Rail Capacity shortages cause auto shipment delays

A Wall Street Journal article (April 13, 2011) describes the impact rail shipment delays on car manufacturer inventories. During the recession, railroads decreased their rail cars and cut their staff. The sudden expansion of car shipments has created a surge that cannot be handled quickly despite route adjustments and rail car speeds.  The resulting delays have the potential to hurt sales at dealerships, and the urgency in getting these cars to the lot is due to the anticipated demand slowdown as gas prices increase. While trucks can move finished cars, their higher cost may cut into margins for manufacturers. Given such supply bottlenecks, how should manufacturers adjust their mode mode mix to keep dealers stocked while managing costs ? Should car inventories be pooled temporarily in field locations to better manage demand and supply ? Could customers be offered incentives to drive their cars from plants to their residential locations ?

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About aviyer2010

Professor
This entry was posted in Operations Management, Service Operations, Supply Chain Issues and tagged , , , , , . Bookmark the permalink.

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