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

Cachon, Gérard P.; Olivares, Marcelo

doi:10.1287/mnsc.1090.1095

Cited by 132 publications

(125 citation statements)

References 24 publications

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“…Industry-specific papers include those by Olivares and Cachon (2009) and Cachon and Olivares (2010), which identify the key drivers that explain the variation in the finished goods inventory within the automotive distribution system. There is also work that investigates the factors that affect inventory record accuracy (DeHoratius and Raman 2008) and when managers decide to deviate from the inventory recommendations of an automated ordering system (van Donselaar et al 2010).…”

Section: Supply Chain Management (Onlinementioning

confidence: 99%

OM Forum—Causal Inference Models in Operations Management

Lim

Reza

et al. 2017

M&SOM

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Abstract. Operations management (OM) researchers have traditionally focused on developing normative mathematical models that prescribe what managers and firms should do. Recently, there has been increased interest in understanding what managers and firms actually do and the factors that drive these decisions. To advance this understanding, empirical investigation using causal inference models is critical. However, in many contexts, the ability to obtain causal inferences is fraught with the challenges of endogeneity and selection bias. This paper describes five empirical tools that have been widely used in economics to address these challenges and how they can be adopted by OM researchers. We also present an example that illustrates how the various attributes of big data-variety, velocity, and volume-can be useful in addressing the endogeneity bias.

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Section: Supply Chain Management (Onlinementioning

confidence: 99%

OM Forum—Causal Inference Models in Operations Management

Lim

Reza

et al. 2017

M&SOM

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“…In sum, the automotive industry is the very spot where virtually every kind of new managerial idea is experimentally invited in to be applied in a variety of areas, and therefore it has had tremendous use as a research setting in which scholars interested in organizational studies examine their ideas (e.g., Cachon & Olivares, 2010;Chung, Mitchell, & Yeung, 2003;Dobrev, Kim, & Carroll, 2002;Dobrev, Kim, & Hannan, 2001;English & Marchione, 1983;Goyal, Netessine, & Randall, 2006;Haunschild & Rhee, 2004;Lieberman & Demeester, 1999;Lieberman et al, 1990;MacDuffie, Sethuraman, & Fisher, 1996;Rhee & Haunschild, 2006;Rhee, Kim, & Han, 2006). More specifically, a great number of studies about experiential learning have been conducted by using this industry (e.g., Haunschild & Rhee, 2004;Lieberman & Demeester, 1999;MacDuffie et al, 1996;Rhee & Haunschild, 2006).…”

Section: Chapter 3 Hypothesesmentioning

confidence: 99%

“…(Cachon & Olivares, 2010;Levin, 2000), and the present study also uses it as a main source for operation-related information and data regarding the manufacturing processes of automotive engine plants. In this study, the research period begins in 1995 mainly to make sure of the continuity of data over the years, because the report substantially changed its data collecting scheme beginning in 1995 (The Harbour Report, 1995).…”

mentioning

confidence: 99%

"Learning by Doing in Social Networks: The North American Automotive Engine Plants, 1995-2006"

Yang

Rhee

2015

AMPROC

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“…Our research thus also relates to the endogenous product choice literature, as we deal with the endogeneity of both pricing and the warranty length decision by firms. Finally, our research is related to the numerous empirical studies in OM that examine the automobile industry, including Fisher et al (1999), Ramdas and Randall (2008), Cachon and Olivares (2010), and Gallino et al (2013), among many others, that as ours attempt to examine some aspect that contribute to an understanding of factors influencing the matching between what firms supply and what consumers demand in this industry.…”

Section: Related Literaturementioning

confidence: 99%

Service Competition and Product Quality in the U.S. Automobile Industry

2012

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We study the impact of service attributes (warranty length, after-sales service quality) on consumer demand in the U.S. automobile industry, examining the presence of complementarities/substitution between service attributes and product quality. Our results estimate a median willingness to pay for one year of a warranty of approximately $850, which is equivalent to 3.1% of the median vehicle price in our sample. We find that, for a car with median characteristics, the effect on consumer utility of a 1% price decrease is equivalent, all else being equal, to increasing product quality by 2.2%, and is in turn equivalent to increasing the warranty length by 8%. Our results also indicate that service attributes play a compensatory role with respect to product quality; i.e., the impact of warranty length and service quality on demand increases when product quality decreases. Conversely, both service metrics are complementary with respect to demand; i.e., the better the service quality, the higher the marginal effect of longer warranties. Our results thus imply that, in our period of analysis, warranties played a more important role for American firms than for foreign firms, consistent with the fact that American manufacturers exhibited lower product quality and higher service quality than nonAmerican firms. We study the impact of service attributes (warranty length, after-sales service quality) on consumer demand in the U.S. automobile industry, examining the presence of complementarities/substitution between service attributes and product quality. Our results estimate a median willingness to pay for one year of warranty of about $850, which is equivalent to 3.1% of the median vehicle price in our sample. Wend that, for a car with median characteristics, the effect on consumer utility of a 1% price decrease is equivalent, all else being equal, to increasing product quality by 2.2%, and is in turn equivalent to increasing the warranty length by 8%. Our results also indicate that service attributes play a compensatory role with respect to product quality, i.e., the impact of warranty length and service quality on demand increases when product quality decreases. Conversely, both service metrics are complementary with respect to demand, i.e., the better the service quality, the higher the marginal effect of longer warranties. Our results thus imply that, in our period of analysis, warranties played a more important role for American firms than for foreign firms, consistent with the fact that American manufacturers exhibited lower product quality and higher service quality than non-American firms. AbstractWe study the impact of service attributes (warranty length, after-sales service qual-

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

Cited by 132 publications

References 24 publications

OM Forum—Causal Inference Models in Operations Management

OM Forum—Causal Inference Models in Operations Management

"Learning by Doing in Social Networks: The North American Automotive Engine Plants, 1995-2006"

Service Competition and Product Quality in the U.S. Automobile Industry

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