of Chile - Departamento de Ingenieria Industrial

Gerard Cachon


University of Pennsylvania - Operations & Information Management Department

January 1, 2010

Management Science, Vol. 56, No. 1, pp. 202-216, January 2010
Columbia Business School Research Paper No. 11-25

Abstract:     
Automobile manufacturers in the U.S. supply chain exhibit significant differences in their days-of-supply of finished vehicles (average inventory divided by average daily sales rate). For example, from 1995 to 2004, Toyota consistently carried approximately 30 fewer days-of-supply than General Motors. This suggests that Toyota's well-documented advantage in manufacturing efficiency, product design and upstream supply chain management extends to their finished-goods inventory in their downstream supply chain from their assembly plants to their dealerships. Our objective in this research is to measure for this industry the effect of several factors on inventory holdings. We find that two factors, the number of dealerships in a manufacturer's distribution network and a manufacturer's production flexibility, explain essentially all of the difference in finished goods inventory between Toyota and three other makes, Chrysler, Ford and General Motors.

Number of Pages in PDF File: 15

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Date posted: October 20, 2011  

Suggested Citation

Olivares, Marcelo and Cachon, Gerard, Drivers of Finished-Goods Inventory in the U.S. Automobile Industry (January 1, 2010). Management Science, Vol. 56, No. 1, pp. 202-216, January 2010; Columbia Business School Research Paper No. 11-25. Available at SSRN: http://ssrn.com/abstract=1946445

Contact Information

Marcelo Olivares (Contact Author)
Columbia University - Columbia Business School - Decision Risk and Operations ( email )
3022 Broadway
Uris Hall, #417
New York, NY 10027
United States
HOME PAGE: http://www.columbia.edu/~mo2338/index.htm

University of Chile - Departamento de Ingenieria Industrial ( email )
Republica 701 Santiago
Chile
Gerard Cachon
University of Pennsylvania - Operations & Information Management Department ( email )
Philadelphia, PA 19104
United States
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