Examining demand and supply-chain antecedents of inventory dynamics: Evidence from automotive industry

This study examines inventory dynamics on durable finished goods in an automotive supply chain with respect to manufacturers, distributors, and retailers. We apply a regression method to product-level industry data covering a period from 2010 to 2019. We test the demand-oriented and supply chain-associated influences on the development of inventory dynamics to reveal the practical implications that are important to managing a business. Our results show that essential factors that directly affect inventory dynamics include information distortion, product variety, and product attractiveness. In addition, our study also shows that the effects of product variety and product attractiveness are mediated by the demand variation to the development of inventory dynamics. Further, we demonstrate that the studied factors may influence inventory dynamics in various degree when the test is made based on individual product type.