This study uses survey data on several hundred automotive suppliers in North Americato evaluate the determinants of inventory levels in high-volume discrete parts manufacturing

This study uses survey data on several hundred automotive suppliers in North Americato evaluate the determinants of inventory levels in high-volume discrete parts manufacturing. Weassess the magnitude of raw materials, work-in-process, and finished goods inventories, as well asproduction lot sizes and through-put times. Results are broadly consistent with the EOQformula and related models of optimal inventory holding. Inventories are shown to be jointlydetermined by technological factors and managerial practices.Several categories of managerial practices are found to be important. Low inventories arelinked to employee training and problem solving activities and frequent communication withcustomers. More unexpected findings show the absence of inventory differences between USownedand Japanese-owned plants operating in the United States. This suggests that Japanesetransplant parts makers have not been completely successful in adapting Japanese manufacturingmethods to the US environment.

The MIT International Motor Vehicle Program and the UCLA Academic Senate for financialsupport.

Demeester, Lieven
Helper, Susan

Lieberman, Marvin B.

automotive
JIT manufacturing
inventory

automotive
JIT manufacturing
inventory