Search Results
Showing results 1 to 1 of approximately 1.
(refine search)
Working Paper
Why are Inventory-Sales Ratios at U.S. Auto Dealerships so High?
Motor vehicle dealerships in the United States tend to hold inventories equivalent to around 65 days? worth of sales, a relatively high level that has been nearly unchanged for 50 years. Despite playing a prominent role in the volatility of U.S. business cycles, very little is known about why the auto industry targets inventory stocks at such a high level. We use a panel of inventory and sales data from 41 vehicle brands over 30 years and the solutions to two well-known inventory planning problems to show that vehicle inventories appear to be related to (1) the size of dealership franchise ...